ACCC v AirAsia Berhad Company

Federal Court of Australia|2012-12-14|Before: Commission J, Tracey J

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the Respondent: Ms W A Harris SC and Mr E J C Heerey

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 39 of 2012

The Respondent, in trade or commerce, and in connection with the supply and possible supply of air travel services to consumers in Australia, contravened s 48(1) of the Australian Consumer Law ("ACL"): 1.1 By making representations in Australia, between 21 March 2011 and 20 January 2012, with respect to the amount, being the fare offered for the supply of air travel services: 1.1.1 For the flights between: (a) Melbourne and each of Macau, London, Ho Chi Minh City, New Delhi, Hangzou and Chengdu; (b) Perth and each of Taipei, Phuket, Osaka, London, Ho Chi Minh City and Hangzhou; and (c) Gold Coast and Ho Chi Minh City, (collectively, "the Fare Amounts"); 1.1.2 Published on www.airasia.com ("the Website") in the "Select Flights" section of the Website; 1.1.3 Which, if paid, would have constituted only a part of the minimum quantifiable consideration for the supply of those air travel services along each route as it excluded taxes, fees and other charges which the consumer was required to pay; and 1.2 Without specifying, in a prominent way and as a single figure, the single price for the supply of those air travel services along each route, being a price which included all taxes, fees and other charges which the consumer was required to pay.

Pursuant to s 224(1) of the ACL, the Respondent pay to the Commonwealth of Australia a pecuniary penalty in the sum of $200,000 in respect of the contraventions of s 48(1) of the ACL referred to in the declaration above within 21 days of this order.
If either party wishes to contend that the normal order for costs should not be made, that party file and serve short written submissions setting out the alternative order sought and the reasons therefor within seven days of the making of this order.
If either party files and serves such a submission the other party file and serve its answering submissions within 14 days of the date of this order.

THE COURT NOTES THAT: 5. The Respondent undertakes to the Court that, for a period of 3 years, whether by its servants or agents, it will not publish in Australia fares for air travel services without specifying, in a prominent way and as a single figure, the single price for the supply of those air travel services. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 39 of 2012

JUDGE: TRACEY J DATE: 14 DECEMBER 2012 PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 The respondent, AirAsia Berhad Company, carries on business as an international airline based in Malaysia which supplies air travel services to consumers located in Australia. It does so under the trade name "AirAsia" ("AirAsia"). It published on its website www.airasia.com ("the Website") the prices of airfares for travel out of or into Australia. 2 The Australian Competition and Consumer Commission ("ACCC") commenced a proceeding in the Court alleging that, in publishing on the Website, from around March - August 2011 until 21 January 2012 ("the relevant period"), the price of air travel services for certain routes without specifying in a prominent way and as a single figure the price including applicable taxes and charges, the respondent contravened s 48(1) of the Australian Consumer Law ("ACL") which appears as Schedule 2 to the Competition and Consumer Act 2010 (Cth). The ACCC seeks declarations, pecuniary penalties and publication orders in relation to the aforementioned conduct of the respondent. It does not, however, press its application for an injunction against AirAsia and has instead indicated acceptance of AirAsia's offer to give an undertaking in like terms. 3 AirAsia has admitted that its conduct, though inadvertent and due to a "systemic error", was in contravention of the ACL in the manner alleged by the ACCC. However, it has opposed the granting of some of the remedies sought by the ACCC. It submitted that that the proper aims of s 48 of the ACL would be more than adequately served by the Court granting a declaration in the terms sought by the ACCC, accepting the aforementioned undertaking and imposing penalties no greater than $110,000. 4 Further details of the relevant conduct, the circumstances in which it occurred and the remedies sought by each party are set out below.

