Apple, ACCC agree on $2.25m 4G fine

Apple and the Australian Competition and Consumer Commission (ACCC) have agreed that Apple should pay a $2.25 million penalty for calling its iPads "4G", even though they don't work on Australian 4G networks. However, the judge has not yet approved this amount.

The ACCC took Apple to court in March for using the moniker "4G" to describe iPads that were able to connect to mobile networks, even though the 4G frequencies that the iPad uses don't work on current Australian long-term evolution (LTE) 4G networks.

Facts agreed on by the ACCC and Apple Australia suggest that Apple's conduct breached consumer laws in four ways — by saying that the new iPad with Wi-Fi and 4G could connect to Telstra's LTE network on:

  • Its web page and online store

  • Its own stores

  • Information and materials provided to resellers

  • Information and materials provided by Apple on reseller sites.

Each of these instances of non-compliance has a maximum potential penalty of $1.1 million, meaning that Apple was originally facing a maximum penalty of $4.4 million. Apple and the ACCC have settled on a penalty of $2.25 million.

Justice Mordecai Bromberg adjourned the matter until next week, as he wanted further information to assess the appropriateness of the penalty. Specifically, he wanted Apple to provide financial information and sales figures for iPads during the period while the new iPad was sold as 4G, as well as information pertaining to the differences between 3G and 4G networks.

Apple's counsel argued that the number of iPads sold is irrelevant, pointing to similar cases involving Optus and Harvey Norman, where the court accepted general statements about the size of the businesses rather than requiring specific, detailed financial information. Apple, however, finally agreed to provide the sales information confidentially.

Apple also noted that refunds may have been sought for any reason — there was data collected on whether refunds were sought specifically over the 4G issue, and the court will need to consider this in its judgment.

Based on the facts before him, Bromberg said that he had "no idea" of the impact on a customer expecting to connect to a 4G network. He said that the evidence before him didn't tell him how the networks were different. "There is nothing before me that differentiates between 3G and 4G other than the fact they have a different numeral," he said.

The ACCC told Bromberg that he didn't need to "delve into the technical characteristics" in order to make his ruling, saying that it is only focused on whether consumers were misled, rather than the impact on those consumers of receiving a 3G-capable device rather than a 4G-capable device.

Apple pointed out that it provided unconditional refunds to all potentially affected iPad customers, altered its worldwide marketing materials and would bear the burden of a record of non-compliance with consumer laws. Apple also changed the designator globally. This action, along with the $2.25 million penalty, would provide an appropriate balance between penalty and corrective action, according to the ACCC.


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