MELBOURNE Apple Inc (AAPL.O) will email all buyers of its new iPad in Australia to offer them a refund, a lawyer for the company said on Wednesday, after the nation's consumer watchdog accused it of misleading advertising over one key aspect of the product.
The Australian Competition and Consumer Commission has taken legal action to ensure Apple makes consumers aware its third-generation iPad cannot connect to a 4G mobile data network in Australia due to technical incompatibility.
Apple agreed to post warnings that its new iPad "is not compatible with current Australian 4G LTE networks and WiMAX networks" over the next week.
In documents lodged with the court, the ACCC says Apple advertised that "iPad with WiFi can with a SIM card, connect to a 4G mobile data network in Australia, which it cannot do".
Apple "seems to accept that there's a lack of compatibility," said Colin Golvan, senior counsel for the ACCC said at the Federal Court in Melbourne. "It's been completely indifferent to the Australian market," he said.
A trial has been set for May 2, with a hearing a preceding that on April 16.
Apple promoted its third-generation tablet as the iPad with Wifi+4G, but Australia has only one 4G network, operated by Telstra Corp (TLS.AX), which operates on a different frequency to the 4G on Apple's new iPad. Rival Optus, the Australian unit of Singapore Telecommunications Ltd (STEL.SI), is due to launch a second 4G network in April but that will not be iPad-compatible either.
Apple barrister Paul Anastassiou told the Federal Court in Melbourne that the company would send emails to all Australian buyers to date, offering the refund.
Apple rolled out the first wave of new iPad tablets on March 16.
While the iPad is the clear market leader, and the new version with its faster chips, fourth-generation wireless and a sharper display is only expected to cement Apple's lead, the company has hit some bumps in the road.
It is waging a battle with a Chinese technology company, Proview, that claims to own the iPad trademark in China, in a long-running dispute that has threatened to disrupt iPad sales in one of its fastest growing markets.
In Australia, a small but a key launch market for Apple products, it lost a bid to ban the sales of Samsung Electronics Co (005930.KS) Galaxy tablet late last year.
That battle is part of bruising global patent war between the two firms that spans about 30 legal cases in 10 countries.
(Reporting by Miranda Maxwell; Editing by Alex Richardson)