CONTRAVENING CONDUCT 5 AirAsia published and continues to publish the Website which is directed to consumers in Australia and includes prices for flights offered from Australia to international destinations and facilities for making a booking. A separate entity, AirAsia X Sdn. Bhd. ("AirAsia X") is the company which conducts connecting flights outside of Australia. 6 The relevant prices and facilities for booking on the Website were displayed over a series of pages (together, "the Booking Sequence"). The Booking Sequence was as follows: Page 1 - the reader could search for flights corresponding to the information entered; Page 2 - the reader could select flights, a range of which were displayed with dates, times and prices and a reader could proceed to booking by selecting one of them; Page 3 - the reader, if proceeding to booking, could enter his or her own name and contact details; Page 4 - the reader could enter guest contact details; Page 5 - the reader could proceed by confirming personal details and choosing certain flight options (including, for example, in relation to meals and baggage); Page 6 - the reader could opt to select a seat or continue without selecting a seat; Page 7 - the reader was required to confirm the flights and additional services chosen (if applicable); Page 8 - the reader was informed that add-on insurance was not available for the booking; and Page 9 - the reader was able to review the booking cost, flight details and additional services before then proceeding to select the payment method. 7 On Page 2, AirAsia published fares offered to consumers ("the Fare Amounts") to supply air travel services for flights between airports at the following locations: Melbourne and each of Macau, London, Ho Chi Minh City, New Delhi, Hangzhou and Chengdu; Perth and each of Taipai, Phuket, Osaka, London, Ho Chi Minh City and Hangzou; and the Gold Coast and Ho Chi Minh City. 8 It was the publication of the Fare Amounts on Page 2 that gave rise to the contravention. This was the case because the Fare Amounts, if paid, would have constituted only part of the minimum quantifiable consideration for the supply of the relevant air travel services as they did not take account of the following additional amounts to be imposed on the consumer: for flights departing from airports inside Australia (at Melbourne, Perth and the Gold Coast): a) a charge that was referable to charges imposed under the Passenger Movement Charge Act 1978 (Cth) that would otherwise have been payable by passengers departing Australia; and b) a fuel surcharge; and for flights departing from airports outside Australia, taxes, fees, surcharges and other charges. 9 Thus, in the relevant period, and in contravention of the ACL, Page 2 of the Booking Sequence did not state a single price which was inclusive of all applicable taxes and charges. 10 Page 2 of the Booking Sequence did however contain the statement that "Fares shown EXCLUDE taxes and fees". It is also important to note that on Pages 3 - 9, the single total price of the relevant airfare was displayed, sometimes in more than one place.

THE LEGISLATION 11 Section 48 of the ACL (formerly s 53C of the Trade Practices Act 1974 (Cth) ("the TPA")), relevantly provides that: (1) A person must not, in trade or commerce, in connection with: (a) the supply, or possible supply, to another person of goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption; or (b) the promotion by any means of the supply to another person, or of the use by another person, of goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption; make a representation with respect to an amount that, if paid, would constitute a part of the consideration for the supply of the goods or services unless the person also specifies, in a prominent way and as a single figure, the single price for the goods or services. … (5) For the purposes of subsection (1), the person is taken not to have specified a single price for the goods or services in a prominent way unless the single price is at least as prominent as the most prominent of the parts of the consideration for the supply. … (7) The single price is the minimum quantifiable consideration for the supply of the goods or services at the time of the representation, including each of the following amounts (if any) that is quantifiable at that time: (a) a charge of any description payable to the person making the representation by another person (other than a charge that is payable at the option of the other person); (b) the amount which reflects any tax, duty, fee, levy or charge imposed on the person making the representation in relation to the supply; (c) any amount paid or payable by the person making the representation in relation to the supply with respect to any tax, duty, fee, levy or charge if: the amount is paid or payable under an agreement or arrangement made under a law of the Commonwealth, a State or a Territory; and the tax, duty, fee, levy or charge would have otherwise been payable by another person in relation to the supply

RELIEF 12 The ACCC seeks declaratory orders, the imposition of pecuniary penalties and an order requiring the publication of a corrective advertisement. 13 As foreshadowed at paragraph [2] above, the ACCC does not press its application for an injunction restraining AirAsia from publishing in Australia fares for air travel services without specifying, in a prominent way and as a single figure, the single price for the supply of those air travel services. Rather, it indicated in oral submissions that it will accept the undertaking offered by AirAsia in the following terms: The Respondent undertakes, for a period of 3 years, whether by its servants or agents, not to publish in Australia fares for air travel services without specifying, in a prominent way and as a single figure, the single price for the supply of those air travel services. 14 AirAsia has also consented to the granting of a declaration in the terms sought by the ACCC. However, AirAsia opposes a pecuniary penalty in the range sought by the ACCC and the making of publication orders.

Declarations 15 AirAsia acceded to the granting of a declaration in the following terms sought by the ACCC:

The Respondent, in trade or commerce, and in connection with the supply and possible supply of air travel services to consumers in Australia, contravened s 48(1) of the ACL: 1.1 By making representations in Australia, between 21 March 2011 and 20 January 2012, with respect to the amount, being the fare offered for the supply of air travel services: 1.1.1 For the flights between: (a) Melbourne and each of Macau, London, Ho Chi Minh City, New Delhi, Hangzou and Chengdu; (b) Perth and each of Taipei, Phuket, Osaka, London, Ho Chi Minh City and Hangzhou; and (c) Gold Coast and Ho Chi Minh City, (collectively, "the Fare Amounts"); 1.1.2 Published on www.airasia.com ("the Website") in the "Select Flights" section of the Website; 1.1.3 Which, if paid, would have constituted only a part of the minimum quantifiable consideration for the supply of those air travel services along each route as it excluded taxes, fees and other charges which the consumer was required to pay; and 1.2 Without specifying, in a prominent way and as a single figure, the single price for the supply of those air travel services along each route, being a price which included all taxes, fees and other charges which the consumer was required to pay. 16 The Court has the power to make declarations under s 21 of the Federal Court of Australia Act 1976 (Cth). Any declaratory order made in the exercise of this power must be directed to quelling legal controversy between parties. The applicant must have a real interest in obtaining the relief sought: see Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-2. There must also be a proper contradictor: see Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437-8. 17 Each of these requirements is satisfied in the present proceeding. A dispute has existed between the parties as to whether or not AirAsia has engaged in contraventions of s 48(1) of the ACL. The ACCC is a public body which had power under the ACL to bring enforcement proceedings. Declaratory proceedings of the kind proposed serve the public interest by making it plain that conduct such as that admitted by AirAsia contravenes the ACL: see ACCC v Midland Brick Company Pty Ltd (2004) 207 ALR 329 at 333; Rural Press Limited v Australian Competition and Consumer Commission (2003) 216 CLR 53 at 91. 18 In Forster Gibbs J (with whom McTiernan, Stephen and Mason JJ agreed) adopted Lord Dunedin's description of a proper contradictor (in Russian Commercial and Industrial Bank v British Bank for Foreign Trade Limited [1921] 2 AC 438 at 448) as "one presently existing who has a true interest to oppose the declaration sought": see at 437-8. In ACCC v MSY Technology Pty Ltd (No 2) (2011) 279 ALR 609 Perram J added a requirement that the proper contradictor must not only be a party but must argue against the granting of relief: see at [32]. This added requirement would mean that a respondent, such as AirAsia, which reaches agreement with the ACCC as to the appropriate orders, could not be treated as a proper contradictor in respect of any declaratory relief on which the parties had agreed. 19 In ACCC v Sampson [2011] FCA 1165 at [13]-[15] I explained my reasons for concluding that a respondent who consents to the making of declarations may, nevertheless, be a proper contradictor in the sense described in Forster. I adhere to the views which I there expressed. 20 In the present case AirAsia is a "proper contradictor" because it has a genuine interest in resisting the grant of relief. Its interest is to be distinguished from its willingness, as a litigant, to compromise the proceeding. A party may well have an interest in avoiding the making of an order by a Court but be prepared to consent to the making of that order in order to avoid the possibility that, if a trial were to proceed, the Court might be persuaded by the applicant to make findings and orders that would fall more onerously on the respondent. 21 The agreed terms of the proposed declaration contain admissions, by AirAsia, of conduct which contravenes s 48 of the ACL. The admissions are supported by uncontradicted evidence which was tendered by AirAsia. The proposed declarations accurately describe the contravening conduct and should be made.

Pecuniary Penalty 22 The ACCC seeks the imposition of a pecuniary penalty on AirAsia in respect of its contravention of s 48 of the ACL in the relevant period. The ACCC submitted that the penalty imposed should be between $520,000 and $650,000. AirAsia submitted that the imposition of a penalty in the range sought would be "extremely disproportionate" and suggested the figure of $110,000. 23 The power to impose such a penalty in respect of each "act or omission" is provided for under s 224 of the ACL. Importantly, ss 224(4)(b) provides that a person is not liable for more than one pecuniary penalty in respect of the same conduct. The Court must determine, therefore, as a threshold issue, the number of acts or omissions involved in the present case. The ACCC submitted that the contravening conduct was comprised of 13 distinct acts or omissions. Air Asia, by contrast, submitted that a single course of conduct was involved. 24 The ACCC referred to Singtel Optus Pty Ltd v ACCC (2012) 287 ALR 249 ("Singtel") in which the Full Court of this Court found that the deployment of advertisements for broadband data plans in 11 different mediums constituted 11 categories of contravention as opposed to the 5 contended for by the appellant. In that case it was noted that different conduct was involved in each of the 11 categories of contravention - whilst the 11 advertisements used a single strategy, that strategy was implemented in different ways each time. The Court commented (at 262) that it was "simply not the case that the same conduct gave rise to all the contraventions … different conduct was involved in each category of contravention". 25 In my view, the circumstances of the present case are distinguishable from those considered in Singtel. AirAsia adduced affidavit evidence, which was unchallenged by the ACCC, that the contravening pricing display in respect of each of the 13 routes arose out of a single error made by a senior flight scheduler employed by AirAsia who failed adequately to instruct the junior flight schedulers responsible for uploading the Fare Amounts. Indeed, it seems to me that publication of the contravening Fare Amounts with respect to each of the 13 routes arose out of what Lockhart J referred to in the case of Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd (1980) 44 FLR 149 at 176 as "the same episode". Lockhart J further observed that "[a]lthough it is necessary to look at each contravention separately, nevertheless consideration must be given to the facts common to each contravention". In my view the present case is one where the facts common to each of the contraventions, being the failure of AirAsia's senior flight scheduler to instruct junior flight schedulers appropriately, are such as to indicate the existence of a single course of conduct. 26 Such an approach would be consistent with that taken in ACCC v Marksun Australia Pty Ltd [2011] FCA 695. There Gilmour J found (at [71]-[81]) that the publication of combinations of words and images suggesting that certain products were made in Australia, over numerous websites and at varying points in time, constituted a two courses of conduct even though "multiple contraventions comprise[d] each of those courses of conduct". Similarly, in ACCC v EDirect Pty Ltd [2012] FCA 976, Reeves J found (at 34 [74]) that some 438 contraventions of the relevant sections of the TPA, were "part and parcel of the one course of conduct" notwithstanding the fact that the impugned representations had been made over a period of five months to 219 telemarketing customers. 27 There are a number of other considerations relevant to the fixing of an appropriate penalty for contravention of the ACL to which I will now turn.

