Australian Competition and Consumer Commission v amaysim Energy Pty Ltd - [2019] FCA 430 - FCA 2019 case summary — Zoe

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Australian Competition and Consumer Commission v amaysim Energy Pty Ltd

[2019] FCA 430

Federal Court of Australia|2019-03-26|Before: Middleton J

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At a glance

Source facts

Court

Federal Court of Australia

Decision date

2019-03-26

Before

Middleton J

Catchwords

Number of paragraphs: 53

Source

Original judgment source is linked above.

Catchwords

Number of paragraphs: 53

Judgment (38 paragraphs)

[1]

In these orders, the expression "relevant plans" means: (a) Click Topaz Electricity (Victoria); (b) Click Shine Electricity (Victoria); (c) Click Shine Bonus (Victoria); (d) Click Business Prime (Victoria); (e) Click Magenta Gas (Victoria); (f) Click Topaz Electricity (Queensland); (g) Click Shine Electricity (Queensland); (h) Click Shine Budget Electricity (Queensland); (i) Click Shine Extra (Queensland); and (j) Click Business Electricity (Queensland).

[2]

Discount representations 2. Between 1 October 2017 and around March 2018, the Respondent (Click Energy), in trade or commerce, in connection with the supply or possible supply of energy or in connection with the promotion of the supply of energy to consumers: (a) made false or misleading representations that the supply of energy under the relevant plans had benefits in contravention of section 29(1)(g) of the Australian Consumer Law (ACL); (b) made false or misleading representations with respect to the price of energy under the relevant plans in contravention of section 29(1)(i) of the ACL; and (c) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the ACL, by making statements on the Click Energy website that consumers who signed up to the relevant plans in Victoria and Queensland would obtain a significant discount off their usage and supply charges for paying their bills by the due date when in fact: (d) the relevant percentage discount was calculated based on Click Energy's market offer rates which, for the relevant plans, were higher than Click Energy's standing offer rates; and (e) when compared with Click Energy's rates for standing offers also available to consumers, the effective discounts on the relevant plans were much smaller than promoted and some consumers effectively received no discount.

[16]

Compliance Review 12. Click Energy shall, at its own expense, within three months of the date of the Court Order, cause an annual review of the Compliance Program (the Review) to be carried out in accordance with each of the following requirements: (a) Scope of Review: the Review should be broad and rigorous enough to provide Click Energy and the ACCC with: (i) a verification that Click Energy has in place a Compliance Program that complies with each of the requirements detailed in paragraphs 1-11 above; and (ii) the Compliance Reports detailed at paragraph 13 below. (b) Independent Reviewer - Click Energy will ensure that each Review is carried out by a suitably qualified, independent compliance professional with expertise in competition and consumer law (the Reviewer). The Reviewer will qualify as independent on the basis that he or she: (i) did not design or implement the Compliance Program; (ii) is not a present or past staff member or director of Click Energy; (iii) has not acted and does not act for, and does not consult and has not consulted to, Click Energy in any competition and consumer law matters, other than performing Reviews under this Court Order; and (iv) has no significant shareholding or other interest in Click Energy. (c) Evidence - Click Energy will use its best endeavours to ensure that each Review is conducted on the basis that the Reviewer has access to all relevant sources of information in Click Energy's possession or control, including without limitation: (i) the ability to make enquiries of any officers, employees, representatives, and agents of Click Energy; (ii) documents relating to the Risk Assessment, including the Risk Assessment Report; (iii) documents relating to Click Energy's Compliance Program, including documents relevant to Click Energy's Compliance Policy, Complaints Handling System, Staff Training and induction program; and (iv) any reports made by the Compliance Officer to the Board or senior management regarding Click Energy's Compliance Program. (d) Click Energy will ensure that a Review is completed within one year from the date of this Court Order, and that a subsequent Review is completed within each year for three years.

[22]

INTRODUCTION 1 On 26 March 2019, the Court made orders in this proceeding (the 'Orders'). These are the reasons for the Orders. 2 In the proceeding before me, the applicant, the Australian Competition and Consumer Commission (the 'ACCC'), claims that the respondent, amaysim Energy Pty Ltd (trading as Click Energy) ('Click Energy'), engaged in misleading and deceptive conduct and made false or misleading representations in respect of the discounts and savings that a consumer could expect to receive on the price paid for electricity or gas if that consumer commenced an energy plan with Click Energy in contravention of ss 18, 29(1)(g), 29(1)(i) and 29(1)(m) of the Australian Consumer Law ('ACL') being Sch 2 to the Competition and Consumer Act 2010 (Cth) (the 'CCA'). 3 The parties have now reached agreement as to the terms on which they seek to resolve this proceeding and on 20 March 2019, jointly filed the following documents: (1) an agreed statement of facts and admissions setting out the facts agreed between the parties and the admissions made by Click Energy, a copy of which is annexed to these reasons (the 'Agreed Statement of Facts and Admissions'); (2) agreed minute of proposed declarations and orders setting out the relief (including as to penalty) which the parties submit is appropriate (the 'Proposed Declarations and Orders'); and (3) submissions jointly prepared by solicitors for the parties in support of the Proposed Declarations and Orders. 4 First, in the Agreed Statement of Facts and Admissions, Click Energy has admitted for the purposes of this proceeding that it has, in trade or commerce, in connection with the supply or possible supply of energy or in connection with the promotion of the supply of energy to consumers: (1) engaged in misleading or deceptive conduct, or conduct that was likely to mislead or deceive, in contravention of s 18 of the ACL; (2) made false or misleading representations that the supply of energy under the relevant plans had benefits in contravention of s 29(1)(g) of the ACL; (3) made false or misleading representations with respect to the price of energy under the relevant plans in contravention of s 29(1)(i) of the ACL; and (4) made false or misleading representations with respect to the conditions relating to the supply of energy under the relevant plans in contravention of s 29(1)(m) of the ACL. 5 Second, the Proposed Declarations and Orders provide for: (1) declarations to be made pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) (the 'Federal Court Act') in relation to the admitted contraventions of the ACL; (2) an order for payment by Click Energy of a pecuniary penalty of $900,000 pursuant to s 224 of the ACL; (3) corrective publication orders pursuant to ss 246(2) and 247(1) of the ACL; (4) an order for the review and amendment of Click Energy's compliance program pursuant to s 246(2) of the ACL; and (5) payment by Click Energy of the ACCC's costs in an amount as agreed ($50,000) pursuant to s 43 of the Federal Court Act. 6 And third, the parties' joint submissions have formed the basis for the following reasons which explain why I was prepared to make the Orders, which are in substantially the same form as the Proposed Declarations and Orders filed by the parties.

[26]

Discount representations 18 Between 1 October 2017 and around March 2018, Click Energy made statements on the Click Energy website that consumers who signed up to the relevant plans in Victoria and Queensland would obtain a significant discount off usage and supply charges for paying their bills by the due date (the 'Discount Statements'). Example Discount Statements made on the Click Energy website for a selection of postcodes in which the relevant plans were available are identified in column B of Annexure A to the Agreed Statement of Facts and Admissions (ranging from 7% to 29%). 19 Screenshots of the Discount Statements appearing on the Click Energy website for the 'Click Topaz' and 'Click Magenta' plans as at 22 November 2017 are contained in Annexure B.1 to the Agreed Statement of Facts and Admissions. Example screenshots of the Discount Statements appearing on the 'Find a Plan' page of the Click Energy website for the 'Click Topaz' and 'Click Magenta' plans prior to 22 November 2017 are contained in Annexures B.2 and B.3 to the Agreed Statement of Facts and Admissions. 20 The Discount Statements were false or misleading, and misleading or deceptive or likely to mislead or deceive, because: (1) the relevant percentage discount was calculated based on Click Energy's market offer rates which, for the relevant plans, were higher than Click Energy's standing offer rates; and (2) when compared with Click Energy's rates for standing offers also available to consumers, the effective discounts on the relevant plans were much smaller than promoted and some consumers effectively received no discount. 21 Click Energy has admitted that by making the Discount Statements it: (1) made false or misleading representations that the supply of energy under the relevant plans had benefits in contravention of s 29(1)(g) of the ACL; (2) made false or misleading representations with respect to the price of energy under the relevant plans in contravention of s 29(1)(i) of the ACL; and (3) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the ACL.

[27]

Savings representations 22 Between 1 October 2017 and 21 November 2017, the Click Energy website contained statements that consumers in Victoria and Queensland could save up to a specified dollar amount if they switched to a relevant plan with Click Energy (the 'Savings Statements'), and from 22 November 2017 if they also paid their bills on time. Example Savings Statements made on the Click Energy website for a selection of postcodes in which the relevant plans were available: (1) from 1 October 2017 to 21 November 2017, are identified in column C of Annexure A to the Agreed Statement of Facts and Admissions; and (2) from 21 November 2017 to a date prior to May 2018, are identified in column D of Annexure A to the Agreed Statement of Facts and Admissions. 23 Example screenshots of the Savings Statements appearing on the Click Energy website at 22 November 2017 for the 'Click Topaz' and 'Click Magenta' plans are at Annexure 8.1 to the Agreed Statement of Facts and Admissions. Example screenshots of the Savings Statements appearing on the 'Find a Plan' page of the Click Energy website for the 'Click Topaz' and 'Click Magenta' plans prior to 22 November 2017 are contained in Annexures B.2 and B.3 to the Agreed Statement of Facts and Admissions. 24 The Savings Statements were false or misleading, and misleading or deceptive or likely to mislead or deceive, because the specified dollar amounts were estimated annual savings that a Click Energy market offer consumer would obtain by paying on time compared with paying after the due date, rather than the estimated savings that a consumer would obtain by switching to Click Energy from another retailer. 25 Click Energy has admitted that by making the Savings Statements it: (1) made false or misleading representations that the supply of energy under the relevant plans had benefits in contravention of s 29(1)(g) of the ACL; (2) made false or misleading representations with respect to the price of energy under the relevant plans in contravention of s 29(1)(i) of the ACL; and (3) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the ACL.

[28]

Pay-on-time credit condition 26 During the period from 1 October 2017 to early August 2018, for the relevant plans: (1) Click Energy's pay-on-time discounts were not applied to a customer's current bill, but were credited against the charges on the customer's next bill if the customer paid their current bill on time; and (2) a consumer who paid their final bill on time did not receive any discount for paying that bill on time as there was no subsequent bill against which the pay-on-time discount could be applied, (the 'Pay-on-time Credit Condition'). 27 During the period from 1 October 2017 to early August 2018: (1) Click Energy's Fact Sheets and 'How Discounts Work' page, published on the Click Energy website, contained statements that "Discount applied to next bill". The Fact Sheets were accessible by navigating hyperlinks from the 'Find a Plan' page (see Annexure B.1 to the Agreed Statement of Facts and Admissions for sample 'Find a Plan' page). The 'How Discounts Work' page was accessible from at least 1 May 2018 by navigating a hyperlink from the 'Find a Plan' page. Annexure C to the Agreed Statement of Facts and Admissions is an example Fact Sheet for 'Click Topaz' as at 17 October 2017. Annexure D to the Agreed Statement of Facts and Admissions contains an example screenshot of a 'How Discounts Work' page as at 17 July 2018; and (2) Click Energy's Terms and Conditions published on the Click Energy website stated that the customer would be entitled to the pay-on-time discount if, amongst other things, "the bill is not a final bill". Annexure E to the Agreed Statement of Facts and Admissions is a copy of the Terms and Conditions as at 19 October 2017. 28 Click Energy also made amendments to its 'How Discounts Work' page and Fact Sheets, around April/May 2018 to include express wording that the pay-on-time discount did not apply to a final bill. See for example Annexure D to the Agreed Statement of Facts and Admissions. 29 Click Energy has admitted that by making the Discount Statements without adequately disclosing to consumers the Pay-on-time Credit Condition it: (1) made false or misleading representations with respect to the conditions relating to the supply of energy under the relevant plans in contravention of s 29(1)(m) of the ACL; and (2) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the ACL.

[35]

Determination of appropriate penalty 41 I accept the parties' joint submissions that, in respect of the admitted conduct engaged in by Click Energy, the proposed penalty of $900,000 is appropriate. 42 The proposed penalty is appropriate to deter Click Energy and other potential wrongdoers from engaging in like conduct in the future. It takes account of the size and financial position of Click Energy, together with the nature and extent of the contravening conduct and the cooperation of Click Energy in resolving the proceeding at this early stage. Having regard to all of the circumstances of this case, the penalty would not be seen as a mere disgorgement of profits or the "cost of doing business", but would serve to secure compliance by Click Energy and by other potential wrongdoers. 43 It is of public importance that Click Energy and its competitors operate in a manner that complies with the ACL. A penalty of $900,000 sufficiently conveys that requirement and achieves the necessary deterrence. 44 It is also important that the penalty sends a strong message to the retail energy market. The energy retail market is large, and energy is something required by all Australians. As such, the potential impact of misrepresentations in that industry, and the potential benefit from them, are substantial. Any perception that penalties attaching to such gains could be absorbed as a mere "cost of doing business" would give rise to the potential for widespread harms to consumers. This requires a penalty substantial enough to deter other businesses from engaging in similar conduct. 45 Each time a consumer viewed the Discount Statements or the Savings Statements on the Click Energy website, there was a separate contravening act for the purposes of s 224 of the ACL. It follows that the notional maximum penalty may be in the billions of dollars to the extent that it can be calculated, but such a mathematical approach is not a meaningful or helpful exercise in this case. 46 Equally, the course of conduct principle is not likely to be of much assistance in this case. As it has been applied in other cases, the principle would not, in any event, operate to constrain the total maximum penalty, and should not be given primacy or undue weight in relation to the determination of an appropriate penalty of sufficient deterrent value. 47 Applying the totality principle, the parties submit, and I accept, that the penalty of $900,000 is appropriate because it reflects both the extent and nature of the contravening conduct. It strikes the right balance and reflects the need for deterrence and the particular circumstances of Click Energy, and it also takes account of the impact that the contraventions would have had on the relevant consumers.

Australian Competition and Consumer Commission v amaysim Energy Pty Ltd

At a glance

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Decision date

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Catchwords

Source

Catchwords

Judgment (38 paragraphs)

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Legislation Cited (3)

Cases Cited (2)

Cited By (2)