Apple may face up to a $2.25 million fine for its alleged use of misleading branding tactics to market its new iPad in Australia, the Sydney Morning Herald reported Friday.
The damages are being sought by the Australian Competition and Consumer Commission, which accused the Cupertino, Calif.-based mobile giant in March of falsely positioning its new iPad as being compatible with Australia’s 4G wireless networks.
"The ACCC alleges that Apple's recent promotion of the new 'iPad with WiFi + 4G' is misleading because it represents to Australian consumers that the product can, with a SIM card, connect to a 4G mobile data network in Australia, when this is not the case," the commission said in March.
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Apple originally defended its marketing campaign, claiming that it was Australia’s wireless networks -- not the new tablets -- that were mislabeled. The company argued that Australia’s 3G networks, with which the new iPad is compatible, are technically 4G networks by industry standards, thus making its branding legitimate.
But according to the Sydney Morning Herald, Apple is now admitting that its marketing of the new iPad as being 4G-compatible may, in fact, have misled Australian customers, as the device doesn’t technically connect to what they consider to be 4G.
Friday's report said that both Apple and the Australian Competition and Consumer Commission are seeking approval of a $2.25 million settlement through the Federal Court in Victoria. The case has been adjourned until next Wednesday, however, because Mordecai Bromberg, the justice overseeing the case, said he did not have enough information regarding Apple's current financial position to approve the settlement figure.
Before making a ruling, Bromberg has requested details as to how many iPads with the 4G name have been sold in Australia, how many have been returned, and the exact differences between how the tablets perform on a 3G vs. a 4G network.
"Surely the parties can at least put before the court some meaningful facts that identify a disparity between the products," he said in the report.
Apple has agreed to provide this information to the court, allowing Bromberg to rule whether the proposed settlement amount is appropriate. Apple already has offered refunds to Australian customers dissatisfied with the new iPad and has posted disclaimers in its retail locations throughout the country.