Mandatory considerations 28 Section 224(2) of the ACL stipulates that, in determining an appropriate penalty, the Court must have regard to all relevant matters including: c) 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 d) the circumstances in which the act or omission took place; and e) whether the person has previously been found by a court to have engaged in any similar conduct.

Nature and extent of the act or omission 29 The ACCC submitted that the contravening conduct was serious as it failed to "do exactly what s 48 required" and was "undertaken in a medium of mass communication, in the context of sales and marketing material, and with facility to proceed directly to capture a sale". The ACCC submitted that the extent of the contravening conduct was substantial as it spanned a period of 6 - 10 months during which 16,389 bookings were made. It also submitted that no credit or weight should be given to the statement on Page 2 that the Fare Amount did not include taxes and charges, or to the disclosure of the single price on the pages subsequent to Page 2 which would be viewed by a consumer proceeding to booking. 30 AirAsia countered that, whilst the purpose of s 48 of the ACL is to provide consumers with the protection that they be able readily to identify the price they will pay for a product or service, weight should be given to the "prominent and proximate" nature of the statement that "Fares shown EXCLUDE taxes and fees". Air Asia also emphasised the importance of the disclosure of a single price on Pages 3 - 9 of the Booking Sequence. In light of the fact that the consumer could not avoid viewing Pages 3 - 9 of the Booking Sequence in making a booking, AirAsia submitted that the Court should consider the whole of the booking process rather than Page 2 in isolation. 31 I accept that it is necessary to have regard to the entire booking process and to the fact that, having completed it, a consumer would have become aware of the full price to be paid before committing him or herself to a purchase. It is also relevant that, on Page 2, the potential customer was advised that the fares there quoted excluded taxes and fees. These considerations do not, however, weigh heavily in mitigation. The principal vice to which s 48 is directed is the seductive effect of a quoted price which is lower than the actual amount which the consumer will have to pay in order to receive the relevant service. Unless the full price is prominently displayed the consumer may well be attracted to a transaction which he or she would not otherwise have found to be appealing and grudgingly pay the additional imposts rather than go to the trouble of withdrawing from the transaction and looking elsewhere. The company which is seeking to attract business in contravention of s 48 will also obtain an advantage over competitors who are compliant. The relevant errant conduct continued over many months and had the potential to influence thousands of bookings.

Amount of loss or damage suffered 32 The ACCC submitted that, although the amount of loss or damage suffered cannot be quantified, it is reasonable to conclude that at least some consumers may have suffered loss by proceeding with a booking and either: (a) not appreciating the addition of taxes; or (b) having been caught in the marketing web, proceeding in circumstances where another airline offered a cheaper total price; or (c) having been discouraged from proceeding in the absence of disclosure of a single price, making a booking with another airline at a higher total price. 33 The ACCC also contended that it is reasonable to conclude that competitors of AirAsia were denied the opportunity to trade with consumers who were misled into dealing with AirAsia and accordingly suffered loss of custom. 34 AirAsia denied that loss or damage was suffered by consumers or competitors in the manner asserted. It pointed to the fact that it would be difficult for a consumer to complete the booking process without being informed of the actual total price for each flight having viewed Pages 3 - 9 of the Booking Sequence in light of the fact that those Pages all displayed the total single price as the most prominent figure. AirAsia also submitted that no evidence was provided by the ACCC as to consumer loss nor, for that matter, any evidence that competitors of AirAsia suffered loss of custom. 35 I am not persuaded by the ACCC's submissions in relation to consumer loss or damage. There is nothing before the Court that evidences any consumer dissatisfaction, nor is there any evidence of other fares offered by other airlines on competing routes during the relevant period. 36 A lack of evidence of loss or damage to consumers is generally to be considered a mitigating factor in fixing a penalty. In Singtel (at 264 [58]), the Full Court confirmed the reasoning of Perram J in MSY Technology. In that case, his Honour stated at (627 [79]) that: "In cases where, as here, it is easy to imagine detriment to consumers I would accept that the absence of any evidence of suggested harm should be regarded as a mitigating factor. The reason for this is no more than commonsense: if harm is likely to have been suffered by reason of the contravening conduct but no evidence is led which suggests that it was, the respondent is entitled to be sentenced on the basis that the conduct has not caused harm which, plainly enough, will be a mitigating circumstance." 37 I am also not persuaded by the ACCC's argument in relation to loss of custom by AirAsia's competitors. The ACCC referred to the decision of Murphy J in ACCC v TPG (No.2) [2012] FCA 629 where, (at [90]), his Honour inferred that some consumer traffic must have come to the respondent in that case from its competitors as a result of the contravening conduct. The inference was drawn on the basis of evidence of the magnitude of growth of TPG's subscriber numbers. There is no evidence which would support such inferences in the present case. 38 I am prepared to accept that the absence of evidence establishing that any consumer or competitor suffered any economic loss as a result of AirAsia's contravention of s 48 is a factor to be taken into account in its favour in fixing a pecuniary penalty.

