FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v EnergyAustralia Pty Ltd [2015] FCA 274

THE COURT DECLARES THAT:

EnergyAustralia

1.    The First Respondent (EnergyAustralia), in trade or commerce, and in connection with the supply or possible supply of, or in connection with the promotion of the supply of, electricity and gas:

(a)    engaged in conduct that was misleading and deceptive or was likely to mislead and deceive in contravention of s 18 of the Australian Consumer Law (ACL), being Sch 2 to the Competition and Consumer Act 2010 (Cth) (CCA); and

(b)    made false and misleading representations concerning the existence, exclusion or effect of a condition or right in contravention of s 29(1)(m) of the ACL,

by statements made by representatives of the Second Respondent (Bright Choice), acting on behalf of or as agent for EnergyAustralia, during the period 2 August 2012 to 15 April 2013 in telephone calls to certain consumers in New South Wales, Queensland and Victoria promoting electricity and/or gas plans offered by EnergyAustralia by which it represented to each of the consumers that:

(c)    the consumer was not, at the time of the telephone call, being taken by Bright Choice or EnergyAustralia as having agreed to enter into a new plan with EnergyAustralia for the supply of electricity and/or gas;

(d)    the consumer could decide, after the telephone conversation, whether or not to enter into a new plan with EnergyAustralia for the supply of electricity and/or gas upon receiving information sent to the consumer by EnergyAustralia following the telephone conversation; and

(e)    EnergyAustralia and Bright Choice would not, without further communication with the consumer, treat the consumer as if he or she had agreed to enter into a new plan for the supply of electricity and/or gas with EnergyAustralia,

when in fact:

(f)    following the telephone conversation, Bright Choice acted and EnergyAustralia dealt with the consumer as if the consumer had agreed to enter into a new plan with EnergyAustralia for the supply of electricity and/or gas;

(g)    the process followed in each case where the consumer was not an existing customer of EnergyAustralia was that, without further action or consent from the consumer, EnergyAustralia transferred the consumer’s supply of electricity and/or gas from the consumer’s existing retailer to itself, unless the consumer informed EnergyAustralia within 10 business days of receiving the information from EnergyAustralia that they did not want their electricity and/or gas supply to be transferred to EnergyAustralia;

(h)    the process followed in each case where the consumer was an existing customer of EnergyAustralia was that, without further action or consent from the consumer, EnergyAustralia switched the consumer from their existing plan with EnergyAustralia to a new plan with EnergyAustralia, unless the consumer informed EnergyAustralia within 10 business days of receiving the information from EnergyAustralia that they did not want to switch from their existing plan with EnergyAustralia; and

(i)    in each case EnergyAustralia treated a sale report submitted by Bright Choice using the EnergyAustralia system as evidence that the consumer had agreed to enter into a new plan for the supply of electricity and/or gas with EnergyAustralia.

2.    EnergyAustralia, in trade or commerce, and in connection with the supply or possible supply of, or in connection with the promotion of the supply of, electricity and gas:

(a)    engaged in conduct that was misleading and deceptive or was likely to mislead and deceive in contravention of s 18 of the ACL;

(b)    made false and misleading representations that particular persons had agreed to acquire goods or services, namely electricity and/or gas, in contravention of s 29(1)(d) of the ACL; and

(c)    made false and misleading representations concerning the existence, exclusion or effect of a condition or right in contravention of s 29(1)(m) of the ACL,

by making statements in contractual documents sent to certain consumers in New South Wales, Queensland and Victoria during the period 2 August 2012 to 29 April 2013 on the basis of a report provided to EnergyAustralia by its agent Bright Choice which represented to each of those consumers that the consumer had previously agreed:

(d)    to enter into a contract to acquire electricity and/or gas from EnergyAustralia;

(e)    if the consumer was not an existing customer of EnergyAustralia, to acquire electricity and/or gas from EnergyAustralia; and

(f)    if the consumer was an existing customer of EnergyAustralia, to switch from the consumer’s existing plan with EnergyAustralia to a new plan for the acquisition of electricity and/or gas from EnergyAustralia,

when in fact:

(g)    none of the consumers had agreed to enter into a contract to acquire electricity and/or gas from EnergyAustralia;

(h)    of the consumers who were not existing customers of EnergyAustralia, none had agreed to acquire electricity and/or gas from EnergyAustralia; and

(i)    of the consumers who were existing customers of EnergyAustralia, none had agreed to switch from their existing plan with EnergyAustralia to a new plan for the acquisition of electricity and/or gas from EnergyAustralia.

Bright Choice

3.    Bright Choice has, in trade or commerce, and in connection with the supply or possible supply of, or in connection with the promotion of the supply of, electricity and gas:

(a)    engaged in conduct that was misleading and deceptive or was likely to mislead and deceive in contravention of s 18 of the ACL; and

(b)    made false and misleading representations concerning the existence, exclusion or effect of a condition or right in contravention of s 29(1)(m) of the ACL,

by statements made by its representatives during the period 2 August 2012 to 15 April 2013 in telephone calls to certain consumers in New South Wales, Queensland and Victoria promoting electricity and/or gas plans offered by EnergyAustralia by which Bright Choice represented to each of the consumers that:

(c)    the consumer was not, at the time of the telephone call, being taken by Bright Choice or EnergyAustralia as having agreed to enter into a new plan with EnergyAustralia for the supply of electricity and/or gas;

(d)    the consumer could decide, after the telephone conversation, whether or not to enter into a new plan with EnergyAustralia for the supply of electricity and/or gas upon receiving information sent to the consumer by EnergyAustralia following the telephone conversation; and

(e)    EnergyAustralia and Bright Choice would not, without further communication with the consumer, treat the consumer as if he or she had agreed to enter into a new plan for the supply of electricity and/or gas with EnergyAustralia,

when in fact:

(f)    following the telephone conversation, Bright Choice acted and EnergyAustralia dealt with the consumer as if the consumer had agreed to enter into a new plan with EnergyAustralia for the supply of electricity and/or gas;

(g)    the process followed in each case where the consumer was not an existing customer of EnergyAustralia was that, without further action or consent from the consumer, EnergyAustralia transferred the consumer’s supply of electricity and/or gas from the consumer’s existing retailer to itself, unless the consumer informed EnergyAustralia within 10 business days of receiving the information from EnergyAustralia that they did not want their electricity and/or gas supply to be transferred to EnergyAustralia;

(h)    the process followed in each case where the consumer was an existing customer of EnergyAustralia was that, without further action or consent from the consumer, EnergyAustralia switched the consumer from their existing plan with EnergyAustralia to a new plan with EnergyAustralia, unless the consumer informed EnergyAustralia within 10 business days of receiving the information from EnergyAustralia that they did not want to switch from their existing plan with EnergyAustralia; and

(i)    in each case EnergyAustralia treated a sale report submitted by Bright Choice using the EnergyAustralia system as evidence that the consumer had agreed to enter into a new plan for the supply of electricity and/or gas with EnergyAustralia.

AND THE COURT ORDERS THAT:

EnergyAustralia

4.    EnergyAustralia pay the Commonwealth of Australia a pecuniary penalty in the sum of $1,000,000 within 30 days of the date of this Order.

5.    EnergyAustralia pay a contribution towards the Applicant’s costs of and incidental to this proceeding, fixed in the sum of $25,000, within 30 days of the date of this Order.

Bright Choice

6.    Bright Choice, whether by itself, its servants, contractors, representatives, agents, affiliates or otherwise be restrained for a period of five years from, during the course of telemarketing on behalf of or as agent for a supplier of goods or services, representing to consumers that:

(a)    the consumer is not being taken by Bright Choice or the supplier of the goods or services as having agreed to:

(i)    purchase the goods or services; or

(ii)    enter into a contract or agreement for the purchase of the goods or services; or

(b)    the consumer can decide whether or not to agree to:

(i)    purchase the goods or services; or

(ii)    enter into a contract or agreement for the purchase of the goods or services,

after considering information to be sent to the consumer by Bright Choice or the supplier of the goods or services,

if in fact Bright Choice or the supplier of the goods or services will act as if the consumer had agreed to:

(c)    purchase the goods or services; or

(d)    enter into a contract or agreement for the purchase of the goods or services.

7.    Bright Choice:

(a)    establish the Compliance and Education/Training Program set out in Annexure 1 to this Order;

(b)    maintain and administer, at its own expense, the Compliance and Education/Training Program set out in Annexure 1 to this Order for a period of three years; and

(c)    provide, at its own expense, a copy of any documents to be provided to the Applicant pursuant to Annexure 1.

