Full Federal Court orders Optus to pay $3.6 million penalty

9 March 2012

The Full Federal Court ordered Optus to pay $3.61 million in civil pecuniary penalties in relation to advertising for the 'THINK BIGGER' and 'SUPERSONIC' broadband internet plans.

This judgment follows a successful appeal by Optus against orders made by Justice Perram that Optus pay civil pecuniary penalties totalling $5.26 million for breaches of the Trade Practices Act 1974*.

The Full Federal Court allowed the appeal and set aside the penalties originally ordered on the basis that the primary judge erred in making certain factual findings. Those findings had not been sought by the ACCC.

However, the Full Federal Court has resoundingly supported the initial findings in relation to the seriousness of the conduct and the need for a substantial penalty.

The court found that "Optus cannot be regarded as a first offender. It failed to observe the requirements of the Act, and not for the first time", and "this court should proceed on the footing that Optus' conduct was very serious. The contraventions were on a grand scale. They were also unexplained."

"One thing is clear from this judgment, the court considers Optus' conduct to be completely unacceptable," ACCC chairman Rod Sims said today. "As the Full Federal Court stated, there is no explanation for the contraventions."

The Full Federal Court found that "the absence of a satisfactory explanation for the contraventions and the evident laxity in its internal compliance program… mean that Optus has given the court no reason to be confident that, in the absence of a very substantial penalty, it will not regard as acceptable the risk of a fine for contravention."

The Full Federal Court rejected arguments by Optus that it was excessive for the primary judge to impose a penalty which amounted to "profit stripping." Rather, the Full Federal Court said a penalty which did not substantially affect the profitability of Optus’ campaign could not be countenanced.

The court added that "generally speaking, those 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."

Mr Sims said the court's comments send a very strong message to businesses.

"The clear message from the Full Federal Court is that penalties must be set at a sufficiently high level so as to deter misleading conduct becoming a legitimate business strategy," Mr Sims said.

Background

Optus launched the "THINK BIGGER" campaign on 25 April 2010 and the "SUPERSONIC" campaign on 2 August 2010. Optus advertised these plans through a number of media, including television, newspapers, billboards and direct marketing.

In advertising these broadband plans, Optus represented that for a monthly payment, a consumer would receive a headline data allowance of broadband which was then split into peak (midday to midnight) and off-peak (midnight to midday) data allowances.

The ACCC alleged that Optus had not sufficiently disclosed that the service would be speed limited to 64kbps at all times once a consumer exceeded their peak data allowance. The consequence was that any unused off-peak data would no longer be available at a broadband speed and that a consumer, in certain circumstances, would not be able to use the total headline allowance once the speed had been throttled back.

The plans dealt with in these proceedings are:

The "Think Bigger" Internet broadband plans offering:

  • 120GB of data (50GB peak + 70GB off-peak) for $49.99 and
  • 150GB of data (75GB peak + 75GB off-peak) for $59.99, and

The "Supersonic" Internet broadband with Premium Speed Pack plans offering:

  • 120GB of data (50GB peak + 70GB off-peak) for $69.99,
  • 150GB of data (75GB peak + 75GB off-peak) for $79.99, and
  • 170GB of data (85GB peak + 85GB off-peak) for $89.99.

*Effective 1 January 2011, the Trade Practices Act 1974 was renamed as the Competition and Consumer Act 2010. Provisions regarding misleading and deceptive conduct and unfair trade practices are now included in the Australian Consumer Law.

Release number: 
NR 041/12
ACCC Infocentre: 

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Mr Rod Sims - (02) 6243 1108