Circumstances in which the act or omission took place 39 The ACCC submitted that, when the contravening conduct relevant to this proceeding occurred, the ACCC had already raised concerns with AirAsia as to compliance with s 48 of the ACL. It was also submitted that AirAsia's evidence as to oversight did not fully explain the entire period of contraventions. 40 AirAsia submitted that, in light of the fact that the failure to display "all-in" pricing on the Website arose out of an inadvertent error, and in "non-aggravating circumstances", the ACCC's submissions on this point lacked cogency. 41 AirAsia had been alerted to the requirements of s 48 not long before the present contravention occurred. It should, as a result, have been exercising particular vigilance to ensure that, in its dealings with the public, it prominently displayed the "single price" for all of its flights. Whilst inadvertence may have been the underlying cause of the contravention (a matter to which I will return) this only serves to confirm that AirAsia failed to put in place the processes which were necessary in order to ensure that it complied with its statutory obligations.

Previous contraventions 42 The ACCC pointed to the fact that AirAsia had been required to amend the Website for the same kind of non-compliance only weeks or months before the contravening conduct in this case. The ACCC conceded, however, that there were no previous determinations by a court of a contravention of the ACL by AirAsia. 43 What I have said above at [41] is also relevant to this consideration. The absence of any previous curial findings that AirAsia had contravened the ACL is, however, a matter to be weighed in its favour.

Size, financial position and industry position 44 The ACCC contended that the Court should ensure that the significance of the penalty imposed is not diminished by the size and financial strength of AirAsia, referring to ACCC v Leahy Petroleum (No 3) (2005) 215 ALR 301 where Goldberg J stated (at [39]) that: "The penalty imposed must be substantial enough that the party realises the seriousness of its conduct and is not inclined to repeat such conduct. Obviously the sum required to achieve this object will be larger where the Court is setting a penalty for a company with vast resources." 45 AirAsia responded that the authorities which suppport the principle that the appropriate penalty should reflect, in a substantial way, the profitability of the contravening conduct and the size of the errant company involved calculated misleading or deceptive conduct or collusive price fixing: see Singtel at 265 [62]; ACCC v AAB Transmission and Distribution Limited (2001) ATPR 41-815 at 42,937; Leahy Petroleum at 309 [45]-[46]; ACCC v Qantas Airways Ltd (2008) 253 ALR 89 at 106 [21]. Those authorities are to be contrasted with cases such as the present, AirAsia argued, where the contravening conduct was inadvertent. 46 AirAsia argued that, in any event, the penalty which it suggested would be sufficient to strip it of any profit from any of the routes in question during the relevant period. 47 As already noted, this is not a case in which the ACCC has been able to demonstrate that a respondent has profited from its misconduct. Had it been able to do so, that would have been an aggravating factor. Whilst, in some cases, the size and the economic resources of a respondent company may be a factor which is properly brought into account in fixing a pecuniary penalty, this is not one of them. What Goldberg J said in Leahy Petroleum is, with respect, plainly correct. His Honour's observations cannot, however, be understood as supporting the broad proposition for which the ACCC contends. The statutory context suggests otherwise. The Parliament has provided for the imposition of pecuniary penalties for contraventions of s 48 and other provisions of the ACL. It has prescribed statutory maxima for the penalties which may be imposed on individuals and on corporations. Whilst it is necessary to ensure that the quantum of any penalty fairly reflects the gravity of the misconduct involved, it must always be borne in mind that the maximum available penalty is reserved for the hypothetical worst form of misconduct. That maximum penalty will not be imposed on even a large and wealthy multi-national corporation unless warranted by the nature of its conduct. This will be so even if the maximum penalty would have little economic impact on the company. Goldberg J is to be understood as saying no more than that the more serious the misconduct the higher should be the penalty within the available range. Where a company has vast resources it may be necessary to impose a higher penalty than would be imposed on a smaller entity in order to ensure that the respondent will not be prepared to look on the risk of a pecuniary penalty as a mere business cost. In fixing a penalty for AirAsia, its size and market position are factors which are not to be ignored but which are not to be accorded the same weight as the objective seriousness of the company's misconduct.

