Australian Competition and Consumer Commission v Singtel Optus Pty Ltd

I - Introduction 1 On 29 October 2010 I determined that Optus had engaged in a misleading and deceptive fashion by conducting an advertising campaign to sell certain of its internet broadband plans: Australian Competition and Consumer Commission v Singtel Optus Pty Ltd [2010] FCA 1177 (Optus No. 1) and on 2 November 2010 I made orders enjoining Optus from further engaging in that campaign: Australian Competition and Consumer Commission v Singtel Optus Pty Ltd [2010] FCA 1200 (Optus No. 2). The Commission now seeks orders that would require Optus to carry out corrective advertising and to pay a civil penalty to the Commonwealth for the conduct. The issue of corrective advertising was argued before me on 5 November 2010 and the question of penalty remains yet to be argued. These reasons deal with the issue of corrective advertising.

II - Principles 2 The provisions of Part V of the Trade Practices Act 1974 (Cth) constitute a set of proscriptions aimed at corporations. At their heart, exemplified by the terms of s 52 itself, is the prohibition on corporations engaging in misleading and deceptive conduct or conduct which is likely to mislead or to deceive. The prohibition thus disclosed is cast sufficiently wide to catch those remarks which, though strictly correct, are nevertheless likely to mislead. As the Minister for Manufacturing Industry said to the House of Representatives on the introduction of Trade Practices Bill 1974 (Cth)"[t]he untrained consumer is no match for the businessman who attempts to persuade the consumer to buy goods or services on terms and conditions suitable to the vendor" (Parliamentary Debates 89 House of Representatives p 226). 3 This case is not concerned with the general question of whether a mandatory injunction may be obtained under s 80 of the Act by one trader to compel another trader to put in place a series of corrective advertisements following a course of misleading and deceptive conduct. Instead, the Commission seeks relief under s 86C of the Act which applies in a number of circumstances including those obtaining where, as here, there have been breaches of ss 52 and 55A of the Act. Where it applies, s 86C(2)(d) authorises the Court to make an order "requiring the person 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". This power is limited in its application to "advertisements" which, by its ordinary connotation and proximity to the word "publish", is likely to bear a meaning which is limited to paid-for statements made to the general public or some relevant segment of the general public. It is, in that circumstance, unlikely to extend to an order which requires a trader to write to its own customers informing them of its wrongdoing and of their concomitant rights arising therefrom. Such a letter is not an advertisement. However, s 86C(2)(c) fills that gap by providing a power to the Court to make 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". Such a power is sufficient to extend to the writing of corrective letters to consumers who may have been misled by a course of advertisements. 4 Section 86C is headed "Non-punitive orders" and the orders contemplated by it are not available to be used as instruments of punishment. So much is likely to be the case simply from the language of s 86C(2)(c) and (d). The interaction of the heading and s 86C(2)(a) and (b) (which deal, in contrast, with "community service orders" and "probation orders") does not presently arise for consideration. In the context of corrective statements the fact that a remedy is appropriately adapted to the end of removing confusion from the public mind is likely to mean that it is not punitive in the requisite sense and this will be so even if the remedy in question acts as a deterrent. It is only when the extent of a remedy moves beyond that which can be seen as being reasonably related to addressing the underlying infringement does the question of whether an order is punitive arise. 5 The power thus conferred directs attention, at least, to the position of consumers, although other interests, such as the need to avoid market distortions, may also be relevant. It follows that one aim of such an order is to protect the public interest by dispelling the false impression which has been engendered by the advertisement: Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 at 20 [49] per Stone J; another is to inform consumers of the conduct in question and of the possible existence of a remedy: Cassidy 135 FCR at 22 [54]. There will be cases where the making of such an order may properly be seen as adjunctive to the primary order restraining the original conduct (Australian Competition and Consumer Commission v Real Estate Institute (WA) Inc (1999) 95 FCR 114 at 133 [49] per French J cited in Cassidy 135 FCR at 21 [51]). On the other hand, the correction of market distortions caused by the provision of inaccurate information to consumers may also justify orders whose end is the alleviation of that distortion and the restoration of a fair and fully informed marketplace. So much flows from the fact that the norms established by Part V are not limited by the heading "Consumer Protection": Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 601-602 per Mason CJ, Deane, Dawson and Gaudron JJ. Economic concepts of efficiency are, therefore, legitimate concerns under s 86C. 6 In each case, the nature of the original conduct must be carefully considered and an assessment made of the continuing presence in the public's mind of the deception (where the expression "the public mind" is understood as a convenient shorthand for the ordinary class of consumers of broadband products less those afflicted by reactions which are extreme or fanciful: Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 86 [105] per the Court). With the passage of time the capacity of any advertisement or campaign to mislead will nearly always diminish. By the same token, however, the length of the original campaign and its intensity will almost inevitably be relevant concerns. A long campaign, present across multiple media and of medium intensity may well be likely to have a more substantial or enduring impact on the public mind than a brief and intense campaign. Further, where campaigns across multiple media are concerned, attention must always be directed to the ways in which the advertisements comprising the campaign interact with each other. Separate advertisements in different media may reinforce each other through similar get-ups and the cessation of one form of the advertisement may lead seamlessly into the commencement of the next. It follows that a campaign may be more than the sum of its parts. Where such multifaceted campaigns are concerned, the nature of any internet advertising must also be carefully considered. Often enough, an internet site will form a catchment into which consumers attracted by advertisements in other media are drained. Because of the more intense and interactive nature of internet pages, the internet component of a campaign may need to be understood as its ultimate expression and the final destination at which many (but of course not all) consumers may be expected to arrive. But this does not mean that an internet page will save a multimedia campaign from being deceptive in its other forms - in a sense, by the time the consumer gets to the website the damage is done for the consumer will have already been "enticed into the marketing web": Tec & Thomas (Australia) Pty Ltd v Matsumiya Computers Co Pty Ltd (1984) 1 FCR 28 at 38 per Beaumont J. 7 Where television commercials are concerned there needs to be a recognition of the frequently low attention devoted by consumers to them and their essentially transient nature. ("[The advertisements] will be seen by the casual but not overly attentive viewer viewing a free-to-air program with only a marginal interest in the advertisements shown between the segments of the program": Telstra Corporation Ltd v Optus Communications Pty Ltd (1996) 36 IPR 515 at 523-524 per Merkel J cited with approval in Cassidy 135 FCR at 23 [60]). There will be some consumers who will not be watching television live and will fast-forward through all of the commercials. Amongst those who do not take that course there will be many who are not paying especially close attention to what is happening. This is not to say that television commercials are not very effective in their own way but rather to underscore that they may not be ideal for the delivery of complicated information. One may well establish brand awareness using a constant diet of brand references or striking images but the delivery to consumers of detailed information requiring cognition is unlikely to be effective: people watching television commercials are rarely in a contemplative or thinking mood. This observation is relevant not only to gauging the impact of the initial advertisement but also to the capacity of corrective advertising - with its complex message - to operate effectively: cf. Cassidy 135 FCRat 24 [62]-[63].