TPG Internet Pty Ltd v Australian Competition & Consumer Commission (No 2) [2013] FCAFC 37

Jacobson, Bennett and Gilmour JJ of the Federal Court handed down their judgment on relief in relation to TPG Internet Pty Ltd’s (TPG) appeal against Murphy J’s trial decision. This decision follows last year’s Full Court decision on liability, which allowed TPG’s appeal in part, but upheld Murphy J’s finding that TPG’s initial television advertisements for its unlimited ADSL 2+ offer were misleading and did not prominently specify the single price for the service.

In contrast to the trial judge’s imposition of a $2 million dollar penalty, the Full Court ordered TPG to pay a penalty of $50,000. The Full Court also ordered that the ACCC pay 75% of TPG’s costs and set aside injunctions and orders for a compliance program imposed by the trial judge.

The decision at first instance

The trial judge found that TPG had engaged in nine separate contraventions of the Trade Practices Act (TPA) (for conduct TPG engaged in prior to 1 January 2011) and the Australian Consumer Law (ACL) (for conduct TPG engaged from 1 January 2011) by publishing two sets of advertisements on a number of media platforms offering to provide customers with “unlimited” ADSL 2+ for $29.99 a month.

Specifically, Murphy J found that:

  • the advertisements constituted conduct by TPG that was misleading or deceptive, or likely to mislead or deceive, in breach of s 52 of the TPA and s 18 of the ACL;
  • the advertisements contained false representations in relation to the price of goods or services, and in relation to the existence of a condition, in breach of sections 52(e) and (g) of the TPA and sections 29(1)(i) and (m) of the ACL; and
  • a number of the advertisements did not specify the minimum charge in a prominent way as a single price, in breach of s53C of the TPA.

As a result, Murphy J made orders for declarations, injunctions, corrective advertising and pecuniary penalties totalling $2 million.

The decision on appeal

TPG appealed the orders made by Murphy J, with the exception of the order relating to TPG’s breach of the single price provision under s 53C of the TPA in relation to its initial television advertisements.

Being of significance to a finding of liability, the Full Court last December held that Murphy J had erred by:

  • not appropriately considering consumers’ knowledge of bundling practices and set-up charges when determining the nature of the ordinary or reasonable consumer who would be misled. The Full Court found that a reasonable consumer could be familiar with the internet services market, including understanding the practice of bundling and the set-up fees that may apply.
  • finding that the ordinary reader would be misled unless a misleading “dominant message” was corrected by a sufficiently clear and prominent statement. Rather, the Full Court emphasised the overarching principle which requires that advertisements be considered in their full context.
  • accepting the ACCC’s submission that there were nine classes of contraventions.

However, the Full Court held that Murphy J had appropriately construed the phrase “in a prominent way”, in the context of displaying a single price, to mean the price is conspicuous.

The Full Court, therefore, accepted TPG’s submissions that TPG had engaged in only three contraventions, being breaches of sections 52, 53(e) and 53(g) of the TPA in relation to its initial television advertisements and s 53C of the TPA in relation to its initial television, print and online advertisements.

Of significance in terms of considering the appropriate penalty and other relief, the Full Court also found that Murphy J had erred in:

  • holding that an undertaking that TPG provided to the ACCC pursuant to s 87B of the Competition and Consumer Act in 2009 was of relevance to the pecuniary penalties and injunction, and finding that it had been breached. In any case, the 2009 section 87B undertaking merely stated that TPG “may have” contravened the TPA; and
  • making a finding of loss and damage based on any loss or damage that TPG’s competitors may have suffered, as there was insufficient evidence to support this finding.

Following the receipt of submissions on relief from the parties, the Full Court:

  • ordered TPG to pay a penalty of $50,000. In doing so, it took into account a range of factors, including: the lesser number of contraventions, the lack of loss to consumers, the remedial actions TPG took to correct its advertising campaign, and TPG's culture of compliance and cooperation. The Full Court also took into account the significant legal costs and reputational damage TPG had suffered as a result of the proceedings. This penalty is not only a dramatic reduction from the penalty of $2 million ordered at trial, but also from the penalty of $500,000 that the Full Court considered may have been appropriate last December. 
  • ordered the ACCC to pay 75% of TPG's costs, as TPG was successful on most of the issues.
  • found that injunctions were unnecessary, considering that they related to conduct that TPG engaged in for only a few days, two and a half years ago, which ceased as soon as TPG was contacted by the ACCC.
  • held that orders for a compliance program would be unnecessary, as TPG already has an appropriate compliance program in place.

Implications and next steps

The decision indicates how divergent the views of the different Federal Court Judges can be. The implication of this is that, depending on the Federal Court Judge, the same given set of circumstances may, or may not, be found to be misleading, and findings on the extent to which circumstances may be misleading may differ markedly.

In the mean time, the ACCC has reiterated that, as a matter of priority, it will continue (notwithstanding the decision of the Full Court) to pursue advertisers who are in contravention of the law and will prioritise ensuring compliance with the ACL in the telecommunications industry. Business need to be very aware of the proactive stance taken by the ACCC in prosecuting misleading representations, which, in its view, affect a large proportion of consumers.

The ACCC is, no doubt, awaiting the High Court’s decision as to whether it will grant special leave to appeal the Full Court’s decision.