Deliberateness of the contravention 48 The ACCC accepts that the contravening conduct was inadvertent rather than reckless or deliberate but submits that AirAsia should have taken steps to ensure that the Website was compliant with the ACL. Thus, the ACCC submits, the inadvertent nature of the contravention does not "warrant any discount". 49 AirAsia put, however, that this should be taken into account as a significant mitigating factor on the question of penalty, and referred to the cases of ACCC v Global One Mobile Entertainment Limited [2011] FCA 393 at [107]-[112] and MSY Technology at 624-5 [68]-[73]. 50 Whilst these cases show that the deliberateness of a contravention is relevant in fixing a penalty (see Global One Mobile at [109] and MSY Technology at 624 [69]) they do not support the proposition that inadvertence is a mitigating factor. Like many of the other consumer protection provisions of the ACL, s 48 can be contravened without any intention to do so on the part of the contravening company. In CPA Australia Ltd v Dunn (2007) 74 IPR 495 at 500-1 [27], in the context of s 52 of the TPA, Weinberg J commented that: "The question whether a representation made by a person to the public, or a section of it, would be likely to mislead or deceive must be answered without regard to whether that person intends to mislead or deceive. It is not a question of whether, if the person makes these representations, he or she would be acting honestly and reasonably. It is simply a question of whether potential members of the class to whom the representations are to be addressed (which include the astute and the gullible, the intelligent and the not so intelligent, and the well educated and the poorly educated) are at serious risk of being misled or deceived." See also .au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) 207 ALR 521 at [12]. 51 As a result, it is not, in my view, appropriate to treat inadvertence as a mitigating factor in fixing a penalty. A deliberate contravention of such a provision may, on the other hand, properly be regarded as an aggravating factor.

Level at which contravention occurred 52 The ACCC submitted that, although junior employees carried out the programming which resulted in the failure to display a single price, the relevant failing was the inadequate delegation and supervision by "more senior operational personnel and management". 53 AirAsia contended that the ACCC's approach failed to advert to the question of whether or not the contravention occurred with the knowledge, involvement or approval of senior management, a factor which has often been considered by this Court to be relevant in fixing penalties: see Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41-375 at 40,167, MSY Technology Pty Ltd at 629 [91], Global One Mobile at [130]. AirAsia also contended that there was no evidence upon which the Court could reasonably conclude that AirAsia did not have a corporate culture conducive to compliance with the ACL. 54 The evidence does not suggest that AirAsia was unmindful of its obligations under the ACL or that there were any of its policies or practices which encouraged or turned a blind eye to non-compliance. The senior manager who accepted principal responsibility for the present contravention was well aware of the requirements of s 48. He gave instructions to his subordinates which were intended to result in the appropriate "single price" appearing on Page 2 of the website. His instructions were not sufficiently explicit. His subordinates, who were, unlike him, not fully conversant with the statutory requirements, sought to comply with the instructions they had been given. Despite them acting bona fide the fares appearing on Page 2 were not the total amount that the customer was required to pay in order to be able to purchase a ticket. The senior manager did not supervise the work of his subordinates; nor did he check the revisions to Page 2 to make sure that his instructions had been complied with. The evidence goes no further than to establish that errors of the kind just essayed were responsible for the contravention. It does not support findings of any wider cultural deficiencies within the company.

Cooperation 55 The ACCC pointed in written submissions to the fact that AirAsia initially filed a Fast Track Response defending the proceeding and subsequently, by a letter to the Court, indicated that it would not contest liability. 56 AirAsia submitted that it was not unreasonable for it to contest liability initially and that, in any event, it took immediate action to ensure that all fares from Australia were displayed on the Website as a single price. It also highlighted the fact of its making of open offers to the ACCC to resolve the question of penalty, its submission to the jurisdiction of this Court so as to avoid the cost of effecting formal service in Malaysia and its voluntary provision of documents and information to the ACCC. 57 Notwithstanding its initial inclination to defend the proceeding, AirAsia subsequently conceded liability and facilitated a speedy hearing of the ACCC's application. AirAsia was prepared to agree to declaratory orders being made and to the terms of those orders. It expressed a willingness to give undertakings to the Court as to its future conduct thereby rendering injunctive orders unnecessary. It accepted that a pecuniary penalty was appropriate but, as it was entitled to do, it contested the amount of that penalty. There is no suggestion that AirAsia was other than cooperative with the ACCC during the investigative phase of the matter.

