Optus loses to Telstra in court case over misleading ad

Telstra was victorious over rival Optus yesterday in the Victorian Supreme Court in a fight over Optus advertisements which Telstra deemed were “misleading”.

The Optus television and internet promotions, which aired in January this year, claimed there is less than 1% difference in the mobile phone coverage offered by Telstra and Optus.

The advertisements state there “isn’t much difference between us and Telstra”.

Telstra argued in court the geographical difference was much larger, with Telstra covering 2.3 million square kilometres of Australia in comparison to the Optus coverage of about one million square kilometres.

In response, Optus denied the wording of the advertisement was misleading, stating it was focused on the mobile reach to ‘Australians’ in terms of population coverage, not ‘Australia’ in a geographic sense.

However, Justice James Elliott disagreed and said Optus had misled consumers with the claims.

“Each of the representations was misleading or deceptive, or likely to mislead or deceive,” he said.

The judge found that it was “irrefutable” that the dominant message of the advertisement was the focus on the geographic coverage of the Optus mobile network and the comparison with the Telstra mobile network.

“This aspect of the advertisement provides the platform upon which Optus seeks to make it attractive to ‘switch’ and enter into the deals that are being offered,” the judge said.

Optus will now have to remove any remaining advertisements, with compensation for Telstra to be determined at a later date.

Optus vice president corporate and regulatory affairs David Epstein said while the company was “disappointed in the court’s ruling, Optus remains committed to the strength of our network”.

“We have been consistent and transparent in how we communicate the less than 1% difference in the population reach of the Optus mobile network compared to Telstra’s, and these clear facts have not been in dispute,” he said.

“Today’s battle has been about how you portray network reach, but what Telstra is really afraid of is a discussion on price.”

Telstra said Optus had been “caught out misleading Australians by implying their geographic network coverage is similar to Telstra’s”.

“We’re upfront about the extent of our network coverage because we know it’s an important consideration for anyone choosing a mobile plan.”

Hall and Wilcox partner Sally Scott previously told SmartCompany businesses often think they’re protected from a misleading conduct claim if what they say or write in an ad is technically correct.

“However, the Australian Consumer Law goes beyond express statements and considers the overall impression of the ad,” she said.

“An express statement in an ad might be technically correct but if the overall impression of the ad is misleading, then a business can find itself falling foul of the Australian Consumer Law.”

Scott says businesses need to consider the overall impression of any ad they create.

“In this case, Optus is arguing that its ad specifically states that the percentages in the ad relate to population and that they are correct,” she said.

“Telstra is not disputing this but is arguing that the overall impression of the ad is something quite different, being that the percentage relates to the geographical area.”