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Business Law

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Introduction to Business Law
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Last Updated: 12 December 2013 HIGH COURT OF AUSTRALIA FRENCH CJ, CRENNAN, BELL, GAGELER AND KEANE J J AUSTRALIAN

COMPETITION AND CONSUMER COMMISSION APPELLANT AND TPG INTERNET PTY LTD RESPONDENT Australian Competition and Consumer

Commission v TPG Internet Pty Ltd 2013 HCA 54 12 December 2013 M98/2013 ORDER 1. Appeal allowed with costs. 2. Set aside

order 1 ofthe Full Court ofthe Federal Court ofAustralia 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. On appeal from the Federal Court of Australia 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)

Last Updated: 12 December 2013
HIGH COURT OF AUSTRALIA
FRENCH CJ,
CRENNAN, BELL, GAGELER AND KEANE JJ
AUSTRALIAN COMPETITION AND CONSUMER
COMMISSION APPELLANT
AND
TPG INTERNET PTY LTD RESPONDENT
Australian Competition and Consumer Commission v TPG Internet Pty Ltd
[2013] HCA 54
12 December 2013
M98/2013
ORDER
1. Appeal allowed with costs.
2.
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.
On appeal from the Federal Court of Australia
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)
Notice: This copy of the Court’s Reasons for Judgment is subject to formal revision prior to
publication in the Commonwealth Law Reports.
CATCHWORDS
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).
1.
FRENCH CJ, CRENNAN, BELL AND KEANE JJ. From late September
2010 until early November 2011, TPG Internet Pty Ltd (“TPG”) engaged in a multimedia 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 16
August 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 2011 and 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 impression that the entire cost of the service is $29.99 per month, with no
other charges and no obligation to acquire another service”[12]; and the balance of the
advertisement which contained that information was not given sufficient prominence
to counter the effect of the headline claim[13].
21.
The primary judge held that the dominant message was false “because – as
TPG conced[ed] – to acquire Unlimited ADSL2+ for $29.99 per month a consumer is
also obliged to rent a home telephone line from TPG and to pay an additional $30 per
month for it.”[14]
22.
His Honour observed that the bundling condition operated to[15]:
“double the headline advertised monthly charge which is likely to make it much less
attractive for some consumers. For many consumers it will involve the acquisition of a
service extra to the broadband service that they are interested in acquiring. For many young
people that no longer use landline telephones and rely instead on mobile telephones, the
additional landline telephone rental is likely to be a service that they do not want.”
23.
In these circumstances, the primary judge concluded that the information
about TPG’s bundling condition needed to be “quite clear and prominent if it [was] to
correct the misleading impression of the message.”[16]
24.
His Honour found that the initial and revised television advertisements did not
meet this requirement, and made findings to similar effect in relation to the initial and
revised radio advertisements, newspaper and other print advertisements and internet
advertisements, as well as in relation to the revised public transport, billboard and
noticeboard advertisements[17].
25.
As to the revised brochure advertisements, the primary judge accepted that
consumers would read the brochure more carefully than a newspaper so that any
misleading impression created by the headline offer in relation to the price of the
ADSL2+ service was likely to be corrected by the balance of the information[18].
The setup condition
26.
The primary judge accepted that setup fees are always charged for broadband
contracts for less than 24 months, and that the consumers targeted by the campaign
would be aware of this fact. Nevertheless, his Honour held that because the dominant
message gave the impression that there would be no further charges, it was necessary
for the advertisements to qualify clearly that message with an indication of the
requirement of a further fee[19].
27.
In relation to the initial television, radio, newspaper and internet
advertisements, the primary judge found that none of them was sufficiently clear as to
the requirement of the setup fee[20]. Consequently, his Honour held, in relation to
these advertisements, that a consumer would likely conclude that no further fee was
required by TPG[21]. With respect to the revised campaign, the primary judge found
that all advertisements, except the revised radio advertisement, provided information
regarding the setup fee that was sufficiently clear to correct what would otherwise
have been a misleading message[22]. As to the revised radio advertisement, his
Honour held that many consumers hearing it were likely to have seen or heard one or
other of TPG’s advertisements and to be aware of the existence of the setup fee as a
result[23].
Section 53C(1)(c)
28.
The primary judge also concluded that the single price of $509.89 was not
displayed in a prominent way, within the meaning of s 53C(1)(c) of the TPA, in the
initial television, newspaper and internet advertisements[24]. The ACCC had made no
complaint in this regard in relation to any of the revised advertisements.
