Federal Court Orders Optus Pay $1.5 Million Penalty: ACCC v Optus Internet Pty Ltd [2018] FCA 777

“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.”

• Section 18(1): “A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
• Section 29(1): “A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
• (l)  make a false or misleading representation concerning the need for any goods or services; or
• (m)  make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2)”

“From 27 October 2015 to 3 March 2017, Optus Internet Pty Limited (Optus Internet), in trade or commerce:

1. engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law (ACL), being Sch 2 to the Competition and Consumer Act 2010 (Cth); and
2. in connection with the supply or possible supply of services, and the promotion of the supply or use of services, made false or misleading representations concerning the existence of any right, in contravention of s 29(1)(m) of the ACL,

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:

1. engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL; and
2. in connection with the supply or possible supply of services, and the promotion of the supply or use of services, made false or misleading representations concerning the need for services, in contravention of s 29(1)(l) of the ACL,

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.”

1. that Optus Internet would disconnect the customer’s service on a particular date or during a particular period, implicitly representing that it had the right to cancel the customer’s service or services on the date or within the specific period identified (the Cancellation Representations);
2. that, as a result of the pending disconnection of the customer’s service, the customer would need to acquire National Broadband Network (NBN) based services from Optus Internet in order to receive home telephone and/or internet services (the Need to Acquire Representations)

1. Optus Internet admits that, by making the Cancellation Representations and the Need to Acquire Representations, Optus Internet engaged in conduct in trade or commerce that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law.
2. Optus Internet admits that, by making the Cancellation Representations, Optus Internet made false or misleading representations that it had the right to cancel customers’ services on the dates or within the timeframes specified, in contravention of s 29(1)(m).
3. Optus Internet admits that, by making the Need to Acquire Representations, Optus Internet made false or misleading representations that customers needed to acquire NBN based services from Optus Internet in order to receive home telephone and/or internet services, in contravention of section 29(1)(l).

1. $1 million in respect of the contraventions of s 29(1)(m) of the Australian Consumer Law that are the subject of the first declaration; and
2. $500,000 in respect of the contraventions of s 29(1)(l) that are the subject of the second declaration.

"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:

1. the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission; and
2. the circumstances in which the act or omission took place; and
3. whether the person has previously been found by a court in proceedings under Ch 4 or Pt 5-2 of the Australian Consumer Law to have engaged in any similar conduct.

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):

1. a proceeding may be instituted under this Schedule [ie, the Australian Consumer Law] against a person in relation to the contravention of any one or more of the provisions; but
2. a person is not liable to more than one pecuniary penalty under this section in respect of the same conduct."

"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 [139]-[145] and [157]; Cement Australia at [425]-[428].

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."