Australian Competition and Consumer Commission v Dodo Services Pty Ltd

Australian Competition and Consumer Commission v Dodo Services Pty Ltd - [2021] FCA 589 - FCA 2021 case summary — Zoe

[11]

The First Respondent (Dodo) between 26 March 2018 and 2 April 2019, in trade or commerce, in connection with the supply or possible supply or the promotion by any means of the supply of its residential NBN broadband 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), being Schedule 2 to the Competition and Consumer Act 2010 (Cth) (CCA); (b) made misleading representations with respect to the performance characteristics and benefits associated with those services in contravention of ss 29(1)(b) and (g) of the ACL; and (c) engaged in conduct that was liable to mislead the public as to the characteristics of those services in contravention of s 34 of the ACL, by publishing statements on specific pages of its website (www.dodo.com.au) relating to its residential NBN broadband services, which referred to a 'typical evening speed' of: (d) 11 Mbps for its services based on the NBN Co 12/1Mbps speed tier from 26 March 2018 to 2 April 2019; (e) 24 Mbps for its services based on the NBN Co 25/5Mbps speed tier from 26 March 2018 to 2 April 2019; (f) 43 Mbps for its services based on the NBN Co 50/20Mbps speed tier from 26 March 2018 to 26 June 2018; (g) 46 Mbps for its services based on the NBN Co 50/20Mbps speed tier from 26 June 2018 to 4 September 2018; (h) 47 Mbps for its services based on the NBN Co 50/20Mbps speed tier from 4 September 2018 to 2 April 2019, and thereby representing that consumers who acquired one of its NBN plans would, or could expect to, typically or usually receive internet download speeds as published (and set out in sub-paragraphs 1(d) to (h) above) during the period 7pm to 11pm (Busy Evening Period) when it did not have reasonable grounds to make those representations because it did not have a testing methodology in place which was an appropriate measure of the speeds typically or usually received by customers during the Busy Evening Period.
The Second Respondent (iPrimus), between 26 March 2018 to 2 April 2019, in trade or commerce, in connection with the supply or possible supply or the promotion by any means of the supply of its residential NBN broadband services: (a) engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18(1) of the ACL; (b) made misleading representations with respect to the performance characteristics and benefits associated with those services in contravention of ss 29(1)(b) and (g) of the ACL; and (c) engaged in conduct that was liable to mislead the public as to the characteristics of those services in contravention of s 34 of the ACL, by publishing statements on specific pages of its website (www.iprimus.com.au) relating to its residential NBN broadband services, which referred to 'typical evening speeds' of: (d) 11 Mbps for its services based on the NBN Co 12/1Mbps speed tier from 26 March 2018 to 2 April 2019; (e) 43 Mbps for its services based on the NBN Co 50/20Mbps speed tier from 26 March 2018 to 26 June 2018; (f) 46 Mbps for its services based on the NBN Co 50/20Mpbs speed tier from 26 June 2018 to 4 September 2018; and (g) 47 Mbps for its services based on the NBN Co 50/20Mbps speed tier from 4 September 2018 to 2 April 2019, and thereby representing that consumers who acquired one of its NBN plans would, or could expect to, typically or usually receive internet download speeds as published (and set out in sub-paragraphs 2(d) to (g) above) during the Busy Evening Period when it did not have reasonable grounds to make those representations because it did not have a testing methodology in place which was an appropriate measure of the speeds typically or usually received by customers during the Busy Evening Period.

[13]

MURPHY J: 1 In this proceeding the applicant, the Australian Competition and Consumer Commission (ACCC), alleges that the respondents, Dodo Services Pty Ltd (Dodo) and Primus Telecommunications Pty Ltd (iPrimus) engaged in misleading conduct in contravention of ss 18(1), 29(1)(b) and (g) and 34 of the Australian Consumer Law (ACL) in Schedule 2 to the Competition and Consumer Act 2010 (Cth) (the CCA). Dodo and iPrimus are wholly owned subsidiaries of Vocus Group Limited, which together with a number of other corporate entities comprise the Vocus Group (Vocus). 2 Dodo and iPrimus have now admitted that they engaged in misleading conduct on the basis that: (a) from at least 26 March 2018 to 2 April 2019 (the relevant period), Dodo and iPrimus published statements on specific pages of their respective websites relating to broadband internet plans (NBN plans) provided over the National Broadband Network (NBN Co), which referred to "typical evening speeds" (Typical Evening Speed Statements) that were drawn from a methodology developed by Vocus (Vocus Methodology); (b) in making the Typical Evening Speed Statements each of Dodo and iPrimus represented that consumers who acquired one of its NBN Plans would, or could expect to, typically or usually receive internet download speeds as published during the Busy Evening Period between 7pm and 11pm (the Typical Evening Speed Representations). The Typical Evening Speed Representations were representations with respect to future matters within the meaning of s 4 of the ACL; and (c) Dodo and iPrimus admit that they each contravened ss 18(1), 29(1)(b), 29(1)(g) and 34 of the ACL because they did not have reasonable grounds, for the purposes of s 4 of the ACL to make the Typical Evening Speed Representations. 3 The parties have jointly proposed that the Court make agreed declarations in relation to the admitted contraventions of the ACL and order agreed pecuniary penalties of $1,500,000 against Dodo and $1,000,000 against iPrimus for the contraventions of ss 29(1)(b), (g) and 34 of the ACL. 4 For the reasons I explain I consider it is appropriate to make the declarations sought and to impose the penalties proposed.

[14]

THE FACTS AND PROCEDURAL HISTORY 5 The parties filed a Statement of Agreed Facts and Admissions (SAFA) and filed Joint Submissions on Contraventions and Relief (joint submissions), upon which I have directly drawn at various points in these reasons. 6 Dodo and iPrimus are companies incorporated in Australia, and at all relevant times carried on the business of promoting and supplying retail broadband internet services via the NBN. During the relevant period Dodo and iPrimus: (a) offered for sale to consumers, NBN plans that were provided, in part, using wholesale services supplied by NBN Co; and (b) maintained websites at www.dodo.com.au and www.iprimus.com.au respectively, to promote the Dodo and iPrimus NBN plans. 7 As internet retail service providers (RSPs) of NBN Co services, Dodo and iPrimus purchase wholesale services from NBN Co in order to provide the Dodo and iPrimus NBN plans. The wholesale services purchased by Dodo and iPrimus included: (a) an "access virtual circuit" (AVC) unique to each consumer, which relates to the carriage of data between a consumer's premises and a point of aggregation at a particular bandwidth; and (b) a "connectivity virtual circuit" (CVC), which provides services to multiple customers in a connectivity service area, which relates to the carriage of data between the point of aggregation and a point of interconnect. 8 NBN Co offered AVCs to RSPs, including Dodo and iPrimus, in a range of "megabits per second" (Mbps) bandwidth profiles. Mbps is a unit which reflects the maximum download speed for a customer and a maximum upload speed from a customer. The AVCs offered by NBN Co included 12/1Mbps, 25/5Mbps and 50/20Mbps (together or separately, speed tiers). For example, 25/5Mbps is in AVC with a maximum download speed of 25Mbps and a maximum upload speed of 5Mbps. 9 NBN Co also offered CVCs in a range of bandwidth profiles. In general terms, in determining the capacity and quantity of CVCs to acquire from NBN Co, an RSP makes decisions as to the amount of capacity relative to the number of customers that will be serviced per CVC. This is referred to as "provisioning". 10 As the bandwidth of a CVC is shared between many customers, in making provisioning decisions, an RSP will balance the cost of acquiring the CVC from NBN Co with the quality of internet service provided to the customer. Quality of service may be compromised where a CVC becomes congested - which occurs when the aggregated rate at which all consumers on a CVC are downloading data reaches the maximum capacity of that CVC. 11 During the relevant period, for both Dodo and iPrimus, congestion was more likely to occur during the Busy Evening Period, when the number of customers using their internet connections was typically at its highest. Dodo and iPrimus admit that there were times during the Busy Evening Period in the relevant period when some CVCs and backhaul links were congested. 12 At various times during the relevant period Dodo and iPrimus published statements on their respective websites, relating to the NBN plans, which referred to a "typical evening speed" for the speed tiers as follows: (a) 11 Mbps for services based on the NBN Co 12/1Mbps speed tier from 26 March 2018 to 2 April 2019; (b) 24 Mbps for services based on the NBN Co 25/5Mbps speed tier from 26 March 2018 to 2 April 2019 (Dodo only as iPrimus did not promote or offer services at this speed during the relevant period); (c) 43 Mbps for services based on the NBN Co 50/20Mbps speed tier from 26 March 2018 to 26 June 2018; (d) 46 Mbps for services based on the NBN Co 50/20Mbps speed tier from 26 June 2018 to 4 September 2018; and (e) 47 Mbps for services based on the NBN Co 50/20Mbps speed tier from 4 September 2018 to 2 April 2019; (which together comprise the Typical Evening Speed Statements).

[18]

The admitted contraventions 21 Section 18(1) of the ACL provides that: A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. "Conduct" includes doing or refusing to do any act, including, among other matters, engaging in a concerted practice. 22 Section 29 of the ACL provides: (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: … (b) make a false or misleading representation that services are of a particular standard, quality, value or grade… … (g) make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits… 23 Section 34 of the ACL provides: 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. 24 Section 4(1) of the ACL provides that if: (a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do any act); and (b) the person does not have reasonable grounds for making the representation; the representation is taken, for the purposes of this Schedule to be misleading. 25 Dodo and iPrimus admit that by making the Typical Evening Speed Statements, they each made the Typical Evening Speed Representations to potential consumers of NBN broadband internet services in Australia, which were representations with respect to future matters within the meaning of s 4 of the ACL. Dodo and iPrimus admit that they each engaged in misleading conduct by operation of s 4 of the ACL on the basis that: (a) the Typical Evening Speed Representations were representations as to a future matter, namely the internet connection speeds that consumers would or could expect to receive in the future if they acquired a new NBN plan from Dodo or iPrimus; and (b) the methodology relied upon by Dodo and iPrimus to make the Typical Evening Speed Representations was deficient and consequently did not provide reasonable grounds for those representations.

[20]

Declarations of contravention 27 The contraventions are established by the facts and admissions in the SAFA. I am satisfied that it is appropriate to make declarations as to those contraventions as proposed by the parties. 28 As I said in Australian Securities and Investments Commission v Commonwealth Bank [2020] FCA 1543 at [33]: …. Pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) the Court has a wide discretionary power to grant declaratory relief. It is undesirable to fetter the exercise of the discretion by laying down rules as to the manner of its exercise, but ordinarily three requirements must be satisfied before a declaration should be made: see Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421; [1972] HCA 61 at 437-438 (Gibbs J); Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448 (Lord Dunedin): (a) the question must be a real and not a hypothetical or theoretical one; (b) the applicant must have a real interest in raising it; and (c) there must be a proper contradictor, that is, someone who has a true interest to oppose the declaration sought. 29 Those preconditions for declaratory relief are made out in the present case, as: (a) there is a direct and important question as to whether Dodo and iPrimus contravened the provisions of the ACL in making the Typical Evening Speed Representations; (b) the ACCC has an obvious interest, as the statutory regulator discharging its functions in the public interest, in bringing the proceeding; and (c) Dodo and iPrimus, as the alleged contraveners, have an interest in opposing the relief. That remained so notwithstanding their admissions and agreement: Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56; (2012) 201 FCR 378 at [30]-[33] (Greenwood, Logan and Yates JJ). 30 The declarations are appropriate and desirable because they will record the Court's disapproval of the conduct, vindicate the concerns of consumers, assist the ACCC in carrying out the duties conferred on it by the CCA, and make clear to other RSPs that such conduct is unlawful: see Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [77]-[78] (Gordon J). 31 For those reasons I have made the declarations of contravention sought.

[23]

Deterrence 36 The principal object of a pecuniary penalty is deterrence, directed both to discouraging future contravening conduct by the contravener (specific deterrence) and discouraging other persons who might contemplate engaging in similar contraventions (general deterrence). 37 In Commonwealth v Director at [55]) the plurality approved the remarks of French J (as his Honour then was) in Trade Practices Commission v CSR Ltd [1990] FCA 762; (1991) ATPR 41-076 at 52,152 where his Honour said: The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act. 38 In Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union & Anor [2018] HCA 3; (2018) 262 CLR 157 at [116] (Keane, Nettle and Gordon JJ), in respect of pecuniary penalties under the Fair Work Act 2009 (Cth), the High Court applied Commonwealth v Director in explaining that the effectiveness of the "principal object" of deterrence will depend upon a pecuniary penalty having the necessary "sting or burden" to "achieve the specific and general deterrent effects that are the raison d'être of its imposition." 39 The primacy of deterrence in relation to contraventions of the ACL has been emphasised in various ways: (a) in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 at [62]-[63] (Keane CJ (as his Honour then was), Finn and Gilmour JJ) the Full Court explained the need to ensure that the penalty imposed "is not such as to be regarded by that offender or others as an acceptable cost of doing business" and which will deter them "from the cynical calculation involved in weighing up the risk of penalty against the profits to be made from contravention"; (b) applying the observations in Singtel Optus, in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 at [64]-[66] (French CJ, Crennan, Bell and Keane JJ) the High Court referred to the "primary role" of general and specific deterrence in assessing the appropriate penalty where commercial profit is the driver of the contravening conduct; and (c) in Reckitt at [153] the Full Court emphasised that the "critical importance of effective deterrence must inform the assessment of the appropriate penalty". Their Honours explained (at [151]) that "the greater the risk of consumers being misled and the greater the prospect of gain to the contravener, the greater the sanction required, so as to make the risk/benefit equation less palatable to a potential wrongdoer and the deterrence sufficiently effective in achieving voluntary compliance." 40 A penalty must not however be so high as to be oppressive. As the Full Court said in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285 at 293 (Burchett and Kiefel JJ (as her Honour then was), Carr J agreeing): "[I]f deterrence is the object, the penalty should be no greater than is necessary to achieve this object; severity beyond that would be oppression." 41 In the present case the matters relevant to general deterrence include that: (a) the communications industry is very large and the consumer base is extremely broad. The potential impact of misrepresentations by service providers in the industry, and the potential gains from them are large. 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 harm to consumers, which requires a strong deterrent message: Singtel Optus at [61]-[64]; Reckitt at [149]-[153]; (b) the conditions in which the impugned conduct occurred continue to exist. RSPs continue to compete to provide services to customers via the NBN and other access technologies, and customers continue to migrate to the NBN. RSPs are limited in the manner in which they can differentiate their NBN plans from that of other RSPs given the common wholesale NBN elements underpinning those services. One differentiator to some consumers is performance in terms of download speed. As a result, there remains a potential for RSPs to gain market share and profit from misleading conduct of a similar kind; (c) it is important that consumer confidence in relation to the communications industry is not undermined by seller misrepresentations. That would undermine market efficiency which depends on consumer confidence in being given reliable, truthful and accurate information: Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2015] FCA 330; (2015) 327 ALR 540 at [95] (Allsop CJ) (Coles Bread case) ; and (d) communications businesses should be left in no doubt that a strong compliance program sufficient to pick up and address conduct of the present kind is not optional. If the burden of a penalty is seen to be less than the cost or effort of such a program, businesses may be tempted to prefer to absorb the risk of being caught rather than carefully complying with the ACL. In turn that would give the contravening company an advantage over those companies which do take on the proper costs of compliance: Reckitt at [152]. 42 The matters relevant to specific deterrence in the present case include: (a) Dodo and iPrimus stood, and stand, to benefit from having customers choose to purchase their NBN plans over the NBN plans of other RSPs. Consumers that are required to migrate to NBN-based services represent both a risk in terms of existing customers and opportunity in terms of new customers. The risk lies in the requirement to migrate to the NBN, which may act as a natural trigger for consumers to reassess their existing internet services and service provider when they may not otherwise do so; and (b) Dodo and iPrimus previously provided enforceable undertakings to the ACCC which related to maximum attainable speeds under their NBN plans. The fact that the undertakings had not been sufficient to secure their adherence to the requirements of the ACL indicate that a more severe penalty is necessary to secure specific deterrence: TPG Internet at [62]-[64]. 43 In my view, having regard to the following matters I consider the proposed penalties are likely to be sufficient to provide a sufficient sting or burden for the respondents. In the circumstances, they are unlikely to be seen as merely a cost of doing business. 44 First, while the benefit obtained by a respondent often provides a useful yardstick against which to consider the necessary deterrent message (Reckitt at [151]-[153], [158], [164], [176]) in the present case it is not possible to determine what, if any, financial benefit Dodo or iPrimus derived from the contravening conduct. While 11,814 new customers signed up online for new NBN plans in the relevant period, it is not possible to ascertain how many consumers viewed the Typical Evening Speed Statements; nor how many consumers signed up in reliance upon those representations. I accept the parties' submissions that in those circumstances the proposed penalties serve to make the risk/benefit equation sufficiently unpalatable to deter similar conduct by the respondents and other potential wrongdoers. 45 Second, the magnitude of the proposed penalties reflect the objective seriousness of the contravening courses of conduct. Importantly, there is no evidence that customers of Dodo and iPrimus received internet connection speeds that were lower than those stated in the Typical Evening Speed Statements. Further, while the Typical Evening Speed Statements were undertaken in relation to an area of major importance to consumers, they only appeared in one medium, the websites of the two respondents, and they were not used as part of a wider promotional campaign. 46 Third, there is no evidence that any consumer suffered financial harm through the conduct. While it is possible that some consumers may have been disappointed by the download speeds they received relative to the Typical Evening Speeds Statements, and that if they had been properly informed they may have selected another RSP, there is no evidence that they received lower speeds than those represented. It is not possible to determine the extent (if any) to which they received speeds that were lower than those represented nor is it possible to determine the extent to which the lower speeds affected their activities. 47 Fourth, the penalties reflect the cooperation that Dodo and iPrimus provided to the ACCC in relation to the proceeding, including the savings of time, cost and certainty associated with the early agreed resolution.

[24]

The maximum penalty 48 For the period from 26 March 2018 to 31 August 2018, pursuant to item 2 in the table in s 224(3) of the ACL, the maximum penalty for a body corporate for each contravention of ss 29 and 34 of the ACL was $1.1 million. For the period from 1 September 2018 to 2 April 2019, pursuant to ss 224(3) and 224(3A), the maximum penalty for a body corporate for each such contravention was increased to the greater of the following amounts: (a) $10 million, (b) if the court can determine the value of the benefit that the body corporate, and any body corporate related to the body corporate, have obtained directly or indirectly and that is reasonably attributable to the act or omission -three times the value of that benefit; or (c) if the court cannot determine the value of that benefit - 10% of the annual turnover of the body corporate during the 12 month period ending at the end of the month in which the act or omission occurred or started to occur. 49 The "maximum penalty is not just a limit on power, it provides a statutory indication of the punishment for the worst type of case, by reference to which the assessment of the proportionate penalty for other offending can be made, according to the will of Parliament: Pattinson v Australian Building and Construction Commissioner [2020] FCAFC 177 at [62] (Allsop CJ, White and Wigney JJ, with whom Besanko and Bromwich JJ agreed). 50 While it is not possible to identify the number of consumers who read the Typical Evening Speed Statements; nor how many consumers signed up in reliance upon those representations; it is reasonable to expect that a significant number of consumers who visited the websites of Dodo and iPrimus in the relevant period must have had at least some regard to them. If the number of 11,814 "new" NBN plans entered it into during the relevant period is used as the basis for assessing the number of potential contraventions, and that total is divided by the number of months (excluding March 2018 and April 2019) in the relevant period, there were approximately 984 "new" NBN plans entered into by consumers per month which may have been affected by the contravening conduct. 51 The maximum penalty for all contraventions in the period between 26 March 2018 and 31 August 2018, is therefore approximately $5.4 billion (representing $1.1 million by 984 contraventions per month for five months). 52 In the period between 1 September 2018 and 2 April 2019 the maximum penalty is the greater of: (a) $10 million; (b) three times the value of the benefit attributable to the contraventions; or (c) if the value of the benefit cannot be determined - 10% of annual turnover during the 12 month period ending at the end of the month in which the act or omission occurred or started to occur. In the present case: (a) there is no evidence as to the benefit that Dodo, iPrimus or Vocus obtained directly or indirectly that is reasonably attributable to the contravening conduct. In the circumstances, a determination of the benefit obtained under s 224(3A)(b) cannot be made; and (b) the contributions of Dodo and iPrimus to Vocus' annual turnover in the 12 months ending September 2018 were $358.4 million and $126.8 million respectively. 10% of that annual turnover was $35.8 million and $12.6 million respectively, which amounts are the maximum penalty amounts for each contravention pursuant to s 224(3A). Using the annual turnover of iPrimus for the purpose of the example, the maximum penalty for all contraventions in the period between 1 September 2018 and 2 April 2019, is therefore approximately $86.7 billion (representing $12.6 million by 984 contraventions per month for seven months). 53 Where, as in the present case, a large number of contraventions is involved, the maximum penalty may rise to a number such that there is no meaningful overall maximum penalty. That is the position here. In such cases the appropriate penalty range may be best assessed by reference to other factors: Reckitt at [156]-[157]. In that case the Full Court said at [156]: Care must be taken to ensure that the maximum penalty is not applied mechanically, instead of it being treated as one of a number of relevant factors, albeit an important one. Put another way, a contravention that is objectively in the mid-range of objective seriousness may not, for that reason alone, transpose into a penalty range somewhere in the middle between zero and the maximum penalty. Similarly, just because a contravention is towards either end of the spectrum of contraventions of its kind does not mean that the penalty must be towards the bottom or top of the range respectively. However, ordinarily there must be some reasonable relationship between the theoretical maximum and the final penalty imposed. 54 As I said in Australian Competition and Consumer Commission v Optus Mobile Pty Limited [2019] FCA 106 at [28]-[30]: [28] The process to be used in setting a civil penalty for contravention of statutory provisions is similar to that used in criminal sentencing: Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd (2015) 327 ALR 540; [2015] FCA 330 (Coles Bread Case) at [6] (Allsop CJ); Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd (2005) ATPR 42-070; [2005] FCA 683 at [68] (Gyles J). The maximum penalty must be given due attention because the legislature has seen fit to legislate for them, they invite comparison between the "worst possible case" and the case before the court at the time, and they provide a form of yardstick: Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25 at [31]. [29] In Markarian Gleeson CJ, Gummow, Hayne and Callinan JJ held at [27], [31] and [39] that: (a) assessment of the appropriate penalty is a discretionary judgment based on all relevant factors but careful attention to maximum penalties will almost always be required; (b) it will rarely be appropriate for a Court to start with the maximum penalty and proceed by making a proportional deduction from that maximum, and the Court should not adopt a mathematical approach of increments or decrements from a predetermined range, or assign specific numerical or proportionate value to the various relevant factors; and (c) accessible reasoning is necessary in the interests of all, and, while there may be occasions where some indulgence in an arithmetical process will better serve this end, it does not apply where there are numerous and complex considerations that must be weighed. [30] Their Honours described the appropriate sentencing process as one of "instinctive synthesis". McHugh J described this process (at [51]) as one in which: … the judge identifies all the factors that are relevant to the sentence, discusses their significance and then makes a value judgment as to what is the appropriate sentence given all the factors of the case. Only at the end of the process does the judge determine the sentence. 55 As the Full Court said in Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; (2018) 260 FCR 68 at [55] (Allsop CJ, Davies and Wigney JJ), in relation to assessing an appropriate pecuniary penalty: …the task is one that is evaluative, taking into account all the circumstances of the case, not to be reached mechanically or by some illusory process of exactitude, but rather by evaluation that is articulated to a point (but no further) that is useful and meaningful. One starts the process by giving proper weight to the statutory maximum as referable to the most serious kind of contravention. 56 In the present case a potential maximum penalty for the contraventions of approximately $92.1 billion (being the combined maximums for the two periods) means that there is no meaningful maximum penalty.

[27]

The course of conduct principle 62 The ACL does not require the Court to treat a course of conduct involving multiple acts or omissions as a single contravention and, beyond the setting of a maximum penalty, there is no statutory limitation on the pecuniary penalty that may be imposed in respect of contraventions of ss 29 and 34: Coles Bread case at [16]. 63 The course of conduct principle recognises, however, that where there is sufficient interrelationship in the legal and factual elements of the acts or omissions that constitute a contravention, the Court may, in its discretion, penalise the acts or omissions as a single course of conduct. The question as to whether contraventions should be treated as a single course of conduct involves consideration of all the circumstances of the case. 64 The principle was explained in Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; (2010) 269 ALR 1 (Middleton and Gordon JJ) at [47] as follows: What the single course of conduct principle recognises is that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. 65 The Court also noted (at [41]): In other words, where two offences arise as a result of the same or related conduct that is not a disentitling factor to the application of the single course of conduct principle but a reason why a Court may have regard to that principle, as one of the applicable sentencing principles, to guide it in the exercise of the sentencing discretion…. It is a tool of analysis… which a Court is not compelled to utilise. (Citations omitted, emphasis in original.) 66 In Royer v Western Australia [2009] WASCA 139; (2009) 197 A Crim R 319 at [22] (Owen JA) his Honour said: At its heart, the one transaction principle recognises that, where there is an interrelationship between the legal and factual elements of two or more offences with which an offender has been charged, care needs to be taken so that the offender is not punished twice (or more often) for what is essentially the same criminality. The interrelationship may be legal, in the sense that it arises from the elements of the crimes. It may also be factual, because of a temporal or geographical link or the presence of other circumstances compelling the conclusion that the crimes arise out of substantially the same act, omission or occurrences. (Emphasis added.) 67 The principle does not operate to limit the maximum penalty (Coles Bread case at [17) and it does not have paramount importance in the determination of an appropriate penalty. Nor does it operate as a fetter on the proper application of legislation regarding the factors to be considered in the assessment of a pecuniary penalty, or as a de facto limit on the penalty that can be imposed in the discretion of the Court: Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) [2016] FCA 698 at [24]-[25] (Beach J), approved by the Full Court in Reckitt Benckiser at [141] and in Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2017] FCAFC 159; (2017) 258 FCR 312 at [425]-[426] (Middleton, Beach and Moshinsky JJ). 68 I accept the parties' submission that in the circumstances of this case it is appropriate to treat the contraventions as a single course of conduct for each respondent. That is so because the contraventions of each respondent flow from systemic deficiencies in the Vocus Methodology for determining internet connection speeds in busy periods, which deficiencies meant that Dodo and iPrimus did not have reasonable grounds for making the Typical Evening Speed Representations.

[32]

Whether Dodo and iPrimus have previously been found by a Court to have engaged in any similar conduct. 80 Dodo and iPrimus have not previously been found to have contravened the ACL, but they have both previously given court enforceable undertakings to the ACCC in relation to conduct which they have admitted likely breached the ACL. 81 These court-enforceable undertakings arise from conduct that occurred between 1 October 2015 and 30 June 2017, during which period iPrimus and Dodo advertised various NBN plans. For example, iPrimus advertised an NBN plan as capable of providing a download speed of 100Mbps and an upload speed of 40Mbps. The conduct affected consumers whose NBN plans used either fibre to the node (FTTN) or fibre to the building (FTTB) technology. Both FTTN and FTTB are susceptible to performance limitations which, when they arise, result in consumers being unable to achieve the maximum speeds of the NBN plan they have purchased. Dodo and iPrimus admitted that they represented to consumers that they were capable of delivering internet services up to the maximum speeds of each of the relevant plans when this was not the case which conduct was likely to have contravened sections 18, 29(1)(b) and (g) of the ACL. 82 In March 2018, Dodo and iPrimus gave court-enforceable undertakings to the ACCC to offer consumer redress to more than 5,000 customers who did not receive the internet speeds they had signed up for because their NBN connection was incapable of delivering such speeds. 83 In July 2019, Dodo gave a court enforceable undertaking to the ACCC to refund up to $360,000 to around 16,000 customers for claims that its entry-level NBN Plans were "perfect for streaming". The ACCC considered that the representation was false and misleading with respect to NBN plans offering 12/1Mbps, as these consumers would be limited to watching one high-definition (HD) video stream at a time at consistently high quality; would be unable to stream full HD content reliably; and could not stream ultra HD video content at all. For customers who had a monthly data allowance on their NBN plans of 10 gigabytes (GB), the monthly allowance would be expended after only a modest amount of streaming. It followed that a Dodo customer using a 12/1Mbps NBN plan with a monthly data allowance of 10GB did not have an NBN plan which was "perfect for streaming". Dodo admitted that its conduct was likely to have contravened ss 18, 29(1)(b) and (g) and 34 of the ACL and entered into a court-enforceable undertaking to make consumer redress to those affected customers. 84 Dodo and iPrimus both have a history of similar conduct which likely contravened ss 18, 29 and 34 of the ACL. The fact that the earlier undertakings they gave have not been sufficient to secure their adherence to the requirements of the ACL tends to show that a more severe penalty is necessary to secure specific deterrence: TPG Internet at [62]-[64]. In light of their earlier conduct it can be argued that the penalties sought in the present case might be seen by Dodo and iPrimus as just "an acceptable cost of doing business". 85 For the reasons previously described in relation to deterrence I take a different view. In the particular circumstances the case I consider the proposed penalties are likely to be sufficient to provide a sufficient sting or burden for the respondents and are unlikely to be seen as merely a cost of doing business.

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