Penalty
29.
In a separate judgment, the primary judge made orders for injunctions,
pecuniary penalties, corrective advertising, the implementation by TPG of a
compliance program and costs[25]. The only one of these orders presently in
controversy relates to the quantum of the pecuniary penalties imposed on TPG. His
Honour ordered that TPG pay a total penalty of $2 million made up as follows[26]:
“Conduct Penalty
First phase advertisements
Television $175,000
Radio $150,000
Internet $125,000
Print $150,000
Subtotal $600,000
Second phase advertisements
Television and cinema $350,000
Radio $250,000
Internet $200,000
Print $325,000
Outdoor $275,000
Subtotal $1,400,000
Total: $2,000,000”
The conclusions of the Full Court
30.
The Full Court (Jacobson, Bennett and Gilmour JJ) was not persuaded that the
primary judge was wrong in his conclusion that the initial television advertisement
was misleading[27]. Further, the Full Court held that the primary judge’s conclusions
in relation to s 53C(1)(c) revealed no appealable error[28].
31.
On the other hand, the Full Court held that the revised television
advertisement, initial and revised radio advertisements, initial and revised newspaper
advertisements, initial and revised online advertisements and public transport
advertisements were not misleading[29].
32.
Their Honours proceeded to that determination on the footing that they were in
as good a position as the primary judge to determine the proper factual findings to be
made in relation to each of the advertisements, and were required to give effect to
their conclusion in that regard[30].
33.
The Full Court did not reject the primary judge’s conclusions in relation to the
misleading character of the advertisements simply on the basis of a different
impression of the facts of the case or the inferences properly to be drawn from those
facts[31]. Close examination of the Full Court’s reasons shows that their Honours’
conclusion reflected differences in point of principle with the approach taken by the
primary judge. It is necessary to identify those points of divergence and to note their
influence on the conclusions of the Full Court before proceeding to a discussion of the
reasons for upholding the approach of the primary judge.
Differences in approach
34.
The Full Court acknowledged that it was not in dispute that “a percentage of
the target audience is likely to have a lower level of interest in broadband internet
bundled with a home telephone line”, and that it was agreed that “the percentage of
consumers with a fixed home telephone line has been falling since 2005, particularly
amongst 18-24 year olds living away from home.”[32]
35.
The Full Court differed from the primary judge in relation to his Honour’s
view that the “dominant message” of the advertisements was of critical importance in
determining whether they were to be characterised as misleading. In that regard, the
Full Court treated as decisive[33] the statement of principle of Gibbs CJ in Parkdale
Custom Built Furniture Pty Ltd v Puxu Pty Ltd[34] that:
“where the conduct complained of consists of words it would not be right to select some
words only and to ignore others which provided the context which gave meaning to the
particular words.”
36.
Their Honours observed that[35]:
“consumers to whom the advertisements were directed must … be taken to have some
familiarity with the market for the provision of broadband services. In particular, they would
know that services such as ADSL2+ are offered for sale as either ‘bundled’ or ‘stand alone’.”
37.
The Full Court brought this statement of principle and their Honours’ factual
observation together, saying[36]:
“to approach the question as one based solely upon the ‘dominant message’ does not take into
account the need to have regard to the attributes of the hypothetical reader or viewer. As we
have said, these attributes include knowledge of the ‘bundling’ method of sale commonly
employed with this type of service, as well as knowledge that set-up charges are often
applied.”
38.
The Full Court’s approach was also informed by the statement of Gibbs CJ in
Puxu[37] that “[t]he heavy burdens which the section creates cannot have been
intended to be imposed for the benefit of persons who fail to take reasonable care of
their own interests.” Paraphrasing this statement, the Full Court said “[t]he legislation
does not operate for the benefit of those who fail to take care of their own
interests”[38]. What was said in Puxu and adopted by the Full Court reflects a similar
observation in Miller & Associates Insurance Broking Pty Ltd v BMW Australia
Finance Ltd[39] that s 52 of the TPA (and now s 18 of the ACL):
“does not impose on a party an obligation to volunteer information in order to avoid the
consequences of the careless disregard, for its own interests, of another party of equal
bargaining power and competence.”
39.
Whether speaking of representations to the public at large or in negotiations
between parties of equal bargaining power and competence, the quoted observations
in Puxu and Miller go to the characterisation of conduct as misleading or deceptive.
