HP misleading advertising penalty

Australian Competition and Consumer Commission v Hewlett-Packard Australia Pty Ltd [2013] FCA 653 confirms the approach of the Federal Court in Apple and Optus in assessing and imposing consumer law penalties proposed by consent of the parties.

The Federal Court declared that Hewlett-Packard Australia Pty Ltd made false, misleading or deceptive representations in breach of the Australian Consumer Law to consumers and retail suppliers of its products.

The ACCC and HPA agreed on a $3million penalty and $200,000 costs order against HPA which the court approved.

The parties also reached agreement on the terms of an injunction and corrective advertising (including on HP’s website).

HPA admitted to six contraventions of sections 18 (Misleading or deceptive conduct) and 29(1)(m) (False or misleading representations about goods or services) of the ACL.

HPA admitted that when consumers contacted helpdesks operated by HPA (HPA Helpdesks) in relation to HPA Computer Products not of merchantable or acceptable quality, staff employed at the HPA Helpdesks made representations, in accordance with the internal policies, guidelines and scripts developed and implemented by HPA (HPA Guidelines), to the effect that:

  • the remedies available to consumers for those HPA Computer Products were limited to remedies available from HPA at its discretion (Remedy Limitation Representation);
  • consumers must have HPA Computer Products not of merchantable or acceptable quality repaired by HPA multiples times before consumers were entitled to receive a replacement HPA Computer Product (Repair Condition Representation);
  • the warranty period for those HPA Computer Products was limited to a specified express warranty period (Limited Warranty Period Representation); and
  • after the expiry of a specified express warranty period, HPA would repair HPA Computer Products not of merchantable or acceptable quality on condition that consumers paid for such repairs (Payment Condition Representation).

HPA also admitted that when retail suppliers contacted HPA, from time to time staff employed at HPA made representations to the effect that HPA was not liable to indemnify the retail suppliers if, without HPA’s prior authorisation, retail suppliers provided consumers with a refund or replacement (Retail Supplier Representation).

Further, HPA represented on a webpage of the HPA Online Store that consumers could not return or exchange HPA Computer Products purchased through the HPA Online Store not of acceptable quality unless otherwise agreed by HPA, at its sole discretion (Online Remedy Discretion Representation).

Justice Buchanan stated:

“It is accepted by the respondent not only that the contraventions identified by the statement of agreed facts and by the outline of joint submissions were serious ones but that declarations, injunctions and other coercive orders should be made as a result….

I see no reason to doubt that the pecuniary penalty agreed by the parties is an appropriate one. The maximum penalty available for the totality of the six contraventions admitted by the respondent is $6.6 million. The parties have agreed that the admitted contraventions should be the subject of a pecuniary penalty of $3 million. A penalty of that order of magnitude is the equivalent of $500,000 for each admitted contravention, if the matter was to be assessed in that fashion. In my view, that reflects an acknowledgement of the seriousness of the respondent’s conduct, both with respect to the individual contraventions and with respect to the total penalty to be imposed, which penalty I am satisfied does not contravene the totality principle. I am also satisfied that the penalty is sufficient to mark the Court’s disapproval of the respondent’s conduct and to satisfy the requirements of general and specific deterrence….

The parties have agreed that the respondent should pay the applicant’s costs in the amount of $200,000. There is no reason to think that an order for costs in this amount is inappropriate.”

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