FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Telstra Corporation Limited (ACN 051 775 556) [2007] FCA 2058

Trade Practices Act 1974 (Cth)ss 52, 53(aa), 53(c) and 86C  

ACCC v CG Berbatis Holdings Pty Ltd (2001) ATPR 41-802

ACCC v Real Estate Institute (WA) Inc (1999) 95 FCR 114

ACCC v Wizard Mortgage Corporation Ltd (2002) ATPR 41-903

Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1

TPC v Optus Communications Pty Ltd (1996) 64 FCR 326

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v TELSTRA CORPORATION LIMITED (ACN 051 775 556)

VID 855 OF 2007

GORDON J

19 DECEMBER 2007

MELBOURNE

THE COURT DECLARES THAT:

1                         The Respondent, by making statements in the following publications:

(a)                    the Everywhere Advertisement, which was televised in Sydney, Melbourne, Brisbane, Adelaide, Perth, Newcastle, Wollongong and in surrounding areas of those cities from 20 May 2007 to 30 June 2007 (First Event);

(b)                   the Cramer Testimonial Advertisement, which was published in the following newspapers on the following dates:

(i)                      Sunday Mail Brisbane on 19 August 2007;

(ii)                     Gladstone Observer on 20 August 2007;

(iii)                   Gold Coast Bulletin on 22 August 2007;

(iv)                   Toowoomba Chronicle on 31 August 2007;

(v)                    Sunday Mail Brisbane on 2 September 2007;

(vi)                   The Age on 4 September 2007;

(vii)                 Courier Mail on 10 September 2007;

(Second Event);

(c)                    the AFL Website Advertisement, which appeared on the Australian Football League’s website http://www.afl.com.au/FunGames/tabid/77/Default.aspx from 1 March 2007 until 17 September 2007 (Third Event);

(d)                   the Website Information which appeared on the Respondent’s website http://www.telstra.com.au from 1 October 2006 until 3 October 2007 (Fourth Event);

(e)                    a Brochure first distributed in its initial form on 10 May 2007 and then replaced by a variation from 4 June 2007 (Fifth Event);

(f)                     a Telstra Media Release of 8 August 2007 (Sixth Event);

(g)                    the Telstra Shop Business Centre Website page http://telstrashopbusiness.com.au (Seventh Event);

(h)                    selected pages from the Telstra Next G website http://www.nextg.com.au available since 6 October 2006 (Eighth Event);

(i)                      the Next G network for Business brochure available from the website http://www.commsaut.com.au/Uploads/Images/NextGBusiness.pdf since October 2006 (Ninth Event);

(j)                     a television advertisement broadcast in the Cairns area on 8 September 2007 (Tenth Event);

(k)                   two Brisbane radio commercials broadcast on 15 September 2007 (Eleventh Event); and

(l)                      the Next G Family Brochure first distributed on 6 October 2006 (Twelfth Event),

(together the 12 Events)

thereby represented that mobile coverage on the Next G mobile telephone network is available to Next G mobile telephone customers everywhere the customer, from time to time, needs to use their mobile telephone regardless of where the person is, what handset the person is using and whether that handset has an external antenna attached (Coverage Representation), in circumstances where:

(m)                  coverage on the Next G mobile telephone network depended in part upon where the person was, what handset the person was using and whether that handset had an external antenna attached; and

(n)                    the matters identified in (m) were not explicitly mentioned in any of the 12 Events,

and thereby has in trade and commerce:

(o)                   engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of section 52 of the Trade Practices Act 1974 (Cth) (the Act);

(p)                   in connection with the promotion of the supply or possible supply of goods and services or in connection with the promotion of the supply or use of goods and services:

(i)                      falsely represented that services were of a particular standard or quality, in contravention of section 53(aa) of the Act; and

(ii)                     represented that goods had performance characteristics, uses or benefits that they did not have, in contravention of section 53(c) of the Act.

2                         The Respondent, by making statements in one or more of:

(a)                    the Cramer Testimonial Advertisement, which was published in the following newspapers on the following dates:

(i)                      Sunday Mail Brisbane on 19 August 2007;

(ii)                     Gladstone Observer on 20 August 2007;

(iii)                   Gold Coast Bulletin on 22 August 2007;

(iv)                   Toowoomba Chronicle on 31 August 2007;

(v)                    Sunday Mail Brisbane on 2 September 2007;

(vi)                   The Age on 4 September 2007;

(vii)                 Courier Mail on 10 September 2007 (Second Event);

(b)                   the Website Information which appeared on the Respondent’s website http://www.telstra.com.au from 1 October 2006 until 3 October 2007 (Fourth Event);

(c)                    a Brochure first distributed in its initial form on 10 May 2007 and then replaced by a variation from 4 June 2007 (Fifth Event);