Conduct is misleading or deceptive, or likely to mislead or deceive, if it has a
tendency to lead into error. That is to say there must be a sufficient causal link
between the conduct and error on the part of persons exposed to it[40]. It is in that
sense that it can be said that the prohibitions in s 52 and s 18 were not enacted for the
benefit of people who failed to take reasonable care of their own interests.
40.
The effect of these differences of approach upon the conclusion of the Full
Court can be seen in the following passage in the reasons of the Full Court[41]:
“The primary judge answered the critical question by finding that the dominant message in
each of the relevant advertisements was that the reader or viewer could acquire ADSL2+ for
$29.99 per month without incurring an obligation to acquire any additional service or to pay
any further charges.
On that approach, the ordinary or reasonable reader would be misled unless the misleading
dominant message was corrected by a sufficiently clear and prominent statement which
prevented the inaccurate dominant message from being misleading, or likely to mislead or
deceive.
In our respectful view, that was not the correct approach to adopt when considering the
advertisements. It is true … that many persons will only absorb the general thrust. But this is
not a mandate for ignoring the rule that the whole of the advertisement must be considered in
its full context.”
41.
It is to be noted that, in this passage, their Honours accepted that “many
persons will only absorb the general thrust” of the advertisements. That view of the
tendency and effect of the advertisements was in accord with the conclusion of the
primary judge. The Full Court reached the conclusion that TPG’s advertisements were
not misleading via a view of principle which differed from that of the primary judge,
and which should not have been of decisive application, given their Honours’ view as
to the tendency and effect of the advertisements.
42.
The divergence in point of principle between the primary judge and the Full
Court can also be seen in the following passage[42]:
“It seems to us that the primary judge’s emphasis on the ‘dominant message’ led him into
error. The authorities which have considered advertisements containing a misleading
‘primary’ or ‘dominant’ statement do not depart from the overarching rule that it is necessary
to look at the whole of the advertisement. Also, in those cases, the primary statement was
flagrantly misleading when read in light of the inconspicuous fine print.
Moreover, to approach the question as one based solely upon the ‘dominant message’ does not
take into account the need to have regard to the attributes of the hypothetical reader or
viewer. As we have said, these attributes include knowledge of the ‘bundling’ method of sale
commonly employed with this type of service, as well as knowledge that set-up charges are
often applied.”
43.
As it happens, their Honours had not previously, in the course of their reasons,
said that the attributes of the hypothetical reader or viewer included “knowledge that
set-up charges are often applied.” More importantly, however, their Honours went on
to explain that they reached a different conclusion from the primary judge as to the
character of the advertisements by reference to their view that the primary judge had
erred in point of principle. The Full Court said[43]:
“This is the prism through which the critical question of the overall impact of the
commercials on the ordinary and reasonable consumer must be considered. It produces a
different answer to that reached by the primary judge in almost all of the advertisements
because the consumer must be taken to have read or viewed the advertisements with
knowledge of the commercial practices of bundling and set-up charges.”
44.
The Full Court, viewing the case through its different “prism”, concluded in
relation to the particular advertisements that each of the revised television
advertisement, the initial and revised radio advertisements, the initial and revised print
advertisements, the initial and revised online advertisements and the public transport
advertisements was not misleading. In this regard, their Honours concluded that the
advertisements were not misleading because the bundling condition could not be
missed except by “perfunctory” viewing or listening; and, alternatively, because an
ordinary and reasonable viewer or listener would know that “services may be offered
as a ‘bundle'” and, in the case of the revised television advertisement, that setup
charges are often required[44].
The approach of the primary judge was correct
45.
First, the Full Court erred in holding that the primary judge was wrong to
regard the “dominant message” of the advertisements as of crucial importance: neither
of the statements of Gibbs CJ in Puxu which the Full Court applied was decisive in
the circumstances of this case. Secondly, the Full Court erred in failing to appreciate
that the tendency of TPG’s advertisements to mislead was not neutralised by the Full
Court’s attribution of knowledge to members of the target audience that ADSL2+
services may be offered as a “bundle”.
Puxu
46.
Puxu was a case in which the claim of misleading conduct rested “solely on
the fact that the appellant sold goods which were virtually identical in appearance to
those sold by the respondent.”[45] The case was determined on the basis that potential
purchasers of furniture costing substantial sums of money were able to inspect the
furniture which was on display in the retailer’s showroom[46]. The majority of the
Court took the view that purchasers would, acting reasonably, pay attention to the
label, brand or mark of the suite they were minded to buy and, as a result, would not
be misled by similarities in the getup of rival products[47]. It was in this context that
the observations of Gibbs CJ cited above should be understood.
