CONSIDERATION
201 Section 570 of the Telecommunications Act (in so far as it applies to a contravention of s 68(l) of the Telecommunications Act) is substantially the same as s 76 of the TPA.
202 Given the similarities between s 76 of the TPA and s 570 of the Telecommunications Act, the approach to the assessment of penalties under the Telecommunications Act will be informed by the approach of the Courts in considering an appropriate penalty under the TPA.
203 The primary object of pecuniary penalties is deterrence. In Trade Practices Commission v CSR Limited (1991) ATPR 41-076, French J stated:
The principal, and I think probably the only, object of the penalties imposed by s76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.
204 There are aspects of general deterrence and specific deterrence to consider. In relation to Telstra, even though it may be that there is no indication it will contravene a provision of the TPA in the proximate future, a penalty must be imposed which will act as a reminder to Telstra and the community of the consequences of the admitted contraventions: see Australian Competition and Consumer Commission v Rural Press (2001) ATPR 41-833 at [15]. I regard this as the most significant factor in determining the penalties in this proceeding.
205 In addition to the specific factors referred to in s 76 (minored in s 570 of the Telecommunications Act), in CSR Ltd (1991) ATPR 41-076 French J identified the following additional factors as relevant to the assessment of penalty in a case of this nature:
(a) the size of the contravening company;
(b) the degree of power it has, as evidenced by its market share and ease of entry into the market;
(c) the deliberateness of the contravention and the period over which it extended;
(d) whether the contravention arose out of the conduct of senior management or at a lower level;
(e) whether the company has a corporate culture conducive to compliance with the Act, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention; and
(f) whether the company has shown a disposition to cooperate with the authorities responsible for enforcement of the Act in relation to the contravention.
206 The so-called 'French factors' were approved by the Full Court in NW Frozen Foods v Australian Competition and Consumer Commission (ACCC) (1996) 71 FCR 285.
207 In NW Frozen Foods, the court noted that steps taken by a corporation to secure future compliance with the law should be taken into account in the assessment of penalty, but concluded at [18]:
The court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also of others who might be tempted to think that contravention would pay, and detection lead merely to a compliance program for the future.
208 In respect of the size of the contravening company, Goldberg J in Australian Competition and Consumer Commission (ACCC) v Australian Safeway Stores Pty Ltd & Ors (1997) 75 FCR 238 said at [35]-[36]:
I accept that the penalties must be proportionate to the contraventions but in my view corporations the size of GWF have a responsibility to the public at large to ensure that its commercial activities do not contravene Part IV of the Act. When a corporation's commercial activities substantially permeate the commercial and consumer life of the public it is appropriate, in my view, to take that fact into account in determining an appropriate level of penalty for contravention.
209 In a similar vein, in Rural Press (2001) ATPR 41-833, Mansfield J said at [56]:
The size of a contravener is clearly significant in the assessment of penalty, the imposition of a higher penalty will ordinarily apply where a large corporation is involved, to achieve a deterrent effect on that specific individual (see for example Weston Foods; The CC (No 9) Case at 40,827; Safeway Stores at 43,816; ICI at 118; and CSR at 52,155).
210 A contravener's position of influence and importance in the telecommunications industry is a factor to take account of in imposing a penalty: see Trade Practices Commission v Prestige Motors Pty Ltd (1994) ATPR 4-359, per Lee J; Australian Competition and Consumer Commission (ACCC) v CC (NSW) Pty Ltd (No 9) (2000) ATPR 41-756, per Lindgren J and Rural Press (2001) ATPR 41-833 at [10] per Mansfield J. I regard this as a very significant factor in determining the appropriate penalty in these proceeding.
211 By application of the parity principle, assessments of penalty in analogous cases may provide guidance to the Court to ensure that there is parity of treatment of similar circumstances. Equality before the law is important. However, as Hill J observed in Australian Competition and Consumer Commission (ACCC) v Universal Music Australia Pty Ltd (No 2) (2002) 201 ALR 618, while pecuniary penalties imposed in one case provide a guide, that guide will seldom, if ever, be able to be used mechanically.
