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Misleading claims about broadband speeds have landed Vocus Group's (ASX: VOC) telco subsidiaries Dodo and Primus in hot water with both being handed a combined fine of $2.5 million.
The Federal Court has fined Dodo $1.5 million and Primus $1 million following action taken by the Australian Competition and Consumer Commission.
The issue centred on claims made between March 2018 and April 2019 in relation to "typical evening speeds" which the court found to be misleading because they were not calculated on appropriate testing methodology.
"The ACCC brought this case because we were concerned that the methodology which the Vocus Group used as the basis for its speed claims cherry-picked only the fastest speeds its network could deliver, and ignored the slower speeds many of its customers experienced," says ACCC chair Rod Sims.
"These misleading speed claims meant consumers could not accurately compare different offerings and make an informed choice about their broadband provider."
Broadband speed claims have been a constant source of contention in the market.
The ACCC says it has sought to rationalise the claims by introducing a broadband speed claims guidance.
"Despite clear ACCC guidance on making broadband speed claims, Vocus Group used a flawed methodology which was inconsistent with that guidance, and misled consumers about the speeds of its plans," Sims says.
Vocus has 436,000 retail broadband customers representing about 5.2 per cent market share of consumer NBN services.
The company last week was given the green light by the Supreme Court to convene a shareholder meeting to vote on a $3.5 billion takeover by Macquarie Real Assets and Infrastructure Management and Aware Super. The meeting is expected to seal the buyout on June 22.
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