Company says it accepts the penalty, but denies any intent to deceive customers. Commerce Commission objects to Vodafone spin; says company's total penalties of $1.44 million are highest paid by a single Fair Trading Act defendant.
UPDATE Sept 10: Vodafone has been fined $960,000 after pleading guilty to 21 Fair Trading Act charges.
The charges, brought by the Commerce Commission heard by the Auckland District Court, related to a series of promotions between 2006 and 2008.
They related to claims about the size of Vodafone's network, made in the company's "broadband everywhere" advertising campaign between October 2006 and April 2008; the availability of a $10 free airtime credit for those customers who bought Vodafone's supa-prepay pack between May 2007 and September 2008; and the claimed size of Vodafone's 3G mobile phone network between September 2008 and February 2009.
After sentencing, Vodafone marketing director Greg Campbell said his company accepted the penalty, but denied his company had any intent to deceive.
“In 2006 and 2008, there was a huge amount happening in the world of technology – the mobile internet was emerging, mobile networks were speeding up and customers were really getting a handle on the benefits of being mobile. In our genuine attempts to communicate these benefits, we accept that we got some things wrong," Mr Campbell said.
“We did not set out to mislead anyone and we apologise unreservedly. We accept that we didn’t communicate as clearly as we should have done with our customers and pleaded guilty to the FTA charges back in July.
“Unfortunately, we can’t turn back the clock on some things that happened four years ago, but since then we have been focused on ensuring our communication is clear.”
Penalty, not settlement
A Commerce Commission spokeswoman took issue with Vodafone's use of the word "settlement" in a media release this morning.
"This is a court-imposed penalty," she told NBR.
Vodafone entered guilty pleas to 21 charges of the Fair Trading Act in July.
"Gross carelessness"
In sentencing Vodafone today, Judge Harvey described the company's conduct as “gross carelessness”. He commented in relation to Vodafone’s Broadband Everywhere campaign that it was “clearly false and misleading” and that it had done “significant harm”.
Judge Harvey also noted that in relation to the Supa Prepay charges, Vodafone had not acted on concerns raised with the level of seriousness required, even though it had the technology and resources to do so."
“Prior to the Commission bringing charges against Vodafone in 2009, we had a significant number of public complaints about Vodafone’s various mobile phone and mobile broadband advertising campaigns. At the time, mobile data and phone packages were relatively new to the market," said Commerce Commission competition manager Stuart Wallace.
"Customers have no easy way of verifying the claims being made for products like this. This case reinforces that companies need to be especially careful that their marketing materials for new products are not likely to mislead.”
Record fines
The regulator says Vodafone has now paid a total $1.44 million in fines for charges related to its advertising between 2006 and 2008 - more than any other single defendant under the Fair Trading Act.
In August last year, the company was fined more than $400,000 after pleading guilty to breaching the Fair Trading Act in relation to its Vodafone Live service.
In November, it was fined $81,900 in $1-a-day mobile broadband case.
