ACCC Takes Optus to Court for Alleged Misleading Conduct

Tuesday 19 December 2017 @ 11.21 a.m. | Legal Research | Trade & Commerce

It has been announced in a recent Media Release that the Australian Competition and Consumer Commission (the ACCC) has commenced proceedings in the Federal Court against Optus Internet Pty Ltd (Optus), alleging it misled customers about the need to move quickly from its existing Hybrid Fibre Coaxial (HFC) network to the National Broadband Network (NBN).

Background

The Australian regulator claimed that Optus informed customers that since the NBN was coming into their area, existing internet plans on the HFC network would be disconnected sooner than what was contractually allowed.

In 2011, Optus and NBN Co entered into an agreement by which NBN Co agreed to make payments to Optus in respect of each customer who migrated from Optus’ existing HFC network to the NBN, whether the customer acquired NBN-based services from Optus or from another retail service provider.

The Allegations

The ACCC alleges that between October 2015 and March 2017, Optus made false and misleading representations by writing to its customers to advise it would disconnect their HFC service within a specified time period as the NBN was coming to their area.

However, the timeframes were earlier than Optus was contractually allowed to cancel the customers’ services, with Optus even telling customers their services would be disconnected in as little as 30 days.

Allegations of Anti-Competitive Conduct

It is also alleged that between October 2015 and September 2016, Optus misled some of its customers about their options for purchasing an NBN plan.

The ACCC alleges that:

“ … Optus created the impression that its customers were required to obtain NBN services from Optus, when they could have chosen to switch to any internet service provider … Telephone and internet are essential utilities and it is unacceptable for Optus to treat its customers this way."

Comment and Reaction from the ACCC

Commenting to ABC News, the ACCC Chairman Rod Sims said:

“We allege that Optus’ misrepresentations put pressure on customers to move to the NBN sooner than they were required to. This is particularly concerning as Optus received a significant financial payment from NBN Co for each customer that moved from its cable network to the NBN … Optus created the impression that its customers were required to obtain NBN services from Optus, when they could have chosen to switch to any internet service provider … We are also concerned that Optus cut off some of its customers’ internet services when it had no contractual right to do so. Telephone and internet are essential utilities and it is unacceptable for Optus to treat its customers this way.”

Mr Sims said went on to say:

“As the NBN rollout continues throughout Australia, people will be making decisions about which provider to go with. ISPs must not mislead consumers when competing for business. We are keeping a close eye on this sector and will take action where we see wrongdoing.”

Comment from Optus

Responding to the allegations, an Optus spokesperson said the company was "working co-operatively" with the regulator:

"The ACCC’s action today relates to past processes that we have successfully addressed … We also compensated customers who had been disconnected without sufficient notice."

In a separate action, Optus has also agreed to compensate more than 8,700 customers who were misled about the speed of their plans after Optus also admitted it is likely to have breached the Australian Consumer Law (the ACL) by providing speeds slower than what it advertised between September 2015 and June 2017.

According to the ACCC, the slower speeds were due to "technical limitations" on the customers' fibre to the node (FTTN) or fibre to the building (FTTB) NBN connections. Optus will contact its affected consumers by email or letter by 2 March 2018.

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products. Nothing on this website should be construed as legal advice and does not substitute for the advice of competent legal counsel.

Sources:

Optus in court for allegedly misleading 20,000 customers about moving to the NBN – ACCC Release MR 245/17

ACCC takes Optus to court for allegedly misleading 20,000 customers – abc.net.au

Related Articles: