Australian Competition and Consumer Commission v Australian Private Networks Pty Ltd - [2019] FCA 384 - FCA 2019 case summary — Zoe

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Australian Competition and Consumer Commission v Australian Private Networks Pty Ltd

[2019] FCA 384

Federal Court of Australia|2019-03-15|Before: Middleton J

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At a glance

Source facts

Court

Federal Court of Australia

Decision date

2019-03-15

Before

Middleton J

Catchwords

Number of paragraphs: 56

Source

Original judgment source is linked above.

Catchwords

Number of paragraphs: 56

Judgment (24 paragraphs)

[1]

Activ8me, in trade or commerce, in connection with the supply or possible supply, or the promotion of the supply, of internet services: (a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18(1) of the Australian Consumer Law ('ACL'), which is Schedule 2 to the Competition and Consumer Act 2010 (Cth); and (b) made false or misleading representations with respect to the price of the services in contravention of s 29(1)(i) of the ACL, by making representations in direct mail advertisements sent during the period June to November 2018 to recipients in Western Australia, Queensland, New South Wales and Victoria and in digital advertisements published online during the period September to November 2018 that: (c) in return for the payment of $59.95 per month, a customer could acquire Activ8me's '100 Mbps speed pack', when in fact the cost of Activ8me's '100 Mbps speed pack' was $89.95 per month; (d) the total minimum cost payable by a customer on a 12 month contract for the '100 Mbps speed pack' was $719.40 when in fact the total minimum cost payable for the '100 Mbps speed pack' on a 12 month contract was $1,079.40; (e) in return for the payment of $59.95 per month, a customer could acquire a Fibre to the Premises ('FTTP') broadband service with speeds of, or up to, 100 megabits per second ('Mbps') when in fact customers who paid $59.95 per month were provided with a FTTP broadband service with substantially slower speeds of only 12/1 Mbps; (f) in return for the payment of $59.95 or $69.95 per month, a customer would receive unlimited data when in fact a customer's data usage was limited by Activ8me's Acceptable Use Policy which applied to all its so called "unlimited" service offers; and/or (g) there were no setup fees payable by a customer who signed up to Activ8me's internet services when in fact Activ8me charged a customer a setup fee of a $99.95 by default unless the customer opted to sign up for a minimum 12 month contract term.

[8]

ANNEXURE [Activ8me letterhead] [Customer name & Address] You may be entitled to exit your contract without penalty and have setup fees refunded Following action by the Australian Competition and Consumer Commission (ACCC), the Federal Court of Australia has declared that Activ8me engaged in conduct that was misleading and deceptive, liable to mislead the public, and made false or misleading representations in contravention of the Australian Consumer Law in relation to the advertisements referred to below. As a result, you may be entitled to a setup fee refund from Activ8me or to exit your contract with Activ8me without penalty. The advertisements During the period June to September 2018, Activ8me sent direct mail advertisements to households in Western Australia, Queensland, New South Wales and Victoria. These advertisements misrepresented the price, speed and data limits of Activ8me's broadband services at estates and developments on Opticomm's fibre network. The advertisements represented that: • customers could acquire Activ8me's '100 Mbps speed pack' for $59.95 per month when the true cost of Activ8me's '100 Mbps speed pack' was $89.95 per month; and • there were no setup fees payable when Activ8me actually charged a setup fee of $99.95 by default unless the customer signed up for a minimum 12 month contract term. Your rights to change or terminate your plan Contact us on 13 22 88 if you entered into an Activ8me internet services plan after seeing one of the Activ8me advertisements referred to above and want to terminate your plan without incurring any fees or charges. Alternatively, if you entered into a higher priced plan after seeing one of the Activ8me advertisements referred to above, you may elect to switch to the $59.95 12/1 Mbps plan with the difference in monthly fees to be refunded. Refund of setup fee Customers who received the advertisements and were charged a setup fee of $99.95 are entitled to a refund of the setup fee paid. Refunds will be processed automatically via your current payment method. If your payment method does not allow for automatic refunding we will contact you to make alternative arrangements to refund your setup fee. The Federal Court ordered that this letter be sent. More information in relation to the action taken by the ACCC is available on the ACCC's website at www.accc.gov.au.

[9]

INTRODUCTION 1 On 15 March 2019, the Court made orders in this proceeding. These are the reasons for those orders. 2 This proceeding stems from an investigation conducted by the applicant, the Australian Competition and Consumer Commission (the 'ACCC'), into representations made by the respondent, Australian Private Networks Pty Ltd (trading as Activ8me) ('Activ8me'), in certain of its public advertisements for internet services which it supplies to retail consumers. 3 The ACCC seeks relief in respect of misleading or deceptive conduct and conduct liable to misleading the public engaged in by, and false or misleading representations made by Activ8me, regarding the price, speed and data limits of internet services, in contravention of ss 18(1), 29(1)(b), 29(1)(g), 29(1)(i) and 34 of the Australian Consumer Law ('ACL') being Sch 2 to the Competition and Consumer Act 2010 (Cth) (the 'CCA'). The ACCC also seeks relief in respect of Activ8me's failure to specify in a prominent way and as a single figure, the single price for internet services in contravention of s 48(1) of the ACL. 4 The parties have reached agreement as to the terms on which they seek to resolve this proceeding and on 1 March 2019, jointly filed the following documents: (1) a statement of agreed facts and admissions setting out the facts agreed between the parties and the admissions made by Activ8me (the 'Statement of Agreed Facts and Admissions'); (2) agreed minutes 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. 5 First, in the Statement of Agreed Facts and Admissions, Activ8me has admitted for the purposes of this proceeding that it has, in trade or commerce: (1) engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18(1) of the ACL; (2) in connection with the supply or possible supply of internet services, made false or misleading representations: (a) that the services were of a particular standard, quality or value in contravention of s 29(1)(b) of the ACL; (b) that the services had performance characteristics, uses or benefits in contravention of s 29(1)(g) of the ACL; (c) with respect to the price of the services in contravention of s 29(1)(i) of the ACL; (3) engaged in conduct that was liable to mislead the public as to the nature, characteristics, the suitability for purpose or the quantity of internet services, in contravention of s 34 of the ACL; and (4) in connection with the supply or possible supply, or the promotion of the supply, of internet services, contravened s 48(1) of the ACL by making representations with respect of amounts that, if paid, would constitute a part of the consideration for the supply of the services, without specifying in a prominent way the single price for the services. 6 Second, the terms of 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) ('Federal Court Act') in relation to the admitted contraventions of the ACL; (2) an injunction to be made pursuant to s 232 of the ACL; (3) Activ8me to pay a pecuniary penalty in the total sum of $250,000 pursuant to s 224 of the ACL in respect of the contraventions of ss 29(1)(b), 29(1)(g), 29(1)(i), 34 and 48(1) of the ACL; (4) a publication order pursuant to s 246(2)(d) of the ACL; (5) a non-party consumer redress order pursuant to s 239 of the ACL; (6) Activ8me to implement an ACL compliance program pursuant to s 246(2)(b) of the ACL; and (7) Activ8me to pay the ACCC's costs in the proceeding fixed in the sum of $10,000 pursuant to s 43 of the Federal Court Act. 7 And third, the parties' joint submissions have formed the basis for my reasons which follow as to why I am prepared to make declarations and orders substantially in the form of the Proposed Declarations and Orders.

[10]

APPLICABLE LEGISLATION AND LEGAL PRINCIPLES 8 Section 18(1) of the ACL states that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. 9 Section 29(1)(b) relevantly prohibits the making of false or misleading representations "in connection with the supply or possibly supply of goods or services ... that services are of a particular standard [or] quality". 10 Section 29(1)(g) relevantly prohibits the making of false or misleading representations "in connection with the supply or possibly supply of goods or services ... that goods or services have ... particular performance characteristics ... uses or benefits". 11 Section 29(1)(i) relevantly prohibits the making of false or misleading representations "in connection with the supply or possibly supply of goods or services ... with respect to the price of goods or services". 12 Finally, s 34 of the ACL provides that a person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services. 13 The principles applicable to determining whether conduct contravenes s 18 of the ACL are well-known, and I accept the parties' submissions that there are broad similarities between the type of inquiry required by s 18 and that required by ss 29 and 34. 14 Conduct is misleading or deceptive if it has a tendency to lead into error. It may involve the doing of, or refusal to do, any act. Whether conduct in relation to a particular class of consumers is misleading or deceptive is a question of fact to be resolved by a consideration of the whole of the impugned conduct in the circumstances in which it occurred. 15 The purpose underlying provisions such as ss 18, 29 and 34 of the ACL is remedial. Accordingly, these sections should be interpreted broadly "so as to give the fullest relief which the fair meaning of its language will allow": see Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470, 503 (Lockhart and Gummow JJ) and ACCC v AGL South Australia Pty Ltd [2014] FCA 1369, [60] (White J). 16 There is no significant difference between the words and phrases "misleading or deceptive" and "mislead or deceive" in s 18, "misleading" in s 29(1) and "mislead" in 34. In the present case, the legal principles relevant to a finding that a representation is false or misleading in contravention of s 29(1) are similar to those applicable to ss 18 and 34. However, a distinction may be drawn between "likely to mislead or deceive" (s 18) and "liable to mislead" (s 34). The latter may apply to a narrower range of conduct, however, in the present case, the conduct engaged in by Activ8me's fit that narrower range: that is, its conduct was liable to mislead consumers into forming a more favourable impression of the suitability for their purpose of Activ8me's internet plans and the quantity of services that they would obtain, than would have been the case if Activ8me had not engaged in the impugned conduct. 17 As regards s 34, the statements in the relevant advertisements were made to the public, being the large number of intended recipients of the direct mail advertisements. 18 Section 48(1) requires the single price to stand out so as to "strike the attention", "be conspicuous", "be easily seen" or "be very noticeable": TPG Internet Pty Ltd v ACCC [2012] FCAFC 190, [88]. "Single price" is defined in s 48(7) as being the minimum quantifiable consideration for the supply of the goods or services at the time of the representation.

[11]

Activ8me's conduct 19 During the period June to September 2018, Activ8me sent by direct mail to over 81,000 recipients in Western Australia, Queensland, New South Wales and Victoria the following advertisements for its internet services: (1) in June and July 2018, the advertisement contained in Annexure A to the Statement of Agreed Facts and Admissions (the 'First Direct Advertisement'); (2) in August 2018, the advertisement contained in nnexure B to the Statement of Agreed Facts and Admissions (the 'Second Direct Advertisement'); and (3) in September 2018, the advertisement contained in Annexure C to the Statement of Agreed Facts and Admissions (the 'Third Direct Advertisement'), (each a 'Direct Advertisement' and collectively, the 'Direct Advertisements'). (A redacted form of the Statement of Agreed Facts and Admissions and Annexures is available for inspection on the Court file). 20 During the period 16 September to 15 November 2018, Activ8me caused to be published on the websites www.domain.com.au and www.realestate.com.au the advertisement contained in Annexure D to the Statement of Agreed Facts and Admissions (the 'Digital Advertisement'). It is unknown to the parties how many times the Digital Advertisement was viewed, however, the Digital Advertisement was clicked on 1,738 occasions by persons who were then directed to Activ8me's website. 21 By the First Direct Advertisement, Activ8me admits that it made the following representations which were false, misleading or deceptive, and/or likely to mislead or deceive: (1) in return for the payment of $59.95 per month, a customer could acquire Activ8me's '100 Mbps speed pack' (the '100 Mbps Cost Representation'). This was false, misleading or deceptive, and/or likely to mislead or deceive because at all relevant times the cost of Activ8me's '100 Mbps speed pack' was in fact $89.95 per month; (2) the total minimum cost payable by a customer on a 12 month contract for the '100 Mbps speed pack' was $719.40 (the 'Total Minimum Cost Representation'). This was false, misleading or deceptive, and/or likely to mislead or deceive because at all relevant times the total minimum cost payable for the '100 Mbps speed pack' on a 12 month contract was $1,079.40 (being $89.95 x 12); (3) in return for the payment of $59.95 per month, a customer could acquire a Fibre to the Premises ('FTTP') broadband service with speeds of, or up to, 100 Mbps (the '100 Mbps Speed Representation'). This was false, liable to mislead the public, misleading or deceptive, and/or likely to mislead or deceive because at all relevant times customers who paid $59.95 per month were provided with a FTTP broadband service with substantially slower speeds of only 12/1 Mbps (ie 12 Mbps for downloads and 1 Mbps for uploads); (4) in return for the payment of $59.95 per month, a customer would receive unlimited data (the '$59.95 Unlimited Data Representation'). This was false, liable to mislead the public, misleading or deceptive, and/or likely to mislead or deceive because a customer's data usage was limited by cl 2.8 of Activ8me's Acceptable Use Policy which applied to all its so called "unlimited" service offers, and provided that: Activ8me may offer "unlimited" access to specific sites or services from time to time; where we consider your use of such sites or services, or data accessed from and within such sites or services is unreasonable, then we may suspend your access to such sites or services immediately and without notice to you. We may then charge you correspondingly for some or all of the data used. (5) there were no setup fees payable by a customer who signed up to Activ8me's internet service (the 'No Setup Fees Representation'). This was false, misleading or deceptive, and/or likely to mislead or deceive because at all relevant times Activ8me charged customers a setup fee of $99.95 by default unless the customer opted to sign up for a minimum 12 month contract term. 22 By the Second Direct Advertisement, the Third Direct Advertisement and the Digital Advertisement, Activ8me admits that it made the following representations which were false, misleading or deceptive, and/or likely to mislead or deceive: (1) in return for the payment of $69.95 per month, a customer would receive unlimited data (the '$69.95 Unlimited Data Representation'). This was false, liable to mislead the public, misleading or deceptive, and/or likely to mislead or deceive because at all relevant times a customer's data usage was limited by cl 2.8 of Activ8me's Acceptable Use Policy (set out above); and (2) the No Setup Fees Representation. This was false, misleading or deceptive, and/or likely to mislead or deceive because at all relevant times Activ8me charged a customer a setup fee of $99.95 by default unless the customer opted to sign up for a minimum 12 month contract term. 23 By the Direct Advertisements and the Digital Advertisement, Activ8me also admits that it made representations with respect to an amount, namely $59.95 per month or $69.95 per month, that, if paid, would constitute a part of the consideration for the supply of the internet services, but did not specify in a prominent way the single price for those services. The single price was included in very small print in each of the advertisements, and did not stand out so as to "strike the attention", "be conspicuous", "be easily seen" or "be very noticeable", and thus was not prominent in contravention of s 48(1).

Australian Competition and Consumer Commission v Australian Private Networks Pty Ltd

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