8.    Bright Choice pay the Commonwealth of Australia a pecuniary penalty in the sum of $100,000 within 30 days of the date of this Order.

9.    Bright Choice pay the Applicant’s costs of and incidental to this proceeding as agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).

Annexure 1

Compliance and Education/Training Program

Interpretation

1    In this Annexure:

(a)    “ACCC” means the Australian Competition and Consumer Commission;

(b)    “ACCC Compliance Program Review Report” means the report to be provided to Bright Choice by the Reviewer, and by Bright Choice to the ACCC, under paragraph 13 below;

(c)    “ACL” means the Australian Consumer Law, comprising Sch 2 to the Act;

(d)    “Act” means the Competition and Consumer Act 2010 (Cth);

(e)    “Bright Choice” means Bright Choice Australia Pty Ltd (ACN 153 379 894);

(f)    “Company Compliance Program Review Report” means the report to be provided to Bright Choice by the Reviewer under paragraph 13 below;

(g)    “Complaints Handling System” means the complaints handling system established under paragraph 6 below;

(h)    “Compliance Advisor” means the person appointed under paragraph 3 below;

(i)    “Compliance Officer” means the person appointed under paragraph 2 below;

(j)    “Compliance Policy” means the policy established under paragraph 5 below;

(k)    “Compliance Program” means the Compliance and Education/Training Program in this Annexure;

(l)    “Order of the Court” means the relevant order(s) of the Federal Court of Australia made in proceeding VID 701 of 2014;

(m)    “Reviewer” means the person appointed to conduct the Reviews under paragraph 11 below;

(n)    “Reviews” means the reviews of the Compliance Program to be conducted by the Reviewer under paragraph 11 below;

(o)    “Risk Assessment” means the risk assessment conducted by the Compliance Advisor under paragraph 4 below; and

(p)    “Risk Assessment Report” means the report prepared by the Compliance Advisor under paragraph 4 below.

Appointments

2    Bright Choice must, within 30 days of the date of the Order of the Court, appoint a Director or a Senior Manager of the business as the Compliance Officer, whose responsibilities are to include the development, implementation and maintenance of the Compliance Program, and who reports directly to the board or governing body.

3    Bright Choice must, within three months of the date of the Order of the Court, appoint a qualified, internal or external compliance professional with expertise in consumer law as the Compliance Advisor for the purposes set out in paragraph 4.

4    Within 30 days of Bright Choice commencing any business or trade, Bright Choice must instruct the Compliance Advisor to conduct a Risk Assessment and prepare a report in which the Compliance Advisor:

(a)    identifies the areas where Bright Choice is at risk of breaching ss 18 and/or 29 of the ACL;

(b)    assesses the likelihood of these risks occurring and the consequences of the risks to the business operations of Bright Choice should they occur;

(c)    identifies where there may be gaps in Bright Choice’s existing procedures for managing these risks; and

(d)    provides recommendations for action having regard to the assessment.

Compliance Policy

5    Bright Choice must, within 30 days of the date of the Order of the Court, establish a Compliance Policy which is communicated in writing to all directors, officers, employees on commencement of their employment, representatives and agents of Bright Choice regarding compliance with the ACL and the Act. Bright Choice will ensure the Compliance Policy contains:

(a)    a statement of commitment to compliance with the ACL and the Act;

(b)    a direction for all employees or other persons involved in Bright Choice’s business to report any concerns about compliance with the ACL or the Act to the Compliance Officer;

(c)    a statement guaranteeing that employees or other persons involved in Bright Choice’s business who make a complaint or report in relation to Bright Choice’s compliance with the ACL or the Act will not be persecuted or disadvantaged in any way by reason of their complaint or report and that their complaint or report will be kept confidential and secure; and

(d)    a clear statement that Bright Choice will take action internally against any persons who are knowingly or recklessly concerned in a contravention of the ACL or the Act and will not indemnify them.

Complaints Handling System

6    Bright Choice must, within 30 days of the date of the Order of the Court, establish, maintain and administer a Complaints Handling System for complaints concerning compliance with the ACL and the Act, which is capable of identifying, classifying, storing and where necessary, referring internal and external complaints about consumer law matters to the Compliance Officer.

Training

7    Bright Choice must take all reasonable steps to ensure that all directors, officers, employees on commencement of their employment, representatives and agents of Bright Choice, whose duties could result in them being concerned with conduct that may contravene ss 18 and/or 29 of the ACL, receive practical training regarding the Act and the ACL no less than once annually. The training program must be designed to ensure the awareness of those people of the responsibilities and obligations in relation to ss 18 and/or 29 of the ACL. Bright Choice must ensure that the training is conducted by a suitably qualified compliance professional or legal practitioner with expertise in consumer law and the Act.

8    Bright Choice must take all reasonable steps to ensure that an awareness of compliance with the Act and the ACL forms part of the induction of all new directors, officers, employees, representatives and agents, whose duties could result in them being concerned with conduct that may contravene ss 18 and/or 29 of the ACL.

Reports to Senior Management

9    Bright Choice must ensure that the Compliance Officer reports to the board and/or senior management meetings every 6 months on the continuing effectiveness of this Compliance Program.

Supply of Compliance Program Documents to the ACCC

10    Bright Choice must, at its own expense, within four months of the date of the Order of the Court, cause to be produced and provided to the ACCC copies of each of the documents constituting this Compliance Program (including the Compliance Policy and an outline of the Complaints Handling System). Bright Choice must implement promptly and with due diligence any recommendations the ACCC may make that are reasonably necessary to ensure the effectiveness of the Compliance Policy and the Complaints Handling System.

Review

11    Bright Choice shall, at its own expense, cause Reviews of this Compliance Program to be carried out annually in accordance with each of the following requirements:

(a)    Scope of the Reviews – the Reviews should be broad and rigorous enough to provide Bright Choice and the ACCC with verification that Bright Choice has in place a program that complies with each of the requirements detailed in paragraphs 2 to 10 above and to provide sufficient basis for the Company Compliance Program Review Report and the ACCC Compliance Program Review Report detailed at paragraph 13 below.

(b)    Independence of Reviewer – Bright Choice shall ensure that the Reviews are carried out by a Reviewer who must be a suitably qualified, independent compliance professional with expertise in consumer law. The Reviewer will qualify as independent on the basis that he or she:

(i)    did not design or implement the Compliance Program and is not the Compliance Advisor;

(ii)    is not a present or past staff member or director of Bright Choice;

(iii)    has not acted and does not act for Bright Choice in any consumer law related matters;

(iv)    has not and does not act for or consult with Bright Choice or provide other services on consumer law related matters other than Compliance Program reviewing; and

(v)    has no significant shareholding or other interests in Bright Choice.

(c)    Evidence – Bright Choice shall use its best endeavours to ensure that the Reviews are conducted on the basis that the Reviewer has access to all relevant sources of information in Bright Choice’s possession or control, including without limitation:

(i)    enquiries of any officers, employees, representatives, agents and stakeholders of Bright Choice;

(ii)    Bright Choice’s records, including the company’s complaints register/reports and any documents relevant to the Bright Choice training or induction program; and

(iii)    documents created by Bright Choice’s consultants and legal practitioners for use in this Compliance Program.

12    Bright Choice shall ensure that the first Review is completed within one year and one month of the date of the Order of the Court and that each subsequent Review is completed within one year thereafter.

Reporting

13    Bright Choice shall use its best endeavours to ensure that the Reviewer sets out the findings of the Reviews in two separate reports as outlined below:

Company Compliance Program Review Report (to be provided to Bright Choice)

13.1    Bright Choice’s Company Compliance Program Review Report will provide the following information:

(a)    if, and to what extent, the Compliance Program of Bright Choice includes all the elements detailed in paragraphs 2 to 11 above;

(b)    if, and to what extent, the Compliance Program adequately covers the parties and areas identified in the initial Risk Assessment;

(c)    if, and to what extent, the training regarding the Act and the ACL is effective;

(d)    if, and to what extent, the Complaints Handling System is effective; and

(e)    recommendations for rectifying any deficiencies in sub-paragraphs (a) to (d) that the Reviewer thinks are reasonably necessary to ensure that Bright Choice maintains and continues to implement this Compliance Program.

