Apple to offer iPad disclaimer, refunds in Australia

Apple Inc.'s fight to retain the "4G" branding on its latest iPad tablet computer in Australia—a designation the country's consumer watchdog says is misleading—will return to court in early May.

In the interim, the Cupertino, Calif., company agreed with the Australian Competition & Consumer Commission, or ACCC, to clarify claims the new iPad is compatible with 4G telecommunications networks and to offer refunds to early purchasers who feel they were misled.

In Federal Court proceedings brought by the commission in Melbourne, lawyers for Apple said the company would ensure consumers didn't buy the new iPad mistakenly believing it could connect to Telstra Corp's quickest wireless network, which differs from 4G networks rolled out in the U.S. and Canada.

Colin Golvan, lawyer for the ACCC, said the watchdog ultimately wants Apple to stop selling the product as "iPad Wi-Fi + 4G."

The case will be closely watched in other markets for the iPad, which currently is fully compatible only with certain 4G networks in North America. Australia was the first country where the new tablet was available, and it was snapped up by hundreds of shoppers who lined up outside stores on the opening day of sales earlier this month.

The company didn't disclose recent sales figures for Australia, but Credit Suisse estimated last June that Apple had sold more than 500,000 iPads in the country. Globally, Apple said, the latest iPad has had the strongest launch of any iPad version, with sales at three million.

Judge Mordecai Bromberg called for a hearing on the case to begin May 2, with the commission's statement of claim to be filed by April 3. In the meantime, his order said, Apple would display a disclaimer in its stores and on its websites in Australia, reading, "This product supports very fast cellular networks. It is not compatible with current Australian 4G LTE networks and Wi-Max networks."

Apple also will provide displays for third-party retail stores, and email the clarification to customers and offer a refund to anyone in Australia who bought the new iPad Wi-Fi + 4G before March 28, Mr. Bromberg said.

The trial starting in May is likely to center on whether consumers could have been expected to know that the new iPad, while able to run at faster speeds, wouldn't work on the 4G networks so far rolled out in Australia.

"Ultimately at trial, it will be contested by Apple there are in Australia networks that according to international definitions are 4G, are properly described as 4G," Apple's senior council, Paul Anastassiou, told the court. "Can you mislead a consumer with a statement that is technically accurate?"

Mr. Anastassiou said Apple didn't anticipate many customers would seek to return their iPads.

Telstra said it has been careful to ensure customers understand the new iPad doesn't run on its 4G Long Term Evolution network in Australia. A spokeswoman declined to comment as the matter as it's before the courts.

A spokesman for Australia's second-largest telecommunications company, Optus, owned by Singapore Telecommunications Ltd., said Wednesday that disclaimers on its websites clearly state that some features of the new iPad aren't available in all countries and that the devices's 4G is supported only on networks in the U.S. and Canada. Optus is rolling out its own 4G network.

In Japan, Softbank Corp., the only carrier now selling the new iPad, offers only 3G service. A spokeswoman said Softbank tells every customer purchasing the new iPad 4G model that they will be using it on a 3G network.

ACCC's senior council Mr. Golvan said Apple's new iPad didn't meet consumers' requests for a tablet that would work with the 4G network. The regulator wanted iPad packaging to carry a sticker saying the device is "not compatible with current Australia 4G networks," a step Apple rejected.

Mr. Golvan said the commission wrote to Apple about its concerns on March 15, the day before the new iPad went on sale, and again on March 20. It sent formal demands on March 23, Mr. Golvan told the court, to which Apple responded that there was no misleading conduct,.

On its website, Apple states, "4G LTE is supported only on AT&T and Verizon networks in the U.S. and on Bell, Rogers, and Telus networks in Canada. Data plans sold separately. See your carrier for details."

(Published by WSJ - March 28, 2012)