47.
This case is in stark contrast to Puxu in three respects. First, TPG’s target
audience did not consist of potential purchasers focused on the subject matter of their
purchase in the calm of the showroom to which they had come with a substantial
purchase in mind. Here, the advertisements were an unbidden intrusion on the
consciousness of the target audience. The intrusion will not always be welcome. The
very function of the advertisements was to arrest the attention of the target audience.
But while the attention of the audience might have been arrested, it cannot have been
expected to pay close attention to the advertisement; certainly not the attention
focused on viewing and listening to the advertisements by the judges obliged to
scrutinise them for the purposes of these proceedings. In such circumstances, the Full
Court rightly recognised that “many persons will only absorb the general thrust.”[48]
That being so, the attention given to the advertisement by an ordinary and reasonable
person may well be “perfunctory”, without being equated with a failure on the part of
the members of the target audience to take reasonable care of their own interests.
48.
Secondly, the Full Court did not recognise that the tendency of the
advertisements to mislead was to be determined, not by asking whether they were apt
to induce consumers to enter into contracts with TPG, but by asking whether they
were apt to bring them into negotiation with TPG rather than with one of its
competitors on the basis of an erroneous belief engendered by the general thrust of
TPG’s message.
49.
It might be said, as TPG did, that consumers, acting reasonably in their own
interest, could be expected to obtain a clear understanding of their rights and
obligations before signing up with TPG; but to say that is to confuse the question
whether the consumer has suffered loss with the anterior question as to whether the
advertisement, viewed as a whole, has a tendency to lead a consumer into error. Thus,
in Campbell v Backoffice Investments Pty Ltd[49] French CJ noted that the question
of characterisation as to whether conduct is misleading is “logically anterior to the
question whether a person has suffered loss or damage thereby”. French CJ observed
that characterisation of conduct “generally requires consideration of whether the
impugned conduct viewed as a whole has a tendency to lead a person into error”[50].
As observed earlier in these reasons, questions of carelessness by consumers in
viewing advertisements may be relevant to that question of characterisation.
50.
It has long been recognised that a contravention of s 52 of the TPA may occur,
not only when a contract has been concluded under the influence of a misleading
advertisement, but also at the point where members of the target audience have been
enticed into “the marketing web” by an erroneous belief engendered by an advertiser,
even if the consumer may come to appreciate the true position before a transaction is
concluded[51]. That those consumers who signed up for TPG’s package of services
could be expected to understand fully the nature of their obligations to TPG by the
time they actually became its customers is no answer to the question whether the
advertisements were misleading.
51.
Thirdly, this is not a case where the tendency of TPG’s advertisements to lead
consumers into error arose because the target audience might be disposed,
independently of TPG’s conduct, to attend closely to some words of the advertisement
and ignore the balance. The tendency of TPG’s advertisements to lead consumers into
error arose because the advertisements themselves selected some words for emphasis
and relegated the balance to relative obscurity. To acknowledge, as the Full Court
did[52], that “many persons will only absorb the general thrust” is to recognise the
effectiveness of the selective presentation of information by TPG. The Full Court
erred in failing to appreciate the implication of that finding.
52.
It was common ground that when a court is concerned to ascertain the mental
impression created by a number of representations conveyed by one communication,
it is wrong to attempt to analyse the separate effect of each representation[53]. But in
this case, the advertisements were presented to accentuate the attractive aspect of
TPG’s invitation relative to the conditions which were less attractive to potential
customers. That consumers might absorb only the general thrust or dominant message
was not a consequence of selective attention or an unexpected want of sceptical
vigilance on their part; rather, it was an unremarkable consequence of TPG’s
advertising strategy. In these circumstances, the primary judge was correct to attribute
significance to the “dominant message” presented by TPG’s advertisements.
The knowledge base of the target audience
53.
It may be accepted that if the hypothetical reasonable consumer is taken to
know that ADSL2+ services may be sold as part of a bundle with telephony services,
then, if he or she brings that knowledge to bear in a conscious scrutiny of the terms of
TPG’s offer, he or she might be less likely to form the impression that the offer was of
an ADSL2+ service available without a requirement to take and pay for an additional
service from TPG. But the circumstance that many consumers might know that
ADSL2+ services are commonly offered as a “bundle” was not apt to defuse the
tendency of the advertisements to mislead, especially where the target audience is left
only with the general thrust or dominant message after the evanescence of the
advertisement.
54.