ACCC Compliance Program Review Report (to be provided to the ACCC)

13.2    The ACCC Compliance Program Review Report will provide the following information:

(a)    details of the evidence gathered and examined during the Review;

(b)    the name and relevant experience of the person appointed as the Company Compliance Officer;

(c)    the Reviewer’s opinion on whether Bright Choice has in place an effective Compliance Program that complies with the requirements detailed in paragraphs 2 to 11 above;

(d)    actions recommended by the Reviewer to ensure the continuing effectiveness of the Compliance Program;

(e)    confirmation that any actual and potential inadequacies in this Compliance Program have been brought to the attention of the Compliance Officer and the governing body;

(f)    confirmation that the Reviewer has revisited any actual and potential inadequacies in this Compliance Program identified in any previous Company Compliance Program Review Report, and assessed how they have been addressed by Bright Choice;

(g)    any reservations that the Reviewer might have about the reliability and completeness of the information to which the Reviewer had access in the conduct and reporting of the Review; and

(h)    any comments or qualifications concerning the Review process that the Reviewer, in his or her professional opinion, considers necessary.

13.3    Bright Choice will use its best endeavours to ensure that the Company Compliance Program Review Report and the ACCC Compliance Program Review Report are completed and provided to Bright Choice within two months of each Review.

13.4    Bright Choice will retain the Company Compliance Program Review Report and cause the ACCC Compliance Program Review Report to be provided to the ACCC within 14 days of its receipt from the Reviewer.

Recommendations

14    Bright Choice shall implement promptly and with due diligence any recommendations made by the Reviewer or required by the ACCC, that are necessary to ensure that Bright Choice maintains and continues to implement this Compliance Program.

15    If requested by the ACCC during the period of this Compliance Program, Bright Choice will, at its own expense, cause to be produced and provided to the ACCC copies of all documents constituting the Compliance Program, including:

(a)    the Compliance Policy;

(b)    the Risk Assessment Report;

(c)    an outline of the Complaints Handling System;

(d)    copies of documents in respect of training and induction provided in accordance with paragraphs 7 and 8;

(e)    all Company Compliance Program Review Reports and ACCC Compliance Program Review Reports that have been completed at the time of the request; and

(f)    copies of the reports to the board and/or senior management referred to in paragraph 9.

16    In the event the ACCC has sufficient reason to suspect that this Compliance Program is not being implemented effectively, Bright Choice shall, at its own expense and if requested by the ACCC, cause an interim or additional Review to be conducted and cause the resulting Review Report to be provided to the ACCC.

THE COURT DECLARES THAT:

1.    Between 16 January 2013 and 9 October 2013, the Respondent (EnergyAustralia) breached s 38(a) of the National Energy Retail Law (South Australia) (NERL SA) and the National Energy Retail Law (ACT) (NERL ACT) by transferring customers from their existing retailer to itself on the basis of a report provided to EnergyAustralia by its agent Bright Choice Australia Pty Ltd (ACN 153 379 894) (Bright Choice), without obtaining the explicit informed consent of those customers to do so.

2.    Between 28 November 2012 and 26 July 2013, EnergyAustralia breached s 38(b) of the NERL SA and the NERL ACT by entering customers into market retail contracts with EnergyAustralia on the basis of a report provided to EnergyAustralia by its agent Bright Choice, without obtaining the explicit informed consent of those customers to do so.

AND THE COURT ORDERS THAT:

3.    EnergyAustralia maintain for a period of two years a process which applies to all customer transactions where EnergyAustralia is informed by a contractor who is acting on its behalf or as its agent in marketing or selling its electricity and/or gas plans by way of telemarketing that a customer has:

(a)    agreed to enter into a market retail contract; or

(b)    agreed to transfer from their existing retailer to EnergyAustralia,

so that EnergyAustralia takes steps to safeguard against the customer being transferred to EnergyAustralia or entered into a market retail contract without having provided explicit informed consent to the entry into a contract or transfer from their existing retailer, as the case may be.

4.    EnergyAustralia maintain for a period of two years a compliance program that:

(a)    is consistent with the principles set out in the Australian Standard for Compliance Programs (AS3806);

(b)    nominates compliance with EnergyAustralia’s obligations under s 38 of the NERL SA and the NERL ACT as a critical regulatory obligation;

(c)    requires that EnergyAustralia undertake quarterly certification and risk assessment of compliance with s 38 of the NERL SA and the NERL ACT, including, each quarter, reassessing the effectiveness of business practices and processes against EnergyAustralia’s obligations under s 38 of the NERL SA and the NERL ACT; and

(d)    requires that all directors, employees, representatives and agents of EnergyAustralia whose duties could result in them being concerned with conduct that may contravene s 38 of the NERL SA and the NERL ACT receive regular (at least once a year) and practical training regarding compliance with s 38 of the NERL SA and the NERL ACT.

5.    EnergyAustralia pay the Commonwealth of Australia a civil penalty in the sum of $500,000, within 30 days of the date of this Order.

6.    EnergyAustralia pay a contribution towards the Applicant’s costs of and incidental to this proceeding, fixed in the sum of $25,000, within 30 days of the date of this Order.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).

REASONS FOR JUDGMENT

1.    INTRODUCTION

1    EnergyAustralia Pty Ltd (EnergyAustralia) is a retailer of electricity and gas. Bright Choice Australia Pty Ltd (Bright Choice) is not currently engaged in any business activities but was, in the relevant period, a telemarketing company. From 4 April 2012 until 23 October 2013, EnergyAustralia engaged Bright Choice, under a services agreement, to sell by way of telemarketing, EnergyAustralia’s plans for electricity and gas to consumers in defined “sales territories”.

2    There are two proceedings. The ACCC proceeding (VID 701 of 2014), concerns consumers in New South Wales, Queensland and Victoria, and was brought by the Australian Competition and Consumer Commission (ACCC). EnergyAustralia admits that its conduct in respect of those consumers contravened ss 18, 29(1)(d) and 29(1)(m) of the Australian Consumer Law (ACL), as set out in Sch 2 to the Competition and Consumer Act 2010 (Cth) (CCA). Bright Choice admits that its conduct in respect of those consumers contravened ss 18 and 29(1)(m) of the ACL.

3    The AER proceeding (VID 702 of 2014) concerns consumers in South Australia and the Australian Capital Territory (ACT), and was brought by the Australian Energy Regulator (AER). The National Energy Retail Law (NERL) set out in the Schedule to the National Energy Retail Law (South Australia) Act 2011 (SA) applies in South Australia pursuant to s 4(3) of that Act as the National Energy Retail Law (SA) (NERL SA) and in the ACT pursuant to s 6 of the National Energy Retail Law (ACT) Act 2012 (ACT) as the National Energy Retail Law (ACT) (NERL ACT). EnergyAustralia admits that its conduct in dealing with those consumers in South Australia and the ACT breached ss 38(a) and 38(b) of the NERL SA and the NERL ACT.

4    These reasons for judgment will consider the factual background, the applicable principles and then turn to consider the individual circumstances of (including the relief sought against) EnergyAustralia and Bright Choice.

2.    FACTS

5    For the purposes of both proceedings only, two agreed statements of facts between the ACCC, EnergyAustralia and Bright Choice were filed for the purposes of s 191 of the Evidence Act 1995 (Cth). In the ACCC proceeding, the ACCC and Bright Choice filed a separate Agreed Statement of Facts about Bright Choice’s financial position. Following a request by the Court, Bright Choice filed an additional affidavit regarding its financial position on 18 March 2015. This is discussed further in Section 2.1.2 below. The facts recorded in those documents were the entirety of the facts considered by the Court.

6    The following factual summary has been extracted from those documents. Unless otherwise specified, the facts are admissions against each respondent.

2.1    Parties

2.1.1    EnergyAustralia

7    Section 2.1.1 is relevant to EnergyAustralia only. EnergyAustralia is and was carrying on business, in trade or commerce, as a retailer of electricity and gas, in New South Wales, Queensland and Victoria. It is and was also a retailer of electricity and gas in South Australia and the ACT, within the meaning of the NERL SA and the NERL ACT, pursuant to retailer authorisations granted or transferred to it under Pt 5 of the NERL SA and the NERL ACT.

8    EnergyAustralia is one of the largest energy retailers in Australia. As at December 2013, it had approximately 1.9 million retail electricity customers. EnergyAustralia estimates that it has approximately 23% of retail electricity and gas sales in the states and territories belonging to the National Electricity Market (being all states and territories except Western Australia and the Northern Territory).