212 It is also to be remembered, as noted by Burchett and Kiefel JJ in NW Frozen Foods Pty Ltd (1996) 71 FCR 285 at 295, that:
There should not be such an inequality as would suggest that the treatment meted out has not been even-handed… However, things are rarely equal where contraventions of the Trade Practices Act are concerned. In the present case, differing circumstances, size, market power and responsibility for the contraventions, as well as other factors, complicate any attempt to compare the penalties imposed on the appellant with those imposed on the other corporations.
213 Their honours relevantly added;
Another form of comparison is not appropriate. The facts of the instant case should not be compared with a particular reported case in order to derive therefrom the amount of the penalty to be fixed. Cases are authorities for matters of principle; but the penalty found to be appropriate, as a matter of fact, in the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case.
214 There has only been one case to date under s 570 of the Telecommunications Act which is of very limited value in the context of this proceeding. In Australian Communications and Media Authority v WE.NET.AU Pty Ltd [2008] FCA 1530, a penalty of $6,000 was imposed in respect of a number of contraventions of the service provider. The conduct related to billing terms by a small Internet Service Provider and the imposition of a fee in the event of a billing dispute. The penalty ordered by the Court reflected an agreed penalty between the respondent and ACMA following a Court ordered mediation of the issue. The Court also took account of the parlous financial circumstances of the respondent in accepting the agreed penalty figure.
215 It is apparent that there are many difficulties in simply referring to penalties previously imposed for contraventions of legislation in widely differing circumstances or in circumstances where some of the factors are similar but others dissimilar to those of the present proceeding. In each case, the Court must take into account the deterrent effect of the penalty and the fact that the penalties 'should reflect the will of Parliament that the commercial standards laid down in the Act must be observed but not be so high as to be oppressive': see Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR 40-091 at 17,896.
216 However, Telstra submitted that out of the total of about 96 corporate penalty cases under Pt IV of the TPA (since 1996), there have only been three instances in which the penalty imposed exceeded the maximum penalty for one contravention, even though each of the cases involved multiple contraventions. Telstra submitted these three cases are instructive, because they show that a penalty above the maximum for a single contravention, even in cases involving a large number of contraventions, will only be warranted in circumstances where the conduct has been contumelious, conducted in secret, and at the direction of and with the involvement of senior management. None of those features are present in the contravening conduct in this case.
217 Telstra submitted that each of the three cases in which a penalty exceeding the penalty for a single contravention was imposed involved:
(a) cartel conduct with deliberate contraventions of the TPA;
(b) conduct that was covert and extended over a number of years;
(c) active participation on the part of senior management; and
(d) delayed or no co-operation with the ACCC.
218 Telstra submitted that the other cases under s 46 and s 47 of the TPA that are relied upon by the ACCC in its submissions and which attracted significant penalties for corporations, such as Australian Competition and Consumer Commission (ACCC) v Safeway Stores Pty Ltd (No 4) (2006) ATPR 42-101($8.9 million), Universal Music Australia v Australian Competition and Consumer Commission (ACCC) (2003) 131 FCR 529 ($1 million), and Australian Competition and Consumer Commission (ACCC) v Fila Sport Oceania Pty Ltd (2004) ATPR 41-983 ($3 million), can also be distinguished from the present case. In those three cases there were significant aggravating features not present in the proceeding presently before the Court:
(a) all three cases involved senior management (or, in the case of Safeway Stores Pty Ltd (No 4) (2006) ATPR 42-101, an 'important person') from the relevant companies;
(b) all three cases involved conduct that was deliberate; and
(c) all three cases involved conduct by the parties that was directed towards detrimentally affecting competition, and in Safeway Stores Pty Ltd (No 4) (2006) ATPR 42-101, seeking to obtain a commercial advantage from the conduct.
219 Telstra submitted that the Court should adopt the widely utilised practice of imposing a single penalty for all of the contraventions. This was said to be consistent with the overwhelming majority of cases under Pt IV of the TPA involving penalties for multiple instances of the same or similar conduct.
220 Telstra submitted that the conduct giving rise to the contraventions in these proceedings was not independent and unrelated. The contraventions of the TPA and Telecommunications Act were submitted to all flow from the same underlying issue, namely failures of process.
221 It was submitted by Telstra that this approach towards the imposition of penalty has been applied in a number of key cases, including:
(a) Trade Practices Commission v Allied Mills Industries Pty Ltd and Others (No 4) (1981) 37 ALR 256, where Sheppard J followed the approach of Kitto J in L Vogel and Son Pty Ltd v Anderson (1968) 120 CLR 157 (at 164-5)and did not award penalties in respect of each breach in question, but in respect of the whole of the conduct involved on the basis that all the breaches flowed form the same conduct;
(b) Rural Press Ltd (2001) ATPR 41-833, where the Court imposed a single penalty after recognising the relevant contraventions were 'part and parcel' of what was essentially the same conduct; and
(c) Australian Competition and Consumer Commission (ACCC) v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169, where the Court imposed a single penalty against each of Schneider Electric, Wilson Transformer Company and Tyree Transformers (being the parties to the cartel) notwithstanding there were multiple contraventions by each party.
222 Telstra submitted that where there is a multiplicity of contraventions before the Court, it would be wrong for the Court to calculate the applicable penalty by way of contravention-based arithmetic, referring to Mill v The Queen (1988) 166 CLR 59. It was submitted that the contraventions and, more specifically, any underlying contravening conduct, must be viewed by the Court as a whole.
223 Telstra submitted that the ACCC in its closing submissions ignored these principles. It was submitted that the ACCC referred very briefly to the totality principle, contending that a penalty of $34 million would be consistent with that principle, because $34 million is 13% of a total theoretical penalty. It was submitted that there was no foundation in the authorities for an approach of the kind adopted by the ACCC.
224 First and foremost, I am of the view that s 570(5) of the Telecommunications Act has no direct application in this proceeding.
225 This is not a proceeding in respect of the 'same conduct' having occurred for the purposes of s 570(5) of the Telecommunications Act, other than to the extent the very same conduct involving a failure to comply with s 152AR(5)(c) of the TPA is also alleged to be a failure to comply with cl 17 of Sch 1 of the Telecommunications Act. If s 570(5) was otherwise applicable there may be some statutory basis for a 'global' penalty in respect of the 27 contraventions. Otherwise, s 570(1) of the Telecommunications Act indicates that the Court should make an order in respect of each contravention of s 68(1) of the Telecommunications Act. It is to be recalled that s 570(1) is the applicable provision here because the admitted contraventions arise in relation to s 68(1) of the Telecommunications Act.
226 That this proceeding is not in respect of the 'same conduct' in relation to the 27 contraventions for the purposes of s 570(5) is apparent from the various descriptions of the admitted contravening conduct - involving different access seekers, different Telstra staff, different considerations undertaken to deny access, different locations, different times and difference consequences. I do not consider that even if Telstra established that the contraventions all arose from one cause (namely 'failure of process'), this would mean the contraventions were to be treated globally.
227 Therefore, the authorities that proceed to consider global penalties upon this statutory basis may be distinguished and are inapplicable.
228 However, the Court must have regard to the totality principle to ensure that the penalties imposed are just and appropriate (see Mill (1988) 166 CLR 59 at 62 to 63; Trade Practices Commission v Allied Mills Industries Pty Ltd and Others (No 4) (1981) ATPR 40-241 at 43, 182; Trade Practices Commission v TNT Australia Pty Limited (1995) ATPR 41-375 at 40, 167 and ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169).
229 Application of the totality principle requires the Court to review the entirety of the conduct and to determine whether the proposed penalty is appropriate 'as a whole'. The purpose of the exercise is to ascertain whether the proposed penalty is just and appropriate for the entirety of the contravening conduct, looking at the degree of misconduct involved.
230 The rationale underlying the totality principle is to ensure that the proposed penalty is not out of proportion with the conduct giving rise to the contraventions when viewed collectively, and to ensure the penalty is accordingly just and appropriate from the perspective of that collective assessment.
231 In looking at the contraventions in this proceeding, it is useful to refer to the Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd (1980) ATPR 40-161 at [42,277] where Lockhart J talked in terms of the 'same episode' when considering an appropriate penalty:
Guidance is given in the field of sentencing for criminal offences by the well-known principle that where several offences are heard together and arise out of the same transaction it is a sound working rule that the sentences imposed for those offences should be made concurrent; it is inappropriate to sentence consecutively when the offences were all really involved in the same episode: see R. v. Duff a decision of the full court of this court, judgment delivered 6 December 1979; R. v. Walsh (1965) 109 Sol. J. Pt. 1 150; R. v. Melville (1956) 73 W.N. (N.S.W.) 579; R. v. Hussain Crim. L.R. 712; R. v. Hally (1965) 58 Q.R. 582 and Re: P.J. Kastercum (1972) 56 Cr. App. R. 298.
232 Justice Lockhart considered at [42,277] that the contraventions arose out of:
the one course of conduct in that it was directed to Woolworths and reflected the adherence by the respondent to a policy of engaging in resale price maintenance in relation to Woolworths.
233 He then said at [42,277]:
I accept that the contraventions arose out of the one course or pattern of conduct. Although it is necessary to look at each contravention separately, nevertheless consideration must be given to the facts common to each contravention.
234 In this way, Lockhart J regarded the seven contraventions as falling into three categories relating to the conversations giving rise to the contraventions, although from 'one course or pattern'. From there, consideration was given to the facts common to each contravention. However, Lockhart J did not treat the case as involving only one contravention even though arising from 'one course or pattern', namely the adherence to a policy of engaging in resale price maintenance in relation to Woolworths.
235 In the final analysis, in applying the totality principle, the question is one of discretion in coming to the correct, adequate and appropriate penalties. In discussing the totality principle, the majority of the Full Court in Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39 said at [41] to [42]:
As noted above (see [15]), the principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, the Court must ensure that the offender is not punished twice for the same conduct. 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: Johnson v The Queen (2004) 205 ALR 346 at [3] - [4] and [34] and Attorney-General v Tichy (1982) 30 SASR 84 at 92 - 93. It is a tool of analysis (Tichy 30 SASR 84 at 93) which a Court is not compelled to utilise: Royer v Western Australia [2009] WASCA 139 at [21]-[34] and [153]-[156].
A Court is not compelled to utilise the principle because, as Owen JA said in Royer [2009] WASCA 139 at [28],"[d]iscretionary judgments require the weighing of elements, not the formulation of adjustable rules or benchmarks". The exercise of the sentencing discretion does not fall to be exercised in a vacuum. It is a matter of judgment to be exercised according to the facts of each case and having regard to conflicting sentencing objectives: see McHugh J in AB v The Queen (1999) 198 CLR 111 at [14]. For the same reasons, and contrary to the appellants' submissions, even if offences are properly characterised as arising from the one transaction or a single course of conduct, a judge is not obliged to apply concurrent terms if the resulting effective term fails to reflect the degree of criminality involved. Or, in the case of fines, a judge is not obliged to start from the premise that if there is a single course of conduct, the maximum fine is, in the present case, $110,000 for the CFMEU and $22,000 in the case of Mr Mates.
236 I have considered the various common aspects of 'process failure' in arriving at the appropriate range of individual penalty. As I have said, I do not accept that Telstra has only committed in a sense 'one wrong' of failing to have a process in place to prevent all the contraventions occurring. The conduct of Telstra to be penalised under the Telecommunications Act goes well beyond the one act Telstra submits needs to be penalised.
237 I should indicate that it is not necessarily an answer to a contravention or even necessarily a mitigating factor, that 'process failure' occurred. After all, there is an obligation to ensure that such process failure does not occur through the implementation of appropriate policies: see Northrop Jin Ducret v Nissan Motor Car Co (Australia) Pty Ltd (1979) ATPR 40-111 at 18, 153 and Bennet J in Australian Competition and Consumer Commission v Chubb Security Australia Pty Limited (2004) ATPR 42-041 at [86].
238 This is not to say the Court should not consider the reason for the contraventions, and examine the cause of the failure to comply with the relevant legislation. In Australian Competition and Consumer Commission (ACCC) v Allans Music Group Pty Ltd [2002] FCA 1552, Tamberlin J imposed a fine of $80,000 for nine contraventions of s 53(e) of the TPA. The maximum applicable penalty was $200,000, as it was agreed that the nine contraventions were to be grouped by reason of s 79(2) of the TPA. The effect of the conduct of the defendant in advertising false discounts on goods in a catalogue was to mislead or be likely to mislead members of the public. The scale of the advertising was broad. There was no evidence of actual damage. The representations were said to have arisen from inadequate procedures. However, not accepting that mere oversight was involved, Tamberlin J did not view the existence of inadequate procedures an excuse, and said at [23]:
… the failure to have any satisfactory process in place to ensure compliance with the Act is an important consideration when examining the conduct of the defendant.
239 However, an extensive compliance program was subsequently established, the defendant had co-operated with the ACCC and pleaded guilty and, as 'an important consideration', there were no prior convictions. There were no complaints by customers and the defendant proposed to offer to each of the affected customers a gift voucher. Nevertheless, even in those circumstances, his Honour imposed a penalty which was 40% of the maximum.
240 I now turn to other aspects relied upon by Telstra as mitigating factors.
241 Telstra's co-operation, admission of contraventions, and voluntary taking of corrective measures are also relevant factors in the assessment of penalty. A discount is justified if the admissions are properly to be seen as a willingness to facilitate the course of justice. In addition, remorse and an acceptance of responsibility merit consideration.
242 In relation to a plea of guilty the majority judgment in Cameron v The Queen (2002) 209 CLR 339 explained at [11] to [14] the rationale for providing a discounted sentence for a plea of guilty in criminal proceedings. The majority said:
11. It is well established that the fact that an accused person has pleaded guilty is a matter properly to be taken into account in mitigation of his or her sentence. In Siganto v The Queen it was said:
"a plea of guilty is ordinarily a matter to be taken into account in mitigation; first, because it is usually evidence of some remorse on the part of the offender, and second, on the pragmatic ground that the community is spared the expense of a contested trial. The extent of the mitigation may vary depending on the circumstances of the case."
It should at once be noted that remorse is not necessarily the only subjective matter revealed by a plea of guilty. The plea may also indicate acceptance of responsibility and a willingness to facilitate the course of justice.
12. Although a plea of guilty may be taken into account in mitigation, a convicted person may not be penalised for having insisted on his or her right to trial. The distinction between allowing a reduction for a plea of guilty and not penalising a convicted person for not pleading guilty is not without its subtleties, but it is, nonetheless, a real distinction, albeit one the rationale for which may need some refinement in expression if the distinction is to be seen as non-discriminatory.
13. It is difficult to see that a person who has exercised his or her right to trial is not being discriminated against by reason of his or her exercising that right if, in otherwise comparable circumstances, another's plea of guilty results in a reduction of the sentence that would otherwise have been imposed on the pragmatic and objective ground that the plea has saved the community the expense of a trial. However, the same is not true if the plea is seen, subjectively, as the willingness of the offender to facilitate the course of justice.
14. Reconciliation of the requirement that a person not be penalised for pleading not guilty with the rule that a plea of guilty may be taken into account in mitigation requires that the rationale for that rule, so far as it depends on factors other than remorse and acceptance of responsibility, be expressed in terms of willingness to facilitate the course of justice and not on the basis that the plea has saved the community the expense of a contested hearing.
243 The Full Court in Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [75] to [76] and [78] made the following observations:
75 A conventional consideration in assessing a discount in a criminal case for a plea of guilty is the stage in the proceedings at which the plea is entered. Normally, the maximum discount for this factor, sometimes thought to be 25%, is reserved for a plea made at the first reasonable opportunity although, as was indicated in Cameron (at [23] - [24]) there is no obligation to make an early plea to a charge which wrongly particularises the substance to which the charge relates.
76 As Branson J has pointed out (see Alfred v Walter Construction Group Limited [2005] FCA 497) the rationale for providing a discount for an early plea of guilty in a criminal case does not apply neatly to a case, such as the present, where a civil penalty is sought and the case proceeds on pleadings. Nevertheless, in our view, it should be accepted, for the same reasons as given in Cameron, that a discount should not be available simply because a respondent has spared the community the cost of a contested trial. Rather, the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice.
78 The primary judge found moreover, that there was no evidence of contrition or remorse. He said: 'Frank admissions of wrongdoing, and apologies to the employees who have been disgracefully treated, may have operated in mitigation. None were forthcoming'. In the circumstances of the present case, the admission of liability two weeks before the trial was not evidence of contrition or remorse or, except in the most formal of senses, an indication of acceptance of wrongdoing. It would have been open to the primary judge, in our view, to refuse any discount for the admission of liability. There is no basis, therefore, upon which to complain about the allowance of a 'modest' discount of 10%. It was more than ample in the circumstances of this case.
244 It was further observed by Gyles, Stone and Buchanan JJ, at [74] that:
It is important to note that it is not a sufficient basis for a discount that the plea has saved the cost of a contested hearing - that would discriminate against a person who exercised a right to contest the allegations. A discount may be justified, however, if the plea is properly to be seen as willingness to facilitate the course of justice. Remorse and an acceptance of responsibility also merit consideration where they are shown.
245 Telstra also submitted that the contraventions must be see in 'their proper historical and technical context'. In this regard, I accept the following:
(a) Telstra received a total of 5,246 TEBA requests from carriers and service providers in 2006 and 2007;
(b) the rejections that occurred in 2006 and 2007 and that are in issue in this proceeding constituted about 0.5% of the total number of TEBA requests received in that period;
(c) the rejected requests concerned seven TEBA-enabled exchanges, or 1.33% of the 526 TEBA-enabled exchanges in Australia in 2008;
(d) carriers and providers, including in some instances the carriers and providers that were the subject of rejected requests, had already installed and were operating DSLAM equipment at the seven relevant exchanges at the time of the rejected requests;
(e) each of the carriers and providers who had requests rejected continued to install and operate DSLAM equipment in other exchanges throughout the relevant period;
(f) the rapid increase in TEBA requests from about 2005 onwards resulted in congestion at some exchanges;
(g) no requests were rejected at the direction, or with the knowledge or approval, of Telstra's senior management;
(h) since April 2008, Telstra has not rejected any TEBA requests at the seven exchanges relevant to these proceedings;
(i) Telstra has, since around that time, introduced a range of new policies and practices to ensure that exchanges are not included in the capped sites list unless certain procedures are followed and that requests for access to its exchanges are not rejected on the grounds of an absence of capacity on an MDF unless certain procedures are followed. Since those changes have been introduced:
(i) all seven exchanges have been uncapped;
(ii) there are currently no exchanges which are MDF capped only; and
(iii) no access requests have been rejected at the seven exchanges on the grounds of an absence of MDF capacity.
(j) the rejections for access were not targeted at particular carriers or service providers;
(k) the rejected requests were not the result of Telstra using its size or exercising its market position;
(l) Telstra has not previously been found to have engaged in similar conduct relating to its obligations under Pt 3 of Sch 1 of the Telecommunications Act;
(m) Telstra has not been found previously to have contravened Pts IV, XIB or XIC of the TPA;
246 I also accept that Telstra is the only carrier in the telecommunications market that is subject to facilities access requests in any significant volume. Nevertheless, I do not consider that this fact means that general deterrence is not an important consideration, both in relation to possible future carriers, and to other members of the community subject to the requirements of the Telecommunications Act and Pts IV, XIB and XIC of the TPA.
247 In this course of my following remarks, I refer to Schedule A. In Schedule A, the ACCC refers to 'Date of contravening conduct' and 'Date contravening conduct ceased', which may imply each contravention involves continuing conduct. I need not enter this debate. What is clear is that as a result of the refusal to grant access, access was denied over the periods identified by ACCC in Schedule A. It is this consequence that I take into account in assessing particular penalties, and not whether any contravention technically involves 'continuing' conduct.
248 As I have said, none of the contraventions occurred because of conduct that was deliberately anti-competitive at any level within Telstra.
249 I reject any suggestion that the contraventions occurred as a result of any implicit or express direction from the then Chief Executive of Telstra to all Telstra employees to make access to competitors difficult. I also reject any suggestion that the conduct was undertaken in an endeavour to maintain Telstra's revenues and profits at the highest possible level leading to the third tranche of the Telstra float in 2007. There is in my view no evidence to properly support such suggestions, and the evidence of the Telstra employees called indicates clearly that the contraventions did not occur in concert, but as individual events involving separate employees.
250 A number of different approaches in this proceeding could be taken to imposing a penalty. The Court could look to each contravention, consider the appropriate penalty taking into account the totality principle, and then apply any appropriate discount. This was the approach submitted by the ACCC. The Court could group together each exchange or each State, or focus on each period of inability to gain access, and view the contraventions included within those groups as appropriately to be treated together for the purpose of assessing the appropriate penalty. Alternatively, the Court could treat the admitted contraventions as all following from the same cause, and with the maximum penalty being $10 million, and then consider the appropriate discount. This is the approach submitted by Telstra. Another approach would be to look at the capped sites and uncapped sites, and treat that as a basis for grouping the contraventions.
251 There is no scientific approach or arithmetic formula to be applied in determining the appropriate penalty. The circumstances of each contravention need to be looked at, taking into account all the circumstances pertaining to the contravention. I have already indicated what I regard as important and significant considerations, but the other matters I have raised are taken into account.
252 Undoubtedly, the nature of Telstra's contravening conduct in this proceeding had the potential to be very serious from a competition law perspective. The purpose of the access obligations imposed by the TPA and the Telecommunications Act is to facilitate access to Telstra's facilities so as to encourage downstream competition for the benefit of end consumers. The failure to comply with these obligations had the potential to harm consumers. I accept that there is no evidence that this actually occurred in this case, nor that any loss or damage was sustained by the access seekers.
253 However, it is to be recalled that in respect of access to exchange facilitates Telstra has an overwhelming position of bargaining strength. It has control over its exchanges and the power to allow or refuse access. Telstra also has a substantial information advantage compared to access seekers. It is very difficult for access seekers to review or challenge Telstra's decisions to refuse access on the basis that an exchange has no available capacity or for any other reason given to them by Telstra, although as the evidence shows, not impossible. The contraventions in this proceeding would probably not have come to light but for the ACCC's intervention in October 2007 and an investigation thereafter.
254 The seriousness that the contravening conduct must be considered in the context of the fact that the provision of access to bottleneck infrastructure like Telstra's PSTN has been an integral feature of competition policy in Australia for nearly a decade. It was clearly intended to provide considerable consumer benefits in relation to price and performance in the telecommunications sector. The introduction of the standard access obligations, which apply only in respect of the telecommunications regime, was a response to a highly uncompetitive structure of the Australian telecommunication sector. This sector is characterised by a high level of vertical integration and associated market power on the part of Telstra, giving it both the ability and the incentive to favour its downstream retail businesses over its wholesale customers.
255 As the evidence indicated, once Telstra uncapped an exchange on the 11 April 2008, there were a number of applications for access which could have been accepted. This is not to say that the access numbers increased; just that there was the ability of Telstra to accommodate these requests. This demonstrates that significant capacity was available at the exchanges before the uncapping and that Telstra's approval processes for PSR's before uncapping unnecessarily kept access seekers out of exchanges for lengthy periods.
256 The statutory obligations that Telstra contravened were first imposed on Telstra in 2001. Telstra is a very well resourced company. Telstra had more than five years to organise its affairs so as to satisfy the obligations. Whilst I have accepted the conduct did not occur with deliberate anti-competitiveness in mind, the conduct did not occur by accident or by inadvertence. Telstra's managers and employees were given the authority on behalf of the Telstra to make decisions to refuse competitors access to its facilities and to impose conditions on any offer of access. The relevant managers and employees were not properly trained in relation to Telstra's access obligations, or otherwise failed to comply with any training that was given to them, and Telstra had no adequate system for checking on compliance.
257 In this regard, Telstra failed to put in place exchange access processes and procedures which would ensure that Telstra meet the required regulatory and legal obligations. Telstra also failed to provide the necessary oversight to ensure that Telstra was fulfilling its access obligations. This is not a case in which junior employees ignored directions from senior management. The staff involved were not low level staff but experienced staff. In the period from 2006 to 2008, I find that Telstra took no steps to develop a culture of compliance with its access obligations under the TPA and the Telecommunications Act.
258 The obligations imposed by the TPA and the Telecommunications Act are strict or absolute in the sense they do not require proof of an anti-competitive purpose or effect or of any intention. The strict nature of the obligations recognises that Telstra has very substantial market power in respect of fixed line telecommunications services (especially to residential consumers) and any refusal by Telstra to provide access to exchange facilities in a timely manner will harm competition. The importance of these obligations is also reflected in the size of the maximum penalty for each contravention, namely $10 million. I accept that this maximum penalty is not only directed to particular contraventions of the access obligations, and covers many possible contraventions. However, this does not detract from the importance of the access obligations cast upon Telstra, and the significant consequences that could flow from failing to comply with the requirements of the Telecommunications Act.
259 The admitted contraventions demonstrate substantial non-compliance by Telstra with its legal obligations. The non-compliance was within seven exchanges located in four States, although only seven out of the five hundred exchanges nationwide. The contraventions were repeated on numerous occasions over a period of nearly two years, although this was only a very small percentage of the total activity.
260 As the evidence indicates, the circumstances relating to each contravention involved various combinations of the following salient features:
· there were rejections notwithstanding large numbers of vacant line side blocks available;
· decisions were made to cap with little or no checking;
· there were failures to give access over lengthy periods;
· there were failures to uncap or provide access when an audit identified space available;
· there were failures to provide access notwithstanding photographic evidence available that space was available; and
· there were instances where Telstra was aware of significant available space but continued to cap for a lengthy period of time.
261 The ACCC in proposing penalties for each individual offence allocated different proposed penalties depending upon the gravity of the contravening conduct which related to the continuation of the failure to provide access, and specific matters that were said to aggravate the contravening conduct. These included placing unreasonable conditions on access that was sought, continuing to refuse access after a audits identified space available and inconsistent conduct between access users.
262 In considering the evidence of the circumstances of the contraventions, there were a number of decisions made by Telstra staff that did not seem at all explicable and that objectively seemed unreasonable. However, looking at the evidence as to how these decisions were made, I do not detect any deliberateness to act in anti-competitive conduct on the part of any of the members of the Telstra staff. Therefore, whilst difficult to explain, decisions were taken and demands were made on access seekers on occasions by Telstra which were unreasonable, but which were explicable by reference to various failures of process in each individual case.
263 This is not to say there was one cause, or one episode or one contravention. Even the 'process failure' relied upon Telstra as the common cause involved many aspects. Each process failure had a different impact as can be seen from the circumstances of each contravention. In most cases Telstra staff did not understand their responsibilities or role within Telstra. In some cases, there was a lack of communication between Telstra staff, or a communication of misinformation. In other cases, there was a failure to provide access (such as to uncap a site after an audit) when information clearly indicated that space was available. There was a general lack of training and co-ordination, and knowledge of the importance and significance of access obligations. There was also a failure to respond to changed circumstances, so that when access was available it could be provided. There were other failures which Telstra now accepts need to be addressed, and which Telstra has sought to address in its new procedures.
264 As I have already indicated, I do not accept the submission of Telstra that the conduct the subject of the contraventions should be viewed as effectively one contravention, with a maximum penalty to be $10,000,000. I have already considered s 570(5) of the Telecommunications Act, and concluded that the provision has no application to this proceeding.
265 The Telecommunications Act directs attention to the conduct or act of not providing access, not the underlying reason for refusing access. In other words, the Telecommunications Act does not penalise for a failure to have a system in place to provide access; the obligation is to provide access in accordance with the legislative requirements. For the reasons I have already given, failing to provide access is a significant failure in competition terms. The failure to implement policies which could have provided access if implemented is not an excuse or mitigating factor that has significant weight. As I have said, I do accept that the conduct of Telstra was not deliberately anti-competitive.
266 These considerations would indicate that the penalty for each contravention should be at the lower end of the scale, which I would take to be in the range of $750,000 to $1.5 million. I come to this range keeping in mind various facts or salient features common to each contravention. If any one or more contravention involved deliberate anti-competitive behaviour, then depending on the circumstances, the higher range of penalty may have been appropriate.
267 In my view, the significant factor in considering and distinguishing each contravention (keeping in mind my earlier comments) is the period of time in which there has been a failure to provide access. The other factors relied upon by Telstra in Schedule A are relevant to the overall circumstances of each contravention, but I do not consider they warrant any 'additional' penalty. I say this because of the findings I have made in relation to the circumstances of each contravention, and my acceptance of the evidence of those employees called by Telstra.
268 In considering the range I have adopted, taking into account the period in which access was not provided, I assign the following amounts:
1. $750,000 for where access was not provided for 3 months or less;
2. $1,000,000.00 for where access was not provided for 3 months to 1 year; and
3. $1,500,000.00 for where access was not provided for more than 1 year.