Apple yesterday agreed to an A$2.25 million (US$2.22 million) fine for misleading Australian customers about the local 4G capability of its next-generation iPad, in a case brought by regulators.
The Australian Competition and Consumer Commission (ACCC) told the Federal Court that the US tech giant had agreed to the penalty for implying in advertising that the 4G function on its latest iPad worked in Australia.
Apple offered in March to refund Australian customers who felt they had been misled by the “iPad with WiFi + 4G” promotion and publish a clarification about the popular tablet’s capabilities after the ACCC took it to court.
Though the iPad’s 4G function only works on networks in the US and Canada, it had been widely promoted as one of the tablet’s features globally, which the ACCC said amounted to false advertising.
It is now advertised outside North America as “Wi-Fi + Cellular” — a change that came into effect on May 12 — with a clear caveat on its Australian site that “it is not compatible with current Australian 4G LTE and WiMax networks.”
The matter was due to go to a full trial this week, but ACCC lawyer Colin Golvan said Apple had agreed to pay the A$2.25 million fine and the commission’s legal costs as part of an out-of-court settlement. It is half the maximum A$4.4 million fine open to the ACCC in the case.
Apple described the A$2.25 million fine as “more than adequate having regard to the conduct and all the other circumstances” and stressed that the concessions made in the case were only applicable in Australia.
Golvan said the “substantial” penalty would send a strong message to the booming smartphone and tablet industry that “such conduct will not be condoned,” according to a report of the hearing in The Australian newspaper.
However, judge Mordecai Bromberg refused to make an official court order until he had the details of how many iPads had been sold and were returned under the refund offer and further information on Apple’s financial position.
“The parties put forward proposed settlement and consent orders, however His Honour requested further information to be provided for the consideration of the court, which will happen next week,” an ACCC spokesman said.
The iPad was the world’s best-selling tablet in the first three months of the year, outgunning its Android-powered rivals, with sales more than doubling from a year earlier.