9    Prior to 3 October 2012, EnergyAustralia had the registered company name “TRUenergy Pty Ltd” and supplied electricity and gas to customers under the branding “TRUenergy”. Since 3 October 2012, EnergyAustralia has had the registered company name “EnergyAustralia Pty Ltd” and supplied electricity and gas to customers under the branding “EnergyAustralia”.

2.1.2    Bright Choice

10    Section 2.1.2 is relevant to Bright Choice only.

11    Between around April 2012 and October 2013, Bright Choice marketed EnergyAustralia’s electricity and gas plans to consumers. From 23 September 2011 until 26 April 2012, it had the registered company name “Utility Choice Pty Ltd” and from 27 April 2012, has had the registered company name “Bright Choice Australia Pty Ltd”. Since around November 2013, Bright Choice has not carried on any business activities.

12    Bright Choice is a dormant company with two directors, one of whom also serves as a company secretary. Initially, the directors were not identified and did not provide any evidence, and no information was provided about the identity of its shareholders.

13    Bright Choice’s Financial Report for the year ended 30 June 2013 and its Draft Management Accounts as at 31 December 2014 were annexed to an agreed Statement of Facts about its financial position: see [5] above. Those financial statements were unsatisfactory. There was no evidence that the Financial Report for the year ended 30 June 2013 was adopted by “Ehab Abdou”, the named director. It was not signed. Both profit and loss statements recorded that the largest expense item was “Management Fees”. In the year ended 30 June 2013, approximately $14.6m in income was earned and approximately $10.6m (or 72.6%) was spent on management fees. For the period ended 31 December 2014, $598,821 was earned in commissions and $526,730 (or 87.96%) was spent on management fees.

14    As noted in [5] above, after the hearing, Bright Choice was invited to provide short written submissions and any further supporting documents in relation to the following questions:

1.    Who are the shareholders of Bright Choice; and

2.    In relation to Bright Choice’s Financial Report for the year ended 30 June 2013 and the Draft Management Accounts as at 31 December 2014:

a.    Was Bright Choice’s Financial Report for the year ended 30 June 2013 signed by the director, Mr Ehab Abdou (see page 6)?;

b.    What period do the Draft Management Accounts as at 31 December 2014 cover?;

c.    In the year ended 30 June 2013, $14.6m in income was earned and $10.6m (or 72.6%) was spent on management fees. For the period ended 31 December 2014, $598,821 was earned in commissions and $526,730 (or 87.9%) was spent on management fees. When were those management fees paid and to whom?

15    On 18 March 2015, an affidavit sworn by Mr Ehab Abdou (Mr Abdou) and a supplementary submission was filed on behalf of Bright Choice. Mr Abdou’s sworn evidence was that he was Bright Choice’s director and that since September 2011, Bright Choice has had three corporate shareholders. A Current Company Extract for Bright Choice from the Australian Securities and Investments Commission was exhibited. The extract recorded that two of the three corporate shareholders had the same registered address as Bright Choice. The other shareholder’s registered address was recorded as being the same as Mr Abdou’s address. No further details of the shareholders were provided.

16    Mr Abdou then exhibited a copy of Bright Choice’s Financial Report for the year ended 30 June 2013 which had been signed by him. Mr Abdou explained that the signed Financial Report had one difference to that previously provided to the Court. In the signed version, the line items “Commissions Paid” and “Management Fees” had been consolidated into one line item “Commissions Paid”.

17    Mr Abdou explained that the line item “Management Fees” in the Financial Report and the Draft Management Accounts is a reference to monthly management fees payable by Bright Choice to Business Service Brokers Pty Ltd (BSB) from August 2012 to September 2013. The commercial agreement was not provided but was described by Mr Abdou in the following terms:

The management fees were paid to BSB pursuant [to] a commercial agreement between Bright Choice and BSB in consideration of BSB enabling retail distribution for the energy plans, procuring sales of energy plans, enabling Bright Choice to have BSB’s franchisees procure sales of energy plans and providing Bright Choice with management services in respect of those sales activities, BSB’s franchisees and the operations of Bright Choice’s telemarketing contractors.

18    Mr Abdou then explained that the line item “Commission[s] Paid” in the Financial Report and the Draft Management Accounts is a reference to commissions Bright Choice periodically paid to a number of telemarketing contractors between October 2012 and December 2013 – Today Telecom Pty Ltd, Horrus Pty Ltd, V Perform Pty Ltd, Direct Sales Force Australia Pty Ltd and franchisees of BSB. No further details were provided.

19    Finally, Mr Abdou stated that as at the date of the affidavit, Bright Choice does not trade and does not intend to trade in the near future. In the supplementary submission, Bright Choice repeated some of the matters stated in the affidavit. It noted that in the period between October 2012 and June 2013, Bright Choice also paid nearly $4 million in sales commissions to parties other than BSB (see [18] above). The submission stated that the management fees and commissions were paid prior to Bright Choice being put on notice of any investigation against it by the ACCC, and as such were paid in the course of Bright Choice’s business. Bright Choice submitted that its present size, dormant status and financial position were of most relevance in imposing an appropriate penalty. This will be addressed further in Sections 4.2.7.7 and 4.2.7.8 below.

2.1.3    Relationship between EnergyAustralia and Bright Choice

20    From 4 April 2012 until 23 October 2013, EnergyAustralia and Bright Choice were parties to a Services Contract dated 4 April 2012, as amended from time to time, by which EnergyAustralia agreed to pay Bright Choice a fee on each occasion where a consumer contracted to enter into a new plan to purchase electricity or gas from EnergyAustralia as a result of Bright Choice’s marketing (Services Agreement). Bright Choice’s representatives were remunerated based on a wage plus commission.

21    Pursuant to the Services Agreement, EnergyAustralia engaged Bright Choice to sell EnergyAustralia’s electricity and gas plans as described in EnergyAustralia’s campaign briefs and to target consumers in the defined “sales territory”, which relevantly included consumer premises located in New South Wales, Queensland, Victoria, South Australia and the ACT: cl 1 and the definition of “Services” in cl 27.1 read with Sch 2 of the Services Agreement.

22    It is necessary to say something about the terms of the Services Agreement. The Services Agreement imposed a number of compliance obligations on Bright Choice, including, but not limited to, the requirement that Bright Choice:

(1)    Exercise the standard of care, skill and judgment that would be expected of a professional contractor experienced in the performance of services of a similar nature to those under the Services Agreement (cl 1.3(a));

(2)    Comply with all applicable laws and standards necessary to perform the services (cl 1.6(a)); and

(3)    Ensure its service team members conduct outbound telemarketing calls in accordance with mandatory scripting approved by EnergyAustralia for those outbound sales calls (cl 1.14) (addressed further in [24] below).

23    Bright Choice was also required to establish, implement and maintain and comply with a quality assurance and control program (Quality Assurance Program) which was subject to EnergyAustralia’s approval: cl 1.10 of the Service Agreement. A requirement of Bright Choice’s Quality Assurance Program was that Bright Choice carried out quality assurance checks and monitoring to ensure compliance with the program by the “Service Team Members” – Bright Choice and the employees, contractors, consultants and agents used by Bright Choice to provide the Services.

24    In addition to the Quality Assurance Program, Bright Choice was required to develop a training program that utilised training materials developed by EnergyAustralia and that outlined the requirements for compliance with the applicable laws and standards: cl 1.11. One essential element of that program was that it outlined “the requirements in order to obtain Explicit Informed Consent from customers”: cl 1.11. The issue of Explicit Informed Consent and Call Recording was addressed in cl 1.14 of the Services Agreement as follows:

(a)    [Bright Choice] must:

(i)    make call recordings of all outbound telemarketing calls and all telephone discussions with Customers in which Explicit Informed Consent of a Customer is obtained;

(ii)    …

(iii)    only use current scripts which have been approved by [EnergyAustralia] for such calls and call recordings, and otherwise comply with [EnergyAustralia’s] directions;

(iv)    retain all such recordings for a minimum of 2 years after the applicable call was made (or such longer period as may be required by any applicable law); and

(v)    immediately provide an audible copy to [EnergyAustralia] of each such call recording when requested to do so by [EnergyAustralia].

(b)    Quality Assurance Checks

(i)    [Bright Choice] must listen and evaluate a sample of call recordings made for the purposes of this clause 1.14 to check that the recording is audible and to identify any systemic issues.