As the primary judge said, the vice of TPG’s advertisements was that they
required “consumers to find their way through to the truth past advertising stratagems
which have the effect of misleading or being likely to mislead them.”[54] Given
TPG’s strategy, the primary judge was entitled to draw the inference that consumers
might be enticed to enter into negotiation with TPG without appreciating that TPG’s
services were, in fact, being offered only as a “bundle”. It is pertinent to note again
that “many persons will only absorb the general thrust” and that the question is not
whether consumers suffered loss by signing up to a contract to accept and pay for
TPG’s service[55].
55.
It has long been recognised that, where a representation is made in terms apt to
create a particular mental impression in the representee, and is intended to do so, it
may properly be inferred that it has had that effect[56]. Such an inference may be
drawn more readily where the business of the representor is to make such
representations and where the representor’s business benefits from creating such an
impression.
56.
To say this is not to say that TPG acted with an intention to mislead or
deceive: such an intention is not an element of the contravention charged against
TPG, and there was no suggestion of such an intention in the ACCC’s case. There can
be no dispute, however, that TPG did intend to create an impression favourable to its
offer in the mind of potential consumers; and that it did intend to emphasise the most
attractive component of its offer in order to do so.
57.
It cannot be denied that the terms of the message and the manner in which it
was conveyed were such that the impression TPG intended to create was distinctly not
that which would have been produced by an advertisement which gave equal
prominence to all the elements of the package it was offering to the public. In this
regard, it is significant that, as the primary judge noted, TPG considered deploying
just such an advertisement and chose not to adopt it, evidently opting to continue with
its headline strategy[57].
58.
It was not open to the Full Court, in the proper exercise of its appellate
function, to hold that TPG’s advertisements were not misleading.
Penalty
59.
As the findings of the primary judge in relation to TPG’s contraventions of the
TPA and the ACL are to be reinstated, the primary judge’s assessment of penalty
should also be restored. The Full Court expressed the view that, even if the primary
judge’s findings in relation to TPG’s contraventions were sustained, the penalty
imposed by his Honour was “outside the appropriate range of penalties”[58]. We
disagree. In this regard, three broad observations may be made to indicate that the
penalty fixed by the primary judge was within the appropriate range.
Number of contraventions
60.
The primary judge assessed the pecuniary penalty on the basis that there were
nine classes of contraventions based upon the four different types of the initial
advertisements and the five different types of the revised advertisements. The Full
Court held that this approach was in error on the basis that there were “three different
messages … (i) the ‘no bundling condition’, (ii) the no set-up fee in the initial
advertisements, and (iii) the failure to prominently display the single price in the
initial advertisements.”[59]
61.
The Full Court considered that, given that the content of the advertisements
across the range of media was broadly the same, there were only three categories of
contravention[60]. This led the Full Court to begin at a starting point where the total
maximum penalty was not $9.9 million but $3.3 million[61]. The Full Court erred in
this regard in failing to recognise that the primary judge was entitled to have regard to
the circumstance that TPG pursued its “three different messages” by the deployment
of different media.
The s 87B undertaking
62.
In 2009 TPG gave the ACCC an undertaking under s 87B of the TPA. In that
undertaking TPG acknowledged that it might have contravened the TPA by its
conduct and undertook not to engage in misleading and deceptive conduct generally.
The primary judge took this undertaking into account in assessing the pecuniary
penalty to be imposed on TPG in respect of the contraventions which he had found.
63.
The Full Court held that his Honour erred in this regard on the basis that “[t]he
existence of the undertaking, where the facts underlying the undertaking were never
proved and no breach was ever alleged, was not a relevant circumstance.”[62]
64.
The Full Court erred in failing to appreciate the relevance of the undertaking
in relation to the claims of personal deterrence upon the sentencing discretion. The
fact that the undertaking had not been sufficient to secure TPG’s adherence to the
requirements of the TPA indicated that a more severe penalty was necessary to
accomplish the task of securing that adherence. In Singtel Optus Pty Ltd v Australian
Competition and Consumer Commission[63], it was rightly said by the Full Court of
the Federal Court that the court, in fixing a penalty, must “make[] it clear to [the
contravener], and to the market, that the cost of courting a risk of contravention …
cannot be regarded as [an] acceptable cost of doing business.”
Deterrence
65.
General and specific deterrence must play a primary role in assessing the
appropriate penalty in cases of calculated contravention of legislation where
commercial profit is the driver of the contravening conduct. TPG’s campaign was
conducted over approximately 13 months at a cost to TPG of $8.9 million[64]. It
generated revenue of approximately $59 million, and an estimated profit of $8
million[65]. TPG’s customer base grew from 9,000 to 107,000 during this period,
although it cannot be said that this was at the expense of TPG’s competitors.
66.
The pecuniary penalty fixed by the primary judge did not exceed that which
might reasonably be thought appropriate to serve as a real deterrent both to TPG and
to its competitors. As was said in Singtel Optus Pty Ltd v Australian Competition and
Consumer Commission, the penalty for contravention of the TPA[66]:
“must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the]
offender or others as an acceptable cost of doing business. … [T]hose engaged in trade and
commerce must be deterred from the cynical calculation involved in weighing up the risk of
penalty against the profits to be made from contravention.”
67.
It was submitted on TPG’s behalf that the matter should now be referred back
to the Full Court because it had not dealt with aspects of TPG’s appeal to it. That
submission is without foundation. There is nothing in the reasons of the Full Court to
suggest that it had not finally disposed of the matter before it, and TPG has not sought
to maintain the orders of the Full Court on any basis other than that determined by the
Full Court.
Orders
68.
The appeal should be allowed.
69.
Ordinarily, it would follow that the orders made by the Full Court of 4 April
2013 should be set aside and in their place the appeal to the Full Court should be
dismissed, with the consequence that the orders of the primary judge would be
reinstated. But the ACCC accepted that, with the passage of time and TPG’s refraining
from engaging in further contraventions, it is not necessary to reinstate the
injunctions, corrective advertising and compliance programs ordered by the primary
judge.
70.
Accordingly, pars 1, 2, 3, 4, 5 and 6 of the orders made by the Full Court on 4
April 2013 should be set aside along with par 1 of its orders of 20 December 2012,
TPG’s appeal to the Full Court dismissed, and the orders of the primary judge of 15
June 2012 reinstated, save that those orders be varied by deleting paragraphs 4, 9 and
10.
71.
TPG should pay the ACCC’s costs of and incidental to the appeal to the Full
Court and of the application for special leave and of the appeal to this Court.
72.
GAGELER J. I regret that I am unable to concur in the reasons for judgment
of the majority. My inability to concur is not because I disagree with the statements of
legal principle set out in those reasons. It is because I cannot read the reasons for
judgment of the Full Court of the Federal Court as having ignored them.
73.
The question whether TPG’s advertisements were likely to lead the ordinary
and reasonable consumer or potential consumer of broadband internet services into
error is ultimately a question of fact. The Full Court correctly recognised that it was in
as good a position as the primary judge to reach its own conclusion on that question.
The Full Court correctly recognised that it was therefore obliged in the appeal to do
just that.
74.
The question the Full Court was obliged to determine for itself fell to be
addressed against the following background. DSL broadband internet services, which
have been supplied widely in Australia since 2003, are delivered over copper wires of
the kind used to deliver home telephone services. By the time TPG launched its
advertising campaign in 2010, DSL broadband internet services had for some years
been marketed widely, had often been marketed bundled with home telephone line
rental, and commonly had a setup fee. Until recently, it had not been possible to
acquire DSL broadband internet services without actually having a home telephone
service.
75.
Against that background, the essential difference between the Full Court and
the primary judge concerned the level of sophistication each attributed to the ordinary
and reasonable consumer or potential consumer of broadband internet services during
the period of TPG’s advertising campaign in 2010 and 2011.
76.
The Full Court considered that an ordinary consumer of broadband internet
services who was sufficiently aware of DSL broadband internet services potentially to
be misled by those advertisements would also be aware that DSL broadband internet
services were often bundled with home telephone line rental and commonly had a
setup fee. The consumer would not form an impression, merely from a headline
reference to “Unlimited ADSL2+ $29.99 per month”, that what was being advertised
was a stand-alone DSL service for a stand-alone price of $29.99 per month. The
consumer would look to the whole of the advertisement in the first place. Looking to
the whole of the advertisement, the consumer would form an impression as to whether
the headlined DSL service was or was not being bundled with home telephone line
rental and did or did not have a setup fee.
77.
The question, as the Full Court saw it, was therefore not whether the fine print
of an advertisement was sufficient to dispel a “dominant message” conveyed by its
headline. The question was whether the ordinary and reasonable consumer or
potential consumer of broadband internet services, looking with an open mind to the
whole of the advertisement, would be likely in fact to have formed an impression that
what was being advertised was a stand-alone DSL broadband internet service for a
stand-alone price of $29.99 per month.
78.
In my opinion, the Full Court made no error of principle in framing the
ultimate question of fact that way and it was open to the Full Court to answer that
question in the way it did: yes for the initial television advertisements; but no for the
other advertisements. The Full Court did not, as the ACCC sought to advance, err in
the exercise of its appellate function.
79.
What TPG was offering in each advertisement was a bundle of services for six
months comprising: unlimited DSL broadband internet services for $29.99 per month;
home telephone line rental for $30.00 per month and a once-off setup fee of $129.95.
The Full Court concluded that the ordinary and reasonable consumer, aware that the
headlined DSL service might or might not be bundled with home telephone line rental
and might or might not have a setup fee, and looking to the whole of the
advertisement, would not be likely to have been led by the headline reference to
unlimited DSL broadband internet services into thinking that what was being
advertised was less than the bundle comprising all three components.
80.
In so concluding, the Full Court brought to its analysis of the home telephone
line rental component essentially the same form of analysis as the primary judge
brought to the setup component. The advertisements the Full Court found to be noncontravening all expressly referred to the

home telephone line rental component in the
words “when bundled with TPG Line Rental $30 pm” which followed (with less
prominence) the words “Unlimited ADSL2+ $29.99 per month”. The only reference
to the setup component, where reference was made at all in those advertisements, was
buried in the words “includes deposit and setup fees” which followed (with much less
prominence) the words “min charge $509.89”.
81.
Telling also in favour of the Full Court’s conclusion that the hypothetical
ordinary and reasonable consumer would not be likely to have been misled (although
obviously not determinative of that conclusion) was the dearth of evidence of any
actual consumer being misled by any advertisement, even to the point of doing no
more than contacting TPG to make an inquiry, despite TPG’s advertisements having
run nationally for a period of some 13 months.
82.
Nothing for present purposes can, in my opinion, be made of TPG’s choice to
adopt a headline strategy in the advertisements, and to maintain that strategy in the
face of ACCC opposition. Some other background facts are here important. TPG’s
pricing of two components of the bundle was unremarkable: TPG’s competitors
routinely charged $29.95 per month as the basic monthly access fee for a standard
telephone service and between $80 and $200 for setup. The range of charges for basic
telephone services had by 2010 been static for several years. The supply of DSL
services, on the other hand, was hotly contested, with suppliers differentiating their
services based on speed, usage quotas, period and price. The TPG offering was
significant as being one of the first to have unlimited downloads.
83.
Within that market context, TPG understandably focussed in its
advertisements on the component of its bundle which differentiated its services from
those of its competitors and which TPG considered would be most attractive to
consumers: unlimited downloads for $29.99 per month. It does not follow that TPG
thereby intended to, was likely to, or did, lead consumers into error as to the existence
of the other components.
84.
Given my view on contravention, my conclusions on penalty can be stated
quite briefly. In circumstances where the Full Court overturned findings of fact by the
primary judge which impacted on the extent of TPG’s contravening conduct, the Full
Court was obliged to go on to determine the appropriate penalty for itself. That is
what the Full Court did in its separate and subsequent judgment on penalty, delivered
nearly ten months after the primary judge had ordered, amongst other things,
injunctions and corrective advertising. The Full Court did not ignore the importance
of deterrence. The Full Court treated the remaining contraventions as serious. The
Full Court nevertheless took into account the impact on TPG of the decision of the
primary judge, including being required to write to customers telling them it had
engaged in misleading and deceptive conduct and being forced immediately to
terminate its advertising campaign, which the Full Court itself found not to breach the
Act. I can see no error of principle in the Full Court’s reasoning and cannot regard the
size of the penalty it imposed as manifestly inadequate.
85.
I would dismiss the appeal.
[1] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR
42-383 at 44,683 [2].
[2] Sched 2 to the Competition and Consumer Act 2010 (Cth).
[3] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR
42-383 at 44,685 [18].
[4] Trade Practices Act 1974 (Cth), s 76E(3); Australian Consumer Law, s 224(3).
[5] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR
42-383 at 44,683 [5].
[6] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR
42-383 at 44,685 [23].
[7] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR
42-383 at 44,686 [27].
[8] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR
42-383 at 44,686 [28].
[9] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011) ATPR
42-383 at 44,686 [29].
[10] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,686 [31].
[11] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,689 [54].
[12] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,689 [55].
[13] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,692 [78], 44,693 [82], 44,693 [84], 44,693 [87], 44,694 [90], 44,694 [92],
44,695 [97], 44,695-44,696 [102]-[104], 44,696 [105], 44,696 [108], 44,696 [109].
[14] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,689 [56].
[15] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,690 [62].
[16] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,690 [62].
[17] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,691 [73], 44,693 [82], 44,693 [84], 44,693 [87], 44,694 [90], 44,694 [92],
44,695 [97].
[18] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,695 [99].
[19] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,695 [100].
[20] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,695 [102], 44,696 [105], 44,696 [106], 44,696 [109].
[21] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,696 [104], 44,696 [105], 44,696 [108], 44,696 [109].
[22] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,696-44,697 [110]-[111].
[23] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,696 [110].
[24] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,700 [138].
[25] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2)
(2012) ATPR 42-402.
[26] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2)
(2012) ATPR 42-402 at 45,604-45,605 [141].
[27] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 290 [112].
[28] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 291-292 [125]- [133].
[29] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 290 [113], 290 [115], 290 [117]-[118], 291 [119], 291
[122], 291 [124].
[30] Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at 126-127 [25]; [2003] HCA 22;
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424 at
435-436 [24]- [27].
[31] Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531 at 553; [1979] HCA 9.
[32] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 289 [99].
[33] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 286 [79].
[34] [1982] HCA 44; (1982) 149 CLR 191 at 199; [1982] HCA 44.
[35] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 288 [98].
[36] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 289 [105].
[37] [1982] HCA 44; (1982) 149 CLR 191 at 199.
[38] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 290 [110].
[39] (2010) 241 CLR 357 at 371 [22] per French CJ and Kiefel J; [2010] HCA 31.
[40] Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd [1987] FCA 332; (1987) 78
ALR 193 at 241 per Gummow J.
[41] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 289 [101]- [103].
[42] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 289 [104]- [105].
[43] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 289 [106].
[44] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 290-291 [113]- [124].
[45] Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149
CLR 191 at 196.
[46] Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149
CLR 191 at 196, 201-202, 210, 225-226.
[47] Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149
CLR 191 at 199, 210-211, 225-226.
[48] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 289 [103].
[49] [2009] HCA 25; (2009) 238 CLR 304 at 318 [24]; [2009] HCA 25.
[50] Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 at 319
[25].
[51] Trade Practices Commission v Optus Communications Pty Ltd (1996) 64 FCR 326 at
338-339; SAP Australia Pty Ltd v Sapient Australia Pty Ltd [1999] FCA 1821; (1999) 169
ALR 1 at 14 [51]; Australian Competition and Consumer Commission v Commonwealth
Bank of Australia [2003] FCA 1129; (2003) 133 FCR 149 at 171-172 [47]. See also Bridge
Stockbrokers Ltd v Bridges [1984] FCA 391; (1984) 4 FCR 460 at 475.
[52] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 289 [103].
[53] Arnison v Smith (1889) 41 Ch D 348 at 369; Gould v Vaggelas (1985) 157 CLR 215 at
252; [1985] HCA 68; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA
44; (1982) 149 CLR 191 at 199, 210-211.
[54] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,697 [116].
[55] Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 at 351352 [142]- [143].
[56] Gould v Vaggelas (1985) 157 CLR 215 at 219, 237-238, 250-252, 262; Australian
Guarantee Corporation Ltd v Sydney Guarantee Corporation Ltd (1951) 51 SR (NSW) 166
at 170-171; Telmak Teleproducts (Australia) Pty Ltd v Coles Myer Ltd (1988) 84 ALR 437 at
445; Twentieth Century Fox Film Corporation v South Australian Brewing Co Ltd (1996) 66
FCR 451 at 466.
[57] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2011)
ATPR 42-383 at 44,691 [69].
[58] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 292 [136].
[59] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 294-295 [148]- [152].
[60] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 295 [150]- [151].
[61] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 295 [155].
[62] TPG Internet Pty Ltd v Australian Competition and Consumer Commission [2012]
FCAFC 190; (2012) 210 FCR 277 at 296 [159].
[63] [2012] FCAFC 20; (2012) 287 ALR 249 at 266 [68].
[64] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2)
(2012) ATPR 42-402 at 45,596 [79]-[80].
[65] Australian Competition and Consumer Commission v TPG Internet Pty Ltd (No 2)
(2012) ATPR 42-402 at 45,601 [117]-[119].
[66] [2012] FCAFC 20; (2012) 287 ALR 249 at 265 [62]- [63].

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