On 22 May 2018, the Federal Court of Australia ordered in ACCC v Optus Internet Pty Ltd  FCA 777 that Optus Internet Pty Ltd (Optus) pay $1.5 million in penalties for misleading customers with regards to their transition from the Optus’ HFC Network to the National Broadband Network (NBN). The Court also held that (at paragraph 3):
“Optus Internet is restrained for a period of three years from the date of this order, whether by itself, its servants, its agents or otherwise, in trade or commerce in connection with the supply or possible supply of telephone, internet or television services or the promotion of supply or use of telephone, internet or television services, from making any representation to the effect that:
(a) Optus Internet has a right to cancel a customer’s telephone, internet or television service, when Optus Internet has no such right; or
(b) a customer must acquire NBN based services from Optus Internet in order to receive home telephone and/or internet services, when they have no such requirement.”
The relevant legislation to this case is schedule 2 of the Competition and Consumer Act 2010 (Cth) (“Australian Consumer Law”). The two relevant sections on the Australian Consumer Law are:
Sitting for the Federal Court, Justice Moshinsky made two declarations with regards to the Australian Consumer Law (at paragraphs 1 and 2):
“From 27 October 2015 to 3 March 2017, Optus Internet Pty Limited (Optus Internet), in trade or commerce:
by representing to customers to whom Optus Internet supplied one or more of its telephone, internet and television services at 14,649 addresses using its hybrid-fibre coaxial cable network, in letters and short message service messages sent to mobile telephones, that Optus Internet had the right to cancel each customer’s service on a particular date, or within a specific period of time, in circumstances where Optus Internet had no such right.
From 27 October 2015 to 23 September 2016, Optus Internet, in trade or commerce:
by representing in letters to customers to whom Optus Internet supplied one or more of its telephone, internet and television services at 8,403 addresses using its hybrid-fibre coaxial cable network that the customer would need to acquire services provided using the National Broadband Network (NBN based services) from Optus Internet in order to receive home telephone and/or internet services, in circumstances where they had no such need.”
Between 27 October 2015 and 3 March 2017, Optus sent communications to its customers who were accessing telephone, television and internet services using its hybrid-fibre coaxial cable (HFC) networks. In these communications, Optus made one or both of the following representations (paragraph 2):
The motivation behind these representations for Optus was the entitlement to receive migration payments from NBN Co Ltd for every customer that moved from Optus HFC to an NBN based service. This entitlement became part of Optus’ annual target.
The Australian Competition and Consumer Commission (ACCC) commenced proceedings in December 2017 to the effect that the above representations were false and misleading under the Australia Consumer Law.
Prior to the Federal Court hearing, Optus and the ACCC agreed to the results of the proceeding, and jointly proposed that the Court impose pecuniary penalties on Optus based on a statement of agreed facts and admissions. This statement includes the following admissions (paragraph 6):
The pecuniary penalties proposed by the parties were (see paragraph 53):
Justice Moshinsky accepted the statement of agreed facts and admissions proposed by the parties in this case, and in doing so imposed a pecuniary penalty of $1.5 million on Optus. In coming to this conclusion, Justice Moshinsky summarised the Australian Consumer Law behind pecuniary penalties at paragraphs 13-16 of his judgment:
"Section 224(1) of the Australian Consumer Law provides for the Court’s power to impose a pecuniary penalty upon a person who has contravened (among other things) s 29 of the Australian Consumer Law.
Section 224(2) provides that, in determining the appropriate pecuniary penalty, the court must have regard to all relevant matters including:
The maximum pecuniary penalty is specified in s 224(3). In the case of a body corporate, the maximum applicable for each act or omission that relates to a contravention of s 29 is $1.1 million.
Section 224(4) provides as follows:
If conduct constitutes a contravention of 2 or more provisions referred to in subsection (1)(a):
In accepting the proposed pecuniary penalties provided by the parties, Justice Moshinsky applied the above principles to the present case as follows (paragraphs 55-58):
"The parties submit, and I accept, that it is appropriate to treat the contraventions as falling into two groups – those involving the Cancellation Representations and those involving the Need to Acquire Representations. Such a grouping takes into account the significantly overlapping nature of each of those categories of contravention and the interrelationship between such contraventions in terms of their nature and circumstances, the harms suffered and gains achieved.
To take such an approach is not to downplay the wrongdoing. This approach does not convert the many separate contraventions into only two contraventions, nor does it constrain the available maximum penalty. Further, notwithstanding a grouping into courses of conduct, it remains critical to ensure that the penalties ultimately imposed are of appropriate deterrent value having regard to the actual, substantive wrongdoing: Reckitt Benckiser at - and ; Cement Australia at -.
As noted above, the Need to Acquire Representations were made to customers at 8,403 addresses. In each instance, the statements conveying the Need to Acquire Representations included statements regarding a pending cancellation of Optus Internet’s service at that address. Those statements about cancellation were accurate in relation to customers at 5,213 addresses, but were misleading in relation to customers at 3,190 addresses. As a result, there was a Cancellation Representation in relation to the customers at those 3,190 addresses which arose from the same conduct as comprised the Need to Acquire Representation. As such s 224(4) of the Australian Consumer Law (set out above) requires that penalties not be imposed twice for the Communications to those 3,190 addresses. I was informed at the hearing that the parties had taken this into account in the penalties proposed.
As noted above, the maximum penalty for each contravention by a company of s 29 of the Australian Consumer Law is $1.1 million. This maximum applies to each of Optus Internet’s many thousands of contraventions, notwithstanding that the parties seek the imposition of penalties on a course of conduct basis. As explained in the cases referred to above, the statutory maximum for one contravention is not converted into a maximum for the entire course of conduct; the maximum continues to apply to each contravention which forms part of the course of conduct."
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ACCC v Optus Internet Pty Limited  FCA 777.
Competition and Consumer Act 2010 (Cth), schedule 2 (Australian Consumer Law), available on TimeBase's LawOne service.
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