(ii)    For the purposes of clause 1.14(b)(i), [Bright Choice] are required to listen to at least 2% of the total number of call recordings that are created every calendar month for Customers from the Sales Territory.

25    Schedule 2 of the Services Agreement set out the process that Bright Choice had to follow when obtaining explicit informed consent, which involved ensuring that the Bright Choice sales representative:

(1)    Informed the customer prior to any recording being made that the telephone call would be recorded;

(2)    Disclosed all necessary information required to establish a Product Agreement as specified in the relevant Campaign Brief;

(3)    Disclosed all Product Agreement terms and conditions and answered all of the customer’s queries in relation to the terms and conditions;

(4)    Obtained the customer’s informed consent to transfer from its current gas or electricity retailer to EnergyAustralia, or any other documentation required by the regulations or by EnergyAustralia;

(5)    Disclosed all necessary information and obtained necessary consents required to ensure compliance with Privacy Laws; and

(6)    Informed the customer of the implications of consenting to enter into an agreement.

26    In addition, the Services Agreement contained a detailed provision addressing customer complaints (cl 1.15) and provided that EnergyAustralia had the right to audit Bright Choice’s marketing activities to ensure compliance with the regulatory, legal, scripting and product requirements under the Services Agreement (cl 1.16).

27    On appointing Bright Choice under the Services Agreement, EnergyAustralia conducted “train the trainer” sessions for Bright Choice senior sales managers in March 2012 and provided training materials to Bright Choice following the training session in March 2012 and updated training materials in July 2012 (Training Materials). The Training Materials covered legal and regulatory compliance topics (among others), including obtaining the customer’s explicit informed consent in accordance with the requirements under s 38 of the NERL SA and the NERL ACT and misleading or deceptive conduct. The Training Materials also included instructions in relation to sales techniques to be used, and to be avoided, by Bright Choice sales representatives, including ensuring that the customer had a full understanding of what they were agreeing to and not misleading or deceiving a customer or saying anything which was likely to mislead or deceive them.

28    EnergyAustralia also provided Bright Choice with questionnaires that were designed to test the adequacy of Bright Choice’s training program and which were required to be successfully completed by Bright Choice personnel before they conducted any telemarketing.

29    On 28 March 2013, the Services Agreement was amended. EnergyAustralia agreed to pay an additional “bonus fee” to Bright Choice, conditional upon Bright Choice achieving 9,000 new sales per month for five months from 1 April 2013. The bonus fee was $75 for each gas sale and $35 for each electricity sale. The bonuses were significant sums by reference to the base fee which was $80 for each gas sale and $120 for each electricity sale. The amending agreement re-stated EnergyAustralia’s requirement that Bright Choice obtain the customer’s explicit informed consent for each sale.

30    During the period of the Services Agreement, representatives of Bright Choice contacted consumers who were, at the time, acquiring electricity and/or gas from retailers other than EnergyAustralia as well as existing customers of EnergyAustralia and attempted to procure those consumers to enter into new plans with EnergyAustralia for the supply of electricity and/or gas.

31    For the purposes of these proceedings, for each consumer listed in Annexures A, B and C to these reasons for judgment (Consumers), Bright Choice and its representatives were:

(1)    Authorised by EnergyAustralia to contact those Consumers for the purpose of marketing EnergyAustralia’s plans for the supply of electricity and/or gas;

(2)    Authorised by EnergyAustralia to negotiate with those Consumers regarding agreements for the supply of electricity and/or gas;

(3)    Agents of EnergyAustralia acting within the scope of their actual authority in relation to the conduct described in (1) and (2) above;

(4)    Agents of EnergyAustralia acting within the scope of their apparent authority in relation to the conduct described at [32]-[34], [39]-[40] and [44] below; and/or

(5)    Acting on behalf of EnergyAustralia, and

the conduct of Bright Choice and its representatives is taken to have been engaged in also by EnergyAustralia pursuant to s 139B(2) of the CCA.

2.2    Relevant Conduct

2.2.1    General

32    The next three paragraphs are admitted by Bright Choice only in so far as they concern consumers located in New South Wales, Queensland and Victoria.

33    Between August 2012 and May 2013, representatives of Bright Choice contacted Consumers located in New South Wales, Queensland, Victoria, South Australia and the ACT on behalf of EnergyAustralia by telephone for the purpose of marketing EnergyAustralia’s plans for the supply of electricity and/or gas.

34    During the course of these telephone calls, Bright Choice did not obtain the consent of any of the Consumers to enter into an EnergyAustralia electricity or gas plan, or to have their supply of electricity or gas transferred to EnergyAustralia. It will be necessary to return to consider the details of the conversations below.

35    Following the telephone calls, Bright Choice submitted a sale report to EnergyAustralia for each Consumer.

36    It is admitted by EnergyAustralia that, on the basis of the sale report received from Bright Choice, EnergyAustralia caused contractual documents to be sent to each Consumer.

37    For those Consumers in New South Wales, Queensland and Victoria (where the conduct is subject to the ACL):

(1)    EnergyAustralia admits that it engaged in conduct that was misleading and deceptive, or was likely to mislead and deceive, in contravention of s 18 of the ACL, made false and misleading representations that particular persons had agreed to acquire goods or services, namely electricity and/or gas, in contravention of s 29(1)(d) of the ACL and made false and misleading representations concerning the existence, exclusion or effect of a condition or right in contravention of s 29(1)(m) of the ACL; and

(2)    Bright Choice admits that it engaged in conduct that was misleading and deceptive, or was likely to mislead and deceive, in contravention of s 18 of the ACL and made false and misleading representations concerning the existence, exclusion or effect of a condition or right in contravention of s 29(1)(m) of the ACL.

Under s 29(1)(m), the representation concerned the existence of a right to make a decision to receive a supply of electricity and/or gas from EnergyAustralia and to enter into a new plan for the supply of electricity and/or gas after the telephone call from Bright Choice and after receiving further information.

38    For those Consumers in South Australia and the ACT (where the conduct is subject to the NERL SA and the NERL ACT), EnergyAustralia admits that it breached ss 38(a) and 38(b) of the NERL SA and the NERL ACT, because without the explicit informed consent of customers, it entered them into market retail contracts, and in some cases, transferred (or initiated the transfer of) their electricity and/or gas supply from their existing retailer to itself.

2.2.2    Dealings with Consumers in New South Wales, Queensland and Victoria

39    Between 2 August 2012 and 15 April 2013, representatives of Bright Choice contacted each consumer listed in Annexure A (Annexure A Consumers) by telephone and in the course of those telephone conversations, Bright Choice’s representatives made statements to the following effect:

(1)    They were calling on behalf of EnergyAustralia, on or behalf of Telechoice which had “partnered” with EnergyAustralia;

(2)    They could offer the consumer a discount on the consumer’s current electricity and/or gas bills;

(3)    The consumer was invited to agree to receive information, described as a “Welcome Pack” or an “Information Pack” (except Annexure A Consumers 18, 19, 20 and 21, where the information would contain details of an offer of a new plan for the supply of electricity and/or gas with EnergyAustralia);

(4)    The consumer would be able to consider the information and decide whether or not to receive a supply of electricity and/or gas from EnergyAustralia and enter into a new plan for the supply of electricity and/or gas;

(5)    In the case of Annexure A Consumers 1, 3, 4, 6, 14 and 15, if the consumer wanted to accept the offer, he or she should contact EnergyAustralia and unless they did make contact, they would not be treated as having agreed to enter into a new plan for the supply of electricity and/or gas; and

(6)    In the case of Annexure A Consumers 2, 5, 7, 8, 9, 10, 12, 13, 16 and 17, the offer would not commence, and they would not be treated as having agreed to a new plan for the supply of electricity and/or gas until the consumer had accepted the offer, the terms and conditions of which would be described in the “Welcome Pack”.

40    In none of the telephone calls with the Annexure A Consumers did the Bright Choice representative tell the consumer that after the telephone call, without any further communication between the consumer and EnergyAustralia, they would be treated by EnergyAustralia as having agreed to enter into a new plan with it for the supply of electricity and/or gas.

