Apple Faces iPad Fine in Australia

A federal court in Melbourne heard Friday that Apple had agreed to pay A$2.25 million to settle a case brought against it by the Australian Competition & Consumer Commission, as well as the commission’s costs of A$300,000. The settlement has yet to be approved by Mordecai Bromberg, judge in the hearing.

The case centers on sales of a version of the popular iPad device initially sold as iPad “Wi-Fi + 4G.” Colin Golvan, a lawyer for the commission, said the designator misled consumers to believe it was compatible with Telstra Corp.’s (TLS.AU) 4G LTE, or long-term evolution protocol, network in Australia, the first such network to be rolled out in the country.

The device, which also comes in a version that only connects to the internet over Wi-Fi networks, is now sold in Australia and other countries as iPad “Wi-Fi + Cellular” rather than “Wi-Fi + 4G.” Mr. Golvan told the court that the term 4G is used exclusively to describe LTE networks in the country. The frequency bands allocated to run next-generation 4G networks differ from country to country and Apple’s lawyers have previously argued that some network frequencies considered “3G” in Australia, operate as 4G elsewhere.

He said the penalty that the two sides have agreed to was designed to be a deterrent against misrepresenting the cellular capabilities of devices. Alan Archibald, a lawyer for Apple, said the penalty agreed with the commission was “more than adequate.” Faced with questions from the judge, Mr. Archibald argued against disclosing the financial position of Apple’s Australian unit or figures for sales and refunds for the new iPad. He stressed the submissions to the court applied only to this case. Apple has faced accusations in other countries the device can’t connect to local 4G networks.

Apple in March agreed to put a clarification on its website and at sales points telling consumers the new device isn’t compatible with Telstra’s network, and offered refunds to early buyers of the product who claimed they were misled. The Cupertino, Calif., company began selling the third version of its iPad on March 15 and by March 19 said it had already sold three million worldwide. The judge has given the parties until Wednesday to provide further information.