(d)                   a television advertisement broadcast in the Cairns area on 8 September 2007 (Tenth Event),

thereby represented that a customer subscribing to the Next G mobile telephone network would receive the same or better coverage than is available currently on the CDMA mobile telephone network (the CDMA Comparison Representation), in circumstances where:

(e)                    coverage on the Next G mobile telephone network depended in part upon where the person was, what handset the person was using and whether that handset had an external antenna attached; and

(f)                     the matters identified in (e) were not explicitly mentioned in any of the Events listed in (a) to (d) above,

and thereby has in trade and commerce:

(g)                    engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of section 52 of the Act;

(h)                    in connection with the promotion of the supply or possible supply of goods and services or in connection with the promotion of the supply or use of goods and services:

(i)                      falsely represented that services were of a particular standard or quality in contravention of section 53(aa) of the Act; and

(ii)                     represented that goods had performance characteristics, uses or benefits that they did not have in contravention of section 53(c) of the Act.

THE COURT ORDERS THAT:

3                         The Respondent, whether by itself, its respective officers, employees and / or agents or otherwise howsoever, in connection with the supply or possible supply of, or the promotion by any means of the supply of mobile telephone services on the Next G mobile telephone network be permanently restrained from making any representation to the effect that mobile coverage on the Next G mobile telephone network is always available to Next G mobile telephone customers everywhere the customer, from time to time, needs to use their mobile telephone without adequately disclosing that coverage on the Next G mobile telephone network depends in part on where the person is, what particular handset the person is using or whether that handset has an external antenna attached.

4                         The Respondent, whether by itself, its respective officers, employees and / or agents or otherwise howsoever, in connection with the supply or possible supply of, or the promotion by any means of the supply of mobile telephone services on the Next G mobile telephone network be permanently restrained from making any representation to the effect that a customer subscribing to the Next G mobile telephone network will receive the same or better coverage than is available currently on the CDMA network without disclosing that coverage on the Next G network depends in part on where the person is, what particular handset the person is using and whether that handset has an external antenna attached.

5                         The Respondent pay the Applicant’s costs of and incidental to the proceeding, including reserved costs, on a party and party basis to be taxed if not agreed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                                             On 6 December 2007, I directed that the Applicant, after conferring with the Respondent, file minutes of orders to give effect to the reasons for judgment delivered on that day:  [2007] FCA 1904.  The parties are in dispute – they are unable to agree on the matters or topics to be addressed and they cannot agree on the wording of the declarations and injunctions.

2                                             These supplementary reasons for judgment are structured as follows:

(1)        corrective advertising;

(2)        declaratory relief and injunctions; and

(3)        costs.

Corrective advertising

3                                             The Applicant seeks five forms of corrective advertising: 

(1)        a letter from the Respondent to its existing Next G mobile telephone network and CDMA mobile telephone network customers.  The form of the letter was attached as Annexure 1 to the Applicant’s proposed orders;

(2)        one advertisement published by the Respondent in various newspapers across Australia.  The form of the advertisement was attached as Annexure 2 to the Applicant’s proposed orders;

(3)        broadcasts on television and radio of a commercial four times per week for two weeks containing information set out in Annexure 2 to the Applicant’s proposed orders.  The broadcast was said to be confined to those stations which had published the misleading advertisements;

(4)        publication on the AFL website, the Respondent’s website and the Respondent’s Next G website of a notice for 3 months.  The form of the notice was also set out in Annexure 2 to the Applicant’s proposed orders; and

(5)        the publication by signage in the Respondent’s shops of a notice for three months.  Again the form of the notice was set out in Annexure 2 to the Applicant’s proposed orders.

4                                             Section 86C of the Trade Practices Act 1974 (Cth) (“the Act”) confers power on the Court to make an order for corrective advertising.  Corrective advertising may have a number of purposes:  

(1)        to protect the public interest by dispelling an incorrect or false impression that has been created as a result of misleading or deceptive conduct (Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 at [49] (Full Court) and ACCC v Wizard Mortgage Corporation Ltd (2002) ATPR 41-903 at [27]) especially where all of the misleading or deceptive conduct arose out of advertisements and other public statements and promotions;

(2)        to alert consumers to the fact of the misleading or deceptive conduct and inform them that they might have some remedy if they relied upon any of the misleading or deceptive conduct: Medical Benefits Fund 135 FCR 1 at [54];

(3)        as an “aid in the enforcement of the primary orders and the prevention of repetition of the contravening conduct”: ACCC v Real Estate Institute (WA) Inc (1999) 95 FCR 114 at 133 per French J, cited with approval in Medical Benefits Fund 135 FCR 1 at [51].