41    By engaging in the conduct described in [39]-[40] above, Bright Choice, as agent of EnergyAustralia, represented to each Annexure A Consumer that:

(1)    The consumer was not, at the time of the telephone call, being taken by Bright Choice or EnergyAustralia as having agreed to enter into a new plan for the supply of electricity and/or gas with EnergyAustralia;

(2)    The consumer could decide, after the telephone conversation, whether or not to enter into a new plan with EnergyAustralia for the supply of electricity and/or gas upon receipt of the “Welcome Pack”; and

(3)    EnergyAustralia and Bright Choice would not, without further communication with the consumer, treat the consumer as if he or she had agreed to enter into a new plan for the supply of electricity and/or gas with EnergyAustralia,

(together, the Telephone Representations).

42    The Telephone Representations were made in trade or commerce and in connection with the supply or possible supply of, or in connection with the promotion of the supply of, electricity and/or gas. The Telephone Representations were made by a number of different Bright Choice representatives: see Annexure A.

43    The Telephone Representations were false, misleading and deceptive because, following the telephone conversation, Bright Choice acted and EnergyAustralia in fact dealt with each Annexure A Consumer as if they had agreed to enter into a plan with EnergyAustralia for the supply of electricity and/or gas, when they had not. In particular:

(1)    Following the telephone conversation, Bright Choice acted and EnergyAustralia dealt with each of the Annexure A Consumers as if they had agreed to enter into a plan with EnergyAustralia for the supply of electricity and/or gas;

(2)    The process followed in each case where the Annexure A Consumer was not an existing customer of EnergyAustralia, was that without further action or consent from the consumer, EnergyAustralia transferred the consumer’s supply of electricity and/or gas from the consumer’s existing retailer to itself, unless the consumer informed EnergyAustralia within 10 business days of receiving information sent to the consumer by EnergyAustralia that they did not want their electricity and/or gas supply to be transferred to EnergyAustralia;

(3)    The process followed in each case where the Annexure A Consumer was an existing customer of EnergyAustralia, was that without further action or consent from the consumer, EnergyAustralia switched the consumer from their existing plan with EnergyAustralia to a new plan with EnergyAustralia, unless the consumer informed EnergyAustralia within 10 business days of receiving information sent to the consumer by EnergyAustralia that they did not want to switch from their existing plan with EnergyAustralia; and

(4)    In each case EnergyAustralia treated a sale report submitted by Bright Choice as evidence that the Annexure A Consumer had agreed to enter into a new plan for the supply of electricity and/or gas with EnergyAustralia.

44    On around 18 February 2013, a representative of Bright Choice contacted the consumer listed in Annexure B (Annexure B Consumer) by telephone and had a conversation with that consumer in which the representative and the consumer said words to the following effect:

(1)    The representative told the consumer that she was calling because EnergyAustralia had a new offer of a discount of 13% off bills, which AGL was not offering and that the representative could send out some information about the offer;

(2)    The consumer said that last time that occurred she had been signed up to EnergyAustralia and that she did not want to be with EnergyAustralia; and

(3)    The representative replied that was fine and thanked the consumer.

45    Paragraphs [45] to [51] are admitted by EnergyAustralia only. Between 1 November 2012 and 29 April 2013 after the telephone conversations described in [39] and [44] above, and on the basis of the sale report provided to it by Bright Choice, EnergyAustralia caused a Welcome Pack to be sent to each Annexure A Consumer (except for consumers 1, 6, 11 and 21, see [47]-[48] below) and the Annexure B Consumer.

46    The Welcome Packs contained the following statements:

(1)    On the front page:

(a)    you’ve made a great choice;

(b)    thank you for choosing [name of EnergyAustralia plan] for your [gas and/or electricity];

(c)    the full details of your plan are listed in the enclosed Energy Plan Details. We have also enclosed the Terms and Conditions, which together with the Energy Plan Details, form your contract with us;

(d)    to help you understand how your account is transferred to us, here’s a quick run-down of the process;

(e)    the transfer will start at the end of the cooling off period of 10 business days;

(f)    we look forward to providing you with your energy needs; and

(g)    if at any point you’d like more information about your plan ... ;

(2)    On the second page - [consumer’s address] (the accounts will be sent to this address);

(3)    On the third page:

(a)    Energy Plan details and Written Disclosure Statement; and

(b)    Please turn over for further information about your plan,

(the Welcome Pack Statements).

47    On around 2 August 2012, and after the telephone conversation with Annexure A Consumer 1 described in [39] above, EnergyAustralia caused an Online Acceptance Email to be sent to that consumer. The Online Acceptance Email contained the following statements:

(1)    In the text of the email:

(a)    Thank you for choosing TRUenergy for your energy needs;

(b)    Included as attachments to this email are the details of your plan, Terms and Conditions and a link to the TRUenergy Terms and Conditions. These form your energy agreement with us;

(c)    A confirmation pack will be sent to you by post within 5 business days, detailing your energy agreement; and

(d)    In case you change your mind, you have a cooling-off period of 10 business days from the date on the confirmation pack;

(2)    In the attached document entitled “Quotes2DataTermsAndConditions81038_TRUenergy_Market Retail Contract.pdf”:

(a)    TRUenergy Market Retail Contract Terms and Conditions (on pages 1, 2 and 4);

(b)    This contract is a market retail contract. It is about the sale of energy to you at your premises. This Contract is made up of these Contract Terms and Conditions, the Explanation of Benefits and your Energy Plan Details; and

(c)    This contract is between TRUenergy ... and You ... ,

(the Email Statements).

48    Between 10 April 2013 and 12 April 2013 and after the telephone conversations described in [39] above, EnergyAustralia caused a Confirmation Pack to be sent to each of Annexure A Consumers 6, 11 and 21. The Confirmation Packs contained the following statements:

(1)    On the front page:

(a)    Confirmation of your [electricity and/or gas] contracts;

(b)    Thank you for choosing EnergyAustralia for your [electricity and/or gas]; and

(c)    This confirmation pack contains important information about your future supply arrangements with us, including your cooling-off rights;

(2)    On the second page:

(a)    The following confirms details of the Contracts you entered into with EnergyAustralia over the telephone on [date] ... ;

(b)    Contract Start Date [date]; and

(c)    Each Contract commences on the Contract Start Date shown above, which is the day that you accepted our market offer to supply energy to you by giving us your verbal acceptance over the telephone;

(3)    On the final page - 1. Only complete this form and send it if you want to cancel this contract(s): I [blank] wish to cancel the contract I made on [blank] to receive from you the services identified below ...,

(the Confirmation Pack Statements).

49    By making the Welcome Pack Statements, the Email Statements and the Confirmation Pack Statements, EnergyAustralia represented to each Annexure A Consumer and the Annexure B Consumer that the consumer had previously agreed:

(1)    To enter into a contract to acquire electricity and/or gas from EnergyAustralia;

(2)    If the consumer was not an existing customer of EnergyAustralia, to acquire electricity and/or gas from EnergyAustralia; and

(3)    If the consumer was an existing customer of EnergyAustralia, to switch from the consumer’s existing plan with EnergyAustralia to a new plan for the acquisition of electricity and/or gas from EnergyAustralia,

(together, the Contract Representations).

50    The Contract Representations were made in trade or commerce and in connection with the supply or possible supply of, or in connection with the promotion of the supply of, electricity and/or gas.

51    The Contract Representations were false, misleading and deceptive, because in fact:

(1)    None of the Annexure A Consumers nor the Annexure B Consumer had agreed to enter into a contract to acquire electricity and/or gas from EnergyAustralia;

(2)    Of the consumers who were not existing customers of EnergyAustralia, none had agreed to acquire electricity and/or gas from EnergyAustralia; and

(3)    Of the consumers who were existing customers of EnergyAustralia, none had agreed to switch from their existing plan with EnergyAustralia to a new plan for the acquisition of electricity and/or gas from EnergyAustralia.

2.2.3    Dealings with Customers in South Australia and the ACT

52    Section 2.2.3 is admitted by EnergyAustralia only. Between 28 November 2012 and 1 May 2013, representatives of Bright Choice contacted each customer listed in Annexure C (Annexure C Customers) by telephone and had conversations over the telephone with those customers.

53    During the conversations, Bright Choice did not obtain the explicit informed consent of any Annexure C Customer to transfer their supply of electricity and/or gas to EnergyAustralia or enter into a market retail contract with EnergyAustralia.

