Australian Competition and Consumer Commission v TPG Internet Pty Ltd

• Jurisdiction: Australia Federal only
• Judge: French CJ,,Crennan,Bell,Keane JJ
• Judgment Date: 12 December 2013
• Neutral Citation: [2013] HCA 54,2013-1212 HCA B
• Docket Number: M98/2013
• Court: High Court
• Date: 12 December 2013

Australian Competition And Consumer Commission

Appellant

and

Tpg Internet Pty Ltd

Respondent

[2013] HCA 54

French CJ, Crennan, Bell, Gageler and Keane JJ

M98/2013

HIGH COURT OF AUSTRALIA

Australian Competition and Consumer Commission v TPG Internet Pty Ltd

Consumer law — Misleading or deceptive conduct — Whether respondent's advertisements breached Trade Practices Act 1974 (Cth) (‘TPA’) and Australian Consumer Law — Whether ‘dominant message’ approach correct — Whether ordinary and reasonable consumer would have starting assumption that advertised internet service was bundled with telephony service — Whether consumers must consider whole of advertisement (including small print or quickly spoken detail) to correct otherwise misleading headline representations.

Consumer law — Pecuniary penalties — Whether Full Court of Federal Court failed to adequately consider specific and general deterrence in reducing pecuniary penalty — Whether reduced pecuniary penalty manifestly inadequate — Whether primary judge correctly assessed number and classes of contraventions.

Words and phrases — ‘dominant message’.

Trade Practices Act 1974 (Cth), ss 52, 53, 53C(1)(c), 76E(3).

Competition and Consumer Act 2010 (Cth), Sched 2, ss 18, 29, 224(3).

Representation:

J T Gleeson SC, Solicitor-General of the Commonwealth and C D Golvan SC with E J C Heerey for the appellant (instructed by Australian Government Solicitor)

N J O'Bryan SC with M J Hoyne for the respondent (instructed by Truman Hoyle Lawyers)

ORDER

Appeal allowed with costs.

Set aside order 1 of the Full Court of the Federal Court of Australia made on 20 December 2012 and the orders of the Full Court made on 4 April 2013 and, in their place, order that:

(a) orders 4, 9 and 10 of the Federal Court made on 15 June 2012 be set aside;

(b) the appeal to the Full Court be otherwise dismissed; and

(c) the respondent pay the appellant's costs of the appeal to the Full Court.

1 French CJ,, Crennan, Bell and Keane JJ From late September 2010 until early November 2011, TPG Internet Pty Ltd (‘TPG’) engaged in a multi-media advertising campaign, the centrepiece of which was the offer to consumers of an attractive price for the ADSL2+ service which it supplies. That service utilises a consumer's home telephone line to provide a broadband internet connection that has no data download limit 1.

2 The advertisements deployed in TPG's campaign prominently displayed the offer to supply broadband internet ADSL2+ service for $29.99 per month. Much less prominently, the advertisements qualified this offer, stating that it was made on the basis that the ADSL2+ service was available only when bundled with a home telephone service, provided by TPG through landline technology, for an additional $30.00 per month (with a minimum commitment of six months). In addition, TPG required the consumer to pay a setup fee of $129.95 plus a deposit of $20.00 for telephone charges.

3 The Australian Competition and Consumer Commission (‘the ACCC’) brought proceedings in the Federal Court of Australia against TPG. It alleged that the advertisements were misleading and deceptive by reason of the disparity between the prominent headline offering TPG's ADSL2+ service at an attractive price and the less prominent terms qualifying that offer. The ACCC also alleged that some of the advertisements contravened s 53C(1)(c) of the Trade Practices Act 1974 (Cth) (‘the TPA’) by failing to specify ‘in a prominent way and as a single figure, the single price’ for the package of services offered by TPG.

4 The primary judge upheld the ACCC's claim, and made a number of orders against TPG, including the imposition of a pecuniary penalty of $2 million.

5 TPG was largely successful in an appeal to the Full Court of the Federal Court of Australia. All but three of the primary judge's findings that TPG had engaged in misleading conduct were set aside; and the pecuniary penalty was reduced to a total of $50,000 in respect of the findings of infringement which were upheld.

6 The ACCC appeals to this Court pursuant to special leave granted on 1August 2013.

7 The ACCC submitted, among other things, that it was not open to the Full Court, in the proper exercise of its appellate function, to hold that the advertisements were not misleading. Further, the ACCC contended that the penalty imposed by the primary judge should be restored in accordance with his Honour's findings as to the extent of TPG's contraventions and, given the circumstances of TPG's offending, that the penalty reflect the importance of personal and general deterrence considerations.

8 For the reasons which follow, it should be accepted that the Full Court erred in setting aside the findings of the primary judge as to the extent of TPG's contraventions of the TPA; and his Honour's assessment of the appropriate pecuniary penalty of $2 million should be restored.

Statutory framework

9 Section 52 of the TPA provided that ‘[a] corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.’

10 Section 53 of the TPA relevantly provided that:

‘A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services: —

(e) make a false or misleading representation with respect to the price of goods or services; [or]

…

(g) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.’

11 The TPA was amended by the Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth) with the consequence that the TPA applied in relation to advertisements published before 1 January 20and the Australian Consumer Law 2 (‘the ACL’) applied with respect to advertisements

published on or after that date. Sections 52 and 53(e) and (g) of the TPA are in the same terms as ss 18 and 29(1)(i) and (m) of the ACL except that the phrase ‘[a] person must not’ is used in the ACL rather than the phrase ‘[a] corporation shall not’ in the TPA. It was common ground that this difference was of no relevant consequence 3.

12 Under s 76E of the TPA and s 224 of the ACL, the maximum pecuniary penalty for each act or omission in contravention of s 53(e) and (g) of the TPA or s 29(1)(i) and (m) of the ACL was $1.1 million 4.

13 Section 53C(1) of the TPA relevantly provided:

‘A corporation must not, in trade or commerce, in connection with:

• (a) the — possible supply of — services to a person …; or

• (b) the promotion by any means of the supply of — services to a person …;

make a representation with respect to an amount that, if paid, would constitute a part of the consideration for the supply of the — services unless the corporation also:

(c) specifies, in a prominent way and as a single figure, the single price for the — services’.

The advertisements

14 Between 25 September 2010 and 7 October 2010, in the first phase of the campaign, TPG deployed advertisements on three national television stations and seven capital city radio stations, in a number of national and capital city newspapers, and on the websites of TPG and two third parties (‘the initial advertisements’).

15 On 4 October 2010, the ACCC was prompted by the initial advertisements to write to TPG to convey its concerns regarding the advertisements. Although

TPG did not accept that the ACCC's concerns were warranted, it amended the advertisements with effect from about 7 October 2010.

16 The advertisements in the second phase of the campaign were deployed from 7 October 2010 until 4 November 2011 (‘the revised advertisements’). The revised advertisements were published on or in four national television stations, the same seven radio stations as the initial advertisements, a wider range of national and capital city newspapers, the TPG website and third party websites, national cinema screens, national magazines, coupon booklets left in letter boxes, brochures, public transport, billboards and noticeboards 5.

17 Representative samples of the advertisements may be found annexed to the reasons of the primary judge and the Full Court. The primary judge and the Full Court viewed replays of the television advertisements and listened to replays of the radio advertisements. The parties did not invite this Court to do likewise.

The findings and conclusions of the primary judge

18 The primary judge proceeded to his conclusions on the basis that TPG's target audience consisted of ‘the broad class of Australian consumers around mainland capital cities who were users or potential users of broadband internet services.’6 His Honour found that the target audience did not include people who knew little or nothing about broadband internet services 7. While users of ADSL2+ were more knowledgeable about such services than the general class of users or potential users of internet services, the primary judge found that ‘this does not impute a high level of knowledge about broadband internet to the ordinary or reasonable consumer.’8

The bundling condition

19 His Honour found that the target audience included first time users of ADSL2+ services 9. The primary judge also found that, by virtue of the array of available internet options, the ordinary or reasonable consumer would not have any starting assumption as to whether TPG's offering was of a separate or bundled service, and would rely on the advertisement for information as to the service offered 10.

20 The primary judge found that each advertisement had the same dominant message, namely: ‘Unlimited ADSL2+ for $29.99 per month’ 11. His Honour found that the ‘ordinary or reasonable consumer taking in only the dominant message would have the...