Deterrence 58 The ACCC submitted that the Court should take account of specific deterrence as well as general deterrence as companies conducting mass publication of prices on the internet, in the airline industry and more broadly, should not have any commercial incentive to engage in conduct in contravention of the ACL. 59 AirAsia relied on the reputational harm which it had already suffered as a result of the manner in which the current proceedings have been portrayed in the media. It referred, for example, to a media release by the ACCC with the headline "ACCC Takes Action Against AirAsia for Misleading Pricing". That media release also stated that the ACCC was seeking an injunction to restrain AirAsia from engaging in "misleading conduct" in the future. 60 Both specific and general deterrence loom large in most cases under the ACL in which pecuniary penalties are sought for contraventions of consumer protection provisions. The present case is no exception. AirAsia appears to have accepted this. It has, however, sought to plead reputational damage in mitigation. I am prepared to accept that public statements, made by the ACCC at the time at which this proceeding commenced, suggested that (as has now been found) AirAsia had contravened the ACL and that this had been harmful to AirAsia's reputation. The declaratory order to which AirAsia has consented will be no less harmful to that reputation. The harm has been occasioned by AirAsia's failure to comply with its statutory obligations. Any mitigatory affect of adverse publicity on the fixing of a pecuniary penalty is, at best for AirAsia, minimal.

Appropriate Penalty 61 In all the circumstances I consider that the appropriate pecuniary penalty to be imposed on AirAsia is $200,000.

Publication Orders 62 In its fast track application, the ACCC sought orders that AirAsia, pursuant to s 246 of the ACL: "1.1 within 10 days, cause to be published on the homepage of each website which it controls that is accessible by consumers in Australia and which relates to bookings for air travel services (including www.airasia.com) a notice in the terms [appearing in an annexure to the order]; and 1.2 use its best endeavours to ensure that such a notice: 1.2.1 appears immediately upon access by a person in Australia on the computer screen; 1.2.2 appears in an automatically generated active pop-up window or message box whereby a person is required to interact with the window or message box to close it, provided it need only appear once during a user's session; 1.2.3 initially appears in a square shaped pop-up window or square shaped message box that: (a) shows a banner at the top with the words "CORRECTIVE NOTICE" appearing in upper case bold, 100 percent black, times new roman typeface, not less than 18 point or 24 pixels; (b) shows a prominent sub heading with the words "PUBLISHED BY ORDER OF THE FEDERAL COURT OF AUSTRALIA" and "FAILURE TO SPECIFY SINGLE PRICE" centred in bold, 100 percent black, times new roman typeface, not less than 34 point or 45 pixels; (c) has a white background; (d) has a border in 100 percent black with a minimum width of 2 points that is no less than 8 pixels from the text it contains; (e) is located: (i) vertically, at the top of the computer screen; (ii) horizontally, in the centre of the screen; 1.2.4 remains on screen until closed by the person accessing that website; 1.2.5 opens out to a full screen window or message box when the person accesing that website moves the cursor over the window or message box; 1.2.6 when opened out to a full screen window or message box, displays the body of the text in 100 percent black typeface of at least 14 point times new roman typeface or 19 pixels on a white background and justified left; 1.2.7 has a baseline text at least 14 point times new roman typeface and centred below the body of the text; 1.2.8 cannot be closed unless the person accessing that website hovers the cursor over a pop-up button marked with the word "close" or a capital letter "X"; and 1.2.9 is maintained on the websites for 90 days from when the notice is published; and 1.3 within 104 days, provide the ACCC with written evidence of its compliance with subparagraph [1.2] above." 63 The proposed notice records the requirements of s 48 of the ACL, the manner in which AirAsia contravened the provision and invites the reader to contact AirAsia "for further information". 64 Section 246 of the ACL relevantly provides that: "246 Non-punitive orders (1) A court may, on application of the regulator, make one or more of the orders mentioned in subsection (2) in relation to a person who has engaged in conduct that: (a) contravenes a provision of Chapter 2, 3 or 4; or (b) constitutes an involvement in a contravention of such a provision. (2) The court may make the following orders in relation to the person who has engaged in the conduct: (a) … (b) … (c) an order requiring the person to disclose, in the way and to the persons specified in the order, such information as is so specified, being information that the person has possession of or access to: (d) an order requiring the person to publish, at the person's expemse and in the way specified in the order, an advertisement in the terms specified in, or determined in accordance with, the order. … (3) This section does not limit a court's powers under any other provision of this Schedule." 65 It is clear that Court's power to make publication orders under s 246 is intended to be "protective and not punitive": see Hospitals Contribution Fund Australia Ltd v Switzerland Australia Health Fund Pty Ltd (1988) ATPR 40-834 at 49,005 and ACCC v Virgin Mobile Australia Pty Ltd (No.2) [2002] FCA 1548 at [22]. In the latter case, French J (as his Honour then was) further explained that: " … it is important that such advertisements are seen to do more than merely announce a 'win' for the ACCC and the contrition of the respondent." 66 The ACCC accepted, in light of these decisions, that the Court may not be able to make the order it sought under s 246. As a result of this the ACCC applied for, and was granted, leave to amend the application to include additional reliance on s 247 of the ACL which deals with adverse publicity orders and clearly contemplates the punishment of a contravention: TPG Internet at 46 [156]. 67 Section 247 of the ACL, headed "[a]dverse publicity orders", provides that: "(1) A court may, on application of the regulator, make an adverse publicity order in relation to a person who: (a) has contravened a provision of Part 2‑2 or Chapter 3; or (b) has committed an offence against Chapter 4. (2) An adverse publicity order in relation to a person is an order that requires the person: (a) to disclose, in the way and to the persons specified in the order, such information as is so specified, being information that the person has possession of or access to; and (b) to publish, at the person's expense and in the way specified in the order, an advertisement in the terms specified in, or determined in accordance with, the order. (3) This section does not limit a court's powers under any other provision of this Schedule." 68 The ACCC submitted that an order for publication of the website notice would serve to mark the failure of AirAsia to disclose the single price as well as the "misleading impression conveyed as a result". It was contended that such an order would be appropriate having regard to length of the period over which the contravening conduct occurred and its function in raising consumer awareness of conduct that breaches the ACL. 69 AirAsia submitted that corrective advertising is not necessary to further punish the contravening conduct, especially where there is acceptance of the need for a pecuniary penalty and declaratory orders highlighting the occurrence and the nature of the contraventions, and where an undertaking in the form outlined at [13] above has been proffered. It was further submitted that the purposes of deterring future contraventions and encouraging compliance would not be served by publication orders in this case as there was no possibility of future contraventions by AirAsia and the aim of deterrence would be amply satisfied by the aforementioned uncontested forms of relief. 70 Section 247 of the ACL superseded s 86D of the TPA. It was introduced to enable the Court to order corrective advertising in circumstances where, to do so, might be regarded as punitive thereby preventing orders being made under the precursor to s 246, which was s 86C of the TPA. The explanatory memorandum for the Bill that introduced s 86D referred to a report by the Australian Law Reform Commission which had concluded that corrective advertising orders might be appropriate in some cases as an alternative to the imposition of a pecuniary penalty: see the Explanatory Memorandum to the Trade Practices Amendment Bill (No 1) 2000 (Cth), item 24. 71 Some uncertainty attends the use of the adjective "punitive" in relation to ss 246 and 247 of the ACL. The powers granted to the Court by s 246(2)(d) and s 247(2)(b) are identical. Normally, any order made under either provision would be punitive in effect because it would require a respondent to undertake the expense of placing advertisements which publicly acknowledge wrong-doing on the part of the respondent. The distinction between an exercise of power under ss 246(2)(d) and 247(2)(b) would, therefore, appear to be the purpose for which the power is exercised. If the purpose of the order is, for example, to alert consumers to breaches of the ACL, and to inform them of any remedy they might have if they have been adversely affected by the contravention, the order could be made under s 246. If, however, a purpose of making the order is to punish the respondent for the contravention, the Court would have to act under s 247. 72 It may be appropriate to grant an order under s 247 for punitive purposes when other relief is not to be granted. In the present case a substantial pecuniary penalty is to be imposed on AirAsia. In addition there will be declarations recording its contraventions of the ACL and it has given an undertaking which, for practical purposes, will bind it in the same manner as would an injunction granted by the Court. The contravening conduct has long since stopped and any repetition will render AirAsia liable to further penalties. 73 In these circumstances I do not consider that a further punitive order of the kind sought is warranted. In considering s 86D of the TPA, this Court has exercised caution in acceding to the publication of punitive orders: see ACCC v Dataline.net.au Pty Ltd (2006) 236 ALR 665 at 691 [104]. It is also to be noted that the Court has often been reluctant to make orders for corrective advertising where injunctive or declaratory relief has been granted (see ACCC v Kaye [2004] FCA 1363 at [205]) or where the objectives of corrective advertising have been addressed by media reports (see ACCC v Telstra Corp Ltd [2007] FCA 2058 at [5]). 74 In my view the current circumstances do not warrant the making of adverse publicity orders.

COSTS 75 Counsel asked for the opportunity to make submissions in relation to costs after my reasons for making other orders had been published. My orders will therefore provide for the making of written submissions should either party wish to contend that the normal order for costs should not be made. I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey.

Trade Practices Act 1974(Cth)

At a glance

Court

Decision date

Before

Source

Judgment (28 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (20)