54    After these telephone conversations, and on the basis of the sale report provided to EnergyAustralia by Bright Choice, EnergyAustralia, without having obtained explicit informed consent from the affected customers:

(1)    Transferred the electricity and/or gas supply of Annexure C Customers 1, 2, 3, 5, 7 and 9 located in South Australia, and Annexure C Customers 20, 21, 22, 24, 25 and 27 located in the ACT, from their existing retailer (which was not EnergyAustralia) to itself;

(2)    Initiated the transfer of the electricity and/or gas supply of Annexure C Customers 7, 16, 17, 18 and 19 located in South Australia from their existing retailer (which was not EnergyAustralia) to itself by submitting a change request and/or transfer request to the Australian Energy Market Operator (AEMO), which, absent interruption, would lead to the customer’s supply of electricity and/or gas being switched to EnergyAustralia, but which was subsequently cancelled before the customer’s electricity and/or gas supply was switched to EnergyAustralia;

(3)    Entered Annexure C Customers 1-19 located in South Australia, and Annexure C Customers 20-27 located in the ACT into market retail contracts by sending the customers letters which:

(a)    attached documents entitled “EnergyAustralia Market Retail Contract Terms and Conditions” and “Energy Plan Details” (Contract Documents) which provided, relevantly, that the contract would start on the date on which the customer accepted EnergyAustralia’s market offer to supply energy to the customer (terms and conditions clause 4.1), and acceptance of EnergyAustralia’s market offer could occur by the customer giving verbal acceptance of the market offer (terms and conditions clause 4.1); and

(b)    stated that the Contract Documents comprised a contract between the customer and EnergyAustralia in respect of the supply of electricity and/or gas to the customer’s premises.

2.2.4    Investigation by EnergyAustralia and Subsequent Steps

55    Paragraphs [55] to [57] are admitted by EnergyAustralia only. On 7 December 2012, EnergyAustralia commenced an investigation into Bright Choice’s telemarketing practices.

56    On 28 March 2013, EnergyAustralia received details of concerns with Bright Choice’s telemarketing practices, including a failure to obtain explicit informed consent. In April and May 2013, EnergyAustralia identified an increased number of customer complaints and cancellations from telesales made by Bright Choice. EnergyAustralia commenced an investigation into Bright Choice’s conduct which involved EnergyAustralia reviewing a sample of call recordings. EnergyAustralia identified that Bright Choice representatives were not obtaining explicit informed consent from customers or following the scripts provided to them by EnergyAustralia.

57    EnergyAustralia suspended all telesales on 23 May 2013. EnergyAustralia then conducted compliance and training sessions with Bright Choice representatives and implemented monitoring procedures in respect of Bright Choice. After this further compliance training, the suspension was lifted on 21 June 2013.

58    The training materials used during these training sessions included an express warning that:

A customer consenting to receive a Welcome Pack only, is NOT obtaining the Customer’s Explicit Informed Consent. Explicit informed Consent must be obtained in relation to the Customer entering into a retail transfer or market retail contract with EnergyAustralia.

59    On 23 September 2013, EnergyAustralia terminated the Services Agreement, with effect from 23 October 2013. EnergyAustralia required Bright Choice to cease all sales calls in relation to EnergyAustralia products from 23 September 2013.

60    This paragraph is relevant to EnergyAustralia only. Under s 274 of the NERL SA and the NERL ACT, EnergyAustralia is required to submit certain information to the AER relating to compliance with the requirements of the NERL, the National Energy Retail Regulations (National Regulations) and the National Energy Retail Rules (Rules). In accordance with those obligations, EnergyAustralia reported the conduct the subject of these proceedings to the AER in September 2013 and subsequently to the ACCC in October 2013, at the recommendation of the AER. EnergyAustralia also co-operated with the ACCC’s and the AER’s investigations by voluntarily providing, in a timely manner, information and documents to the ACCC and the AER when requested to do so.

61    In around November 2013, EnergyAustralia voluntarily implemented a consumer remedial program (at its own cost, of $958,085.00) under which EnergyAustralia sought to contact remaining customers of EnergyAustralia originating from Bright Choice. Specifically, EnergyAustralia:

(1)    Identified all current, active EnergyAustralia customers (including those customers who were in the process of being transferred to EnergyAustralia) who had originated from Bright Choice since April 2012 and who had not made a complaint to the relevant state or territory energy ombudsman (as those complaints were already being attended to by EnergyAustralia). There were 35,886 such customers identified in total;

(2)    Established a dedicated telephone line;

(3)    Made two attempts to contact such customers by telephone;

(4)    Wrote to those customers who were not contacted by telephone after two attempts.

62    EnergyAustralia offered each of the active EnergyAustralia customers identified in [61(1)], either over the telephone or in a letter sent to the customers, a choice of being transferred back to their previous retailer without any termination fees being charged, or staying with EnergyAustralia on a product which was at least equivalent to the product they had at the time of their dealing with Bright Choice. It is not certain that every affected consumer was contacted as part of the remedial program. For example, customers who had cancelled their contracts during the 10 day cooling off period were excluded.

63    EnergyAustralia has also implemented a process to safeguard against new customers being transferred to EnergyAustralia or entered into a market retail contract without having provided their explicit informed consent to the entry into a contract or transfer from their existing retailer, as the case may be. This process involves EnergyAustralia causing an SMS or email to be sent to every new customer that is entered into a contract with EnergyAustralia following an unsolicited outbound telemarketing sales call, and who provides a mobile number or email address, to confirm that the customer has in fact requested the transfer to, and entry into a market retail contract with, EnergyAustralia.

64    Since terminating the Services Agreement and reporting the conduct the subject of these proceedings, EnergyAustralia has made significant improvements to its compliance program to align it with the principles of the Australian Standard for Compliance Programs (AS3806) and under which compliance with EnergyAustralia’s obligations under s 38 of the NERL, is nominated as a “critical regulatory obligation”. EnergyAustralia has agreed to maintain this compliance program for two years. The improvements have involved:

(1)    Undertaking a quarterly certification and a risk assessment of express informed consent compliance across the business, including by, each quarter, reassessing the effectiveness of business practices and processes against express informed consent obligations;

(2)    Providing regular (at least once a year) and practical training for all directors, officers, employees, representatives and agents of EnergyAustralia, whose duties could result in them being concerned with conduct that may contravene EnergyAustralia’s obligations to obtain express informed consent;

(3)    Appointing a Compliance Officer with the responsibility of ensuring its compliance program is effectively designed, implemented and maintained;

(4)    Appointing a Compliance Advisor to conduct a CCA risk assessment;

(5)    Establishing a monthly scorecard process to assess performance of third party vendors in relation to complaints, cancellations and compliance with EnergyAustralia’s ACL and NERL obligations; and

(6)    Requiring all third party telesales vendors to record the entirety of all calls, and to provide EnergyAustralia with copies of telesales call recordings randomly selected by EnergyAustralia for quality assurance review.

3.    CONTRAVENTIONS – APPLICABLE LEGAL PRINCIPLES

3.1    ACL

65    The applicable legal principles in respect of contraventions of ss 18 and 29(1) of the ACL are well-known: Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2014] FCA 634 at [35]-[47]; Australian Competition and Consumer Commission v AGL South Australia Pty Ltd [2014] FCA 1369 at [60]-[62]. Conduct is likely to mislead or deceive if there is a “real or not remote chance or possibility” that it will do so: Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682 at [10] citing Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 87. The conduct must be capable of leading a person into error and the error or misconception must result from the conduct: Dukemaster at [10].

66    Spoken words must be proven with a degree of precision sufficient to enable the Court to be reasonably satisfied that they were in fact misleading in the proved circumstances: see Watson v Foxman (1995) 49 NSWLR 315 at 318-319, cited with approval in Julstar Pty Ltd v Hart Trading Pty Ltd [2014] FCAFC 151 at [73]. Here, the relevant spoken words have been admitted by EnergyAustralia and Bright Choice (see [39]ff above), and were contrary to the true position: see [43] above.

67    EnergyAustralia and Bright Choice admit, and I find, that between 2 August 2012 and 15 April 2013, by reason of the matters set out in [39]-[43] above (in relation to the Telephone Representations), in trade or commerce, and in connection with the supply or possible supply of, or in connection with the promotion of the supply of, electricity and/or gas, EnergyAustralia and Bright Choice:

(1)    Engaged in conduct that was misleading and deceptive or was likely to mislead and deceive in contravention of s 18 of the ACL; and

(2)    Made false and misleading representations concerning the existence, exclusion or effect of a condition or right in contravention of s 29(1)(m) of the ACL.

68    EnergyAustralia admits, and I find, that between 2 August 2012 and 29 April 2013, by reason of the matters set out in [45]-[51] above (in relation to the Contract Representations), in trade or commerce, and in connection with the supply or possible supply of, or in connection with the promotion of the supply of, electricity and/or gas:

(1)    Engaged in conduct that was likely to mislead and deceive in contravention of s 18 of the ACL;

(2)    Made false and misleading representations that particular persons had agreed to acquire goods or services, namely electricity and/or gas, in contravention of s 29(1)(d) of the ACL; and

(3)    Made false and misleading representations concerning the existence, exclusion or effect of a condition or right in contravention of s 29(1)(m) of the ACL.

3.2    NERL

69    Section 38 of the NERL SA and the NERL ACT provides, relevantly, that a retailer must obtain the explicit informed consent of a small customer for certain transactions including:

(1)    the transfer of the customer to the retailer from another retailer (s 38(a)); and

(2)    the entry by the customer into a market retail contract with the retailer (s 38(b)).

A “small customer” includes a residential customer: s 5(2)(a) of the NERL SA and NERL ACT.

70    Section 39 of the NERL SA and the NERL ACT provides that “explicit informed consent” is given where the retailer, or a person acting on the retailer’s behalf, has clearly, fully and adequately disclosed all matters relevant to the consent of the customer, including the purpose or use of the consent, and the customer gives consent. Consent by the consumer must be given in writing signed by the customer, verbally (provided it is evidenced in such a way that it can be verified), or by electronic communication generated by the customer.

71    Section 38 of the NERL SA and the NERL ACT is a civil penalty provision: s 4(1) of the NERL SA and the NERL ACT. A civil penalty provision that provides that a person may only do something in certain circumstances is taken to impose an obligation on the person not to do the thing except in those circumstances: s 298(4)(a) of the NERL SA and the NERL ACT. Civil penalty is defined in s 2(1) of the NERL SA and NERL ACT to mean in the case of breach of a civil penalty provision by a body corporate, an amount not exceeding $100,000 and an amount not exceeding $10,000 for every day during which the breach continues. Under s 297(2) of the NERL SA and the NERL ACT, a person is not liable for more than one civil penalty in respect of the same conduct.

72    These provisions have not previously been considered by a Court.

73    Section 44AAG(1)(b) of the CCA provides that on application by the AER on behalf of the Commonwealth, the Court may make an order declaring that a person is in breach of a State/Territory energy law. A State/Territory energy law includes the NERL: see s 4(1) of the CCA. If the Court makes an order declaring that a person is in breach of a State/Territory energy law, the Court may order that the person pay a civil penalty determined in accordance with the law: s 44AAG(2)(a) and Australian Energy Regulator v Snowy Hydro Limited (No 2) [2015] FCA 58.

74    EnergyAustralia entered into market retail contracts with customers, and in some cases, transferred customers to itself, having communicated with those customers only by the telephone calls made by Bright Choice. EnergyAustralia has admitted that explicit informed consent was not obtained from any customers the subject of the AER Proceeding, for the transfer of those customers from their existing retailer to EnergyAustralia or for their entering into market retail contracts with EnergyAustralia. EnergyAustralia also admitted that on the basis of sales reports received from Bright Choice, it caused contractual documents to be sent to the consumers and transferred (or initiated transfers of) their gas and/or electricity supply from their existing retailer to itself.

75    EnergyAustralia admits, and I find, that, by reason of the conduct outlined in Section 2.2.3 above, between 16 January 2013 and 9 October 2013, EnergyAustralia breached s 38(a) of the NERL SA and the NERL ACT by transferring customers from their existing retailer to itself on the basis of a report provided to EnergyAustralia by its agent Bright Choice, without obtaining the explicit informed consent of those customers to do so.

76    EnergyAustralia admits, and I find, that, by reason of the conduct outlined in Section 2.2.3 above, between 28 November 2012 and 26 July 2013, EnergyAustralia breached s 38(b) of the NERL SA and the NERL ACT by entering customers into market retail contracts with EnergyAustralia on the basis of a report provided to EnergyAustralia by its agent Bright Choice, without obtaining the explicit informed consent of those customers to do so.

4.    RELIEF SOUGHT – APPLICABLE LEGAL PRINCIPLES

77    In the ACCC proceeding, the parties propose the Court make declarations against EnergyAustralia and Bright Choice under s 21 of the Federal Court of Australia Act 1976 (Cth) (FCA), impose pecuniary penalties on EnergyAustralia and Bright Choice under s 224 of the ACL, grant an injunction against Bright Choice under s 232 of the ACL, impose compliance program and training orders against Bright Choice under s 246(2)(b) of the ACL and make costs orders.

78    In the AER proceeding, the parties propose the Court make declarations against EnergyAustralia under s 21 of the FCA and also s 44AAG(1) of the CCA, impose a civil penalty against EnergyAustralia under s 44AAG(2)(a) of the CCA, impose compliance program and training orders against EnergyAustralia under s 44AAG(2)(d) of the CCA and make a costs order.

4.1    Declarations

79    The Court has a wide discretionary power to grant declarations under s 21 of the FCA: Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 at 97-9. The Court also has power, on application by the AER, to declare that a person is in breach of a State/Territory energy law (as defined in s 4(1) of the CCA) including the NERL SA and the NERL ACT under s 44AAG(1)(b) of the CCA.

80    The Court does not lack jurisdiction or power to grant declaratory relief merely because the relief is sought by the consent of the parties: IMF (Australia) Ltd v Sons of Gwalia Ltd (admin apptd) (2004) 211 ALR 231 at [47] and Australian Competition and Consumer Commission v MSY Technology Pty Ltd (2012) 201 FCR 378 at [30]. When a declaration is sought with the consent of the parties, the Court’s discretion is not supplanted, but nor will the Court refuse to give effect to the terms of settlement where the orders sought are within the Court’s jurisdiction and are otherwise unobjectionable: Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [75].

81    However, before making declarations, three requirements should be satisfied:

(1)    The question must be a real and not a hypothetical or theoretical one;

(2)    The applicant must have a real interest in raising it; and

(3)    There must be a proper contradictor:

Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437-8.

82    Considerations relevant to the exercise of the discretion to make declarations in the present proceedings include whether the declaration will have any utility, whether the proceeding involves a matter of public interest and whether the circumstances call for the marking of the Court’s disapproval of the contravening conduct: Tobacco Institute at 99-100; Australian Competition and Consumer Commission v Powerballwin.com.au Pty Ltd [2010] FCA 378 at [41] and Forster v Jododex at 437-8.

83    Declarations are not made as a matter of course. Where it is appropriate for a declaration to be made, attention must be given to the form of the declaration, so that it is at least informative as to the basis on which the Court declares that a contravention has occurred. The declarations should contain appropriate and adequate particulars of how and why the impugned conduct is a contravention of the Act: Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [89]-[90]; Australian Competition and Consumer Commission v Francis (2004) 142 FCR 1 at [113] and BMW Australia Limited v Australian Competition and Consumer Commission [2004] FCAFC 167 at [35].

84    So what is the position here? First, the contravening conduct is admitted: see Sections 2.2.1-2.2.3 above. The contraventions are admitted: see [67]-[68] and [75]-[76] above. This provides a sufficient factual foundation for the making of the declarations: see ACCC v Coles [2014] FCA 1405 at [79] and the cases cited. The proposed declarations relate to conduct that contravenes the ACL, the NERL SA and the NERL ACT and the matters in issue have been identified and particularised by the parties with precision: MSY Technology at [35]. There can be no doubt that the declarations sought here will have utility. In the absence of them, the contravening conduct would not otherwise be clearly identified.

85    Second, it is in the public interest for the ACCC and the AER to seek to have the declarations made and for the declarations to be made. The ACCC and the AER are public regulators and have a genuine interest in seeking the declaratory relief. Third, EnergyAustralia and Bright Choice are proper contradictors as they have a genuine interest in opposing the declaratory relief. Fourth, and no less importantly, the declarations sought are appropriate because they serve to record the Court’s disapproval of the contravening conduct, vindicate the ACCC’s and the AER’s claim that EnergyAustralia contravened the ACL, the NERL SA and the NERL ACT and Bright Choice contravened the ACL, assist the ACCC and the AER in carrying out their duties in the future, assist in clarifying the law and act as a deterrent to other persons and corporations from contravening the ACL, the NERL SA and the NERL ACT.

86    The threshold requirements for making a declaration have been met, and the declarations sought in both proceedings should be made.

4.2    Penalties

4.2.1    Agreed penalties – