Apple will refund Australian consumers who felt misled by claims its third generation iPad was compatible with local LTE networks but could still be fined for allegedly misleading advertising.
In a hastily-called court battle with the competition watchdog that ended after 5pm yesterday, Apple undertook to display corrective advertising showing that the new iPad is not compatible with Australian 4G LTE and WiMAX networks by April 5.
It will also contact all buyers of the mobile broadband-capable version of the new iPad with the statement:
“This product supports very fast cellular networks. It is not compatible with current Australian 4G LTE networks and WiMAX Networks.”
Those who felt misled by the claims and want a refund will be entitled to one.
Apple sold three million tablets in the first weekend after the iPad's launch worldwide, but has not revealed local figures or broken down the number between wi-fi-only and mobile broadband-capable versions of the tablet.
But the interlocutory relief is unlikely to prevent the ACCC from seeking final relief on the issue.
In a media release on Tuesday, the watchdog said that, in addition to immediate corrective advertising it would seek “pecuniary penalties” for the advertising, which it said misled the public.
Mediation between the parties has been set for April with a hearing on liability scheduled for May 2.
Should the Federal Court side with the watchdog, Apple could face fines of up to $1.1 million in each instance of misleading advertising.
But the consumer giant remained defiant during the court proceedings, according to various reports.
The Australian quoted Apple counsel Paul Anastassiou SC as saying that the company had "at no point in any promotional material for which Apple was responsible” labelled the iPad as being compatible with Australia’s only currently available 4G network, operated by Telstra.
"No such representation in our submission is conveyed by the use of the acronym 4G in the name of the device,”Anastassiou said.
Allegations of misleading advertising were made worse by the fact that US carriers routinely refer to their HSPA+ and dual-carrier HSPA networks as 4G, despite the same functionality being labelled 3G by Australian carriers.
Despite mounting global criticism over Apple’s marketing of the new tablet, the action prompted by the Australian Competition and Consumer Commission’s legal threats is the first time the issue has reached court.
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