5                                             In the present case, I do not propose to order any one of the five forms of corrective advertising sought by the Applicant.  There is no sufficient reason shown why the orders (or any of them) should be made and there is no explanation as to why the orders (or any one of them) would be of any utility in achieving one or more of the purposes of corrective advertising identified above.  First, the conduct of which complaint was made will now cease, the reasons for decision have already been widely reported in many forms of media and a trade rival of the Respondent has taken full page advertisements in major newspapers recording the findings that I made.  In these circumstances, the objectives of corrective advertising have been addressed by those media reports and other advertising:  ACCC v CG Berbatis Holdings Pty Ltd (2001) ATPR 41-802 at [10]. Secondly, any order for corrective advertising of the kinds identified is more likely to be punitive rather than to achieve the matters referred to in [4] above:  TPC v Optus Communications Pty Ltd (1996) 64 FCR 326 at 346-347.  Thirdly, and no less importantly, the public interest is sufficiently protected by the grant of declarations and injunctions:  Optus Communications 64 FCR 326 at 347 and Wizard Mortgage ATPR 41-903 at [27].

6                                             I now turn to the form of the declarations and injunctions.

Declarations and injunctions

7                                             At least many of the differences between the forms of orders proffered by the opposing parties are drafting differences rather than points of fundamental distinction.  It is neither profitable nor necessary to discuss the drafting differences or to attempt to identify whether there are any substantive differences between those two drafts.  Rather, it is enough to say first that I consider that the orders in the form I propose to make will give effect to the conclusions expressed in my reasons for judgment.  Second, my reasons for judgment must be read as a whole.  It is not right to read parts of the reasons, even those attempting to summarise conclusions, as divorced from or limiting the content of the reasons read as a whole.  Third, the injunctive orders that are to be made must identify as precisely as possible what is enjoined and I propose to frame them with that in mind.

8                                             There are two matters that must be noted. First, the orders in the form I propose to make refer to the “12 Events” as that term is defined in the reasons for judgment delivered on 6 December 2007:  [2007] FCA 1904 at [5].  Although the Applicant did not pursue its claim that the Telstra Website (Event 4) conveyed either of the Coverage Representations (see [64]), the Event did convey the CDMA Comparison Representation (see [139] and [144]).  As the reasons for judgment record, the Second Coverage Representation and the CDMA Comparison Representation were artificially divided (see [141]).  Accordingly, Event 4 is included in the orders I propose to make.

9                                             Secondly, I consider that the form of permanent injunction I propose to grant renders it unnecessary to order that the Respondent take specific steps to give effect to the orders.  The injunctions themselves are sufficient direction to the Respondent.  If the injunction is complied with, and I have no reason to doubt that it will be, then the additional directions are superfluous.

Costs

10                                          The Respondent submits that the costs of the proceeding should be apportioned and it should only pay 50% of the Applicant’s costs of the proceeding on a party and party basis.  I do not accept that contention.  The Respondent’s basis for apportionment lacks foundation.  The subject matter of the proceedings was what is defined as the “12 Events”.  That conduct was said by the Applicant to be able to be characterised in a number of ways.  I rejected some of the characterisations.  On any view, the Respondent failed in its defence of the proceedings.  Costs should follow the event.  The Respondent should pay the Applicant’s costs of the proceedings on a party and party basis to be taxed in default of agreement.

ORDERS

11                                          In the circumstances, the declarations and orders I propose to make are as follows.  First, to declare that:

1                         The Respondent, by making statements in the following publications:

(a)                    the Everywhere Advertisement, which was televised in Sydney, Melbourne, Brisbane, Adelaide, Perth, Newcastle, Wollongong and in surrounding areas of those cities from 20 May 2007 to 30 June 2007 (First Event);

(b)                   the Cramer Testimonial Advertisement, which was published in the following newspapers on the following dates:

(i)                      Sunday Mail Brisbane on 19 August 2007;

(ii)                     Gladstone Observer on 20 August 2007;

(iii)                   Gold Coast Bulletin on 22 August 2007;

(iv)                   Toowoomba Chronicle on 31 August 2007;

(v)                    Sunday Mail Brisbane on 2 September 2007;

(vi)                   The Age on 4 September 2007;

(vii)                 Courier Mail on 10 September 2007;

(Second Event);

(c)                    the AFL Website Advertisement, which appeared on the Australian Football League’s website http://www.afl.com.au/FunGames/tabid/77/Default.aspx from 1 March 2007 until 17 September 2007 (Third Event);

(d)                   the Website Information which appeared on the Respondent’s website http://www.telstra.com.au from 1 October 2006 until 3 October 2007 (Fourth Event);

(e)                    a Brochure first distributed in its initial form on 10 May 2007 and then replaced by a variation from 4 June 2007 (Fifth Event);

(f)                     a Telstra Media Release of 8 August 2007 (Sixth Event);

(g)                    the Telstra Shop Business Centre Website page http://telstrashopbusiness.com.au (Seventh Event);

(h)                    selected pages from the Telstra Next G website http://www.nextg.com.au available since 6 October 2006 (Eighth Event);

(i)                      the Next G network for Business brochure available from the website http://www.commsaut.com.au/Uploads/Images/NextGBusiness.pdf since October 2006(Ninth Event);

(j)                     a television advertisement broadcast in the Cairns area on 8 September 2007 (Tenth Event);

(k)                   two Brisbane radio commercials broadcast on 15 September 2007 (Eleventh Event); and

(l)                      the Next G Family Brochure first distributed on 6 October 2006 (Twelfth Event),

(together the 12 Events)

thereby represented that mobile coverage on the Next G mobile telephone network is available to Next G mobile telephone customers everywhere the customer, from time to time, needs to use their mobile telephone regardless of where the person is, what handset the person is using and whether that handset has an external antenna attached (Coverage Representation), in circumstances where:

(m)                  coverage on the Next G mobile telephone network depended in part upon where the person was, what handset the person was using and whether that handset had an external antenna attached; and

(n)                    the matters identified in (m) were not explicitly mentioned in each of the 12 Events,

and thereby has in trade and commerce:

(o)                   engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of section 52 of the Act;

(p)                   in connection with the promotion of the supply or possible supply of goods and services or in connection with the promotion of the supply or use of goods and services:

(i)                      falsely represented that services were of a particular standard or quality, in contravention of section 53(aa) of the Act; and

(ii)                     represented that goods had performance characteristics, uses or benefits that they did not have, in contravention of section 53(c) of the Act.

2                         The Respondent, by making statements in one or more of:

(a)                    the Cramer Testimonial Advertisement, which was published in the following newspapers on the following dates:

(i)                      Sunday Mail Brisbane on 19 August 2007;

(ii)                     Gladstone Observer on 20 August 2007;

(iii)                   Gold Coast Bulletin on 22 August 2007;

(iv)                   Toowoomba Chronicle on 31 August 2007;

(v)                    Sunday Mail Brisbane on 2 September 2007;

(vi)                   The Age on 4 September 2007;

(vii)                 Courier Mail on 10 September 2007 (Second Event);

(b)                   the Website Information which appeared on the Respondent’s website http://www.telstra.com.au from 1 October 2006 until 3 October 2007 (Fourth Event);

(c)                    a Brochure first distributed in its initial form on 10 May 2007 and then replaced by a variation from 4 June 2007 (Fifth Event);

(d)                   a television advertisement broadcast in the Cairns area on 8 September 2007 (Tenth Event),

thereby represented that a customer subscribing to the Next G mobile telephone network would receive the same or better coverage than is available currently on the CDMA mobile telephone network (the CDMA Comparison Representation), in circumstances where:

(e)                    coverage on the Next G mobile telephone network depended in part upon where the person was, what handset the person was using and whether that handset had an external antenna attached; and

(f)                     the matters identified in (e) were not explicitly mentioned in the Events listed in (a) to (d) above,

and thereby has in trade and commerce:

(g)                    engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of section 52 of the Act;

(h)                    in connection with the promotion of the supply or possible supply of goods and services or in connection with the promotion of the supply or use of goods and services:

(i)                      falsely represented that services were of a particular standard or quality in contravention of section 53(aa) of the Act; and

(ii)                     represented that goods had performance characteristics, uses or benefits that they did not have in contravention of section 53(c) of the Act.

12                                          Secondly, to order that:

3                         The Respondent, whether by itself, its respective officers, employees and / or agents or otherwise howsoever, in connection with the supply or possible supply of, or the promotion by any means of the supply of mobile telephone services on the Next G mobile telephone network be permanently restrained from making any representation to the effect that mobile coverage on the Next G mobile telephone network is always available to Next G mobile telephone customers everywhere the customer, from time to time, needs to use their mobile telephone without adequately disclosing that coverage on the Next G mobile telephone network depends in part on where the person is, what particular handset the person is using or whether that handset has an external antenna attached.

4                         The Respondent, whether by itself, its respective officers, employees and / or agents or otherwise howsoever, in connection with the supply or possible supply of, or the promotion by any means of the supply of mobile telephone services on the Next G mobile telephone network be permanently restrained from making any representation to the effect that a customer subscribing to the Next G mobile telephone network will receive the same or better coverage than is available currently on the CDMA mobile telephone network without disclosing that coverage on the Next G network depends in part on where the person is, what particular handset the person is using and whether that handset has an external antenna attached.

5                         The Respondent pay the Applicant’s costs of and incidental to the proceeding, including reserved costs, on a party and party basis to be taxed if not agreed.

Associate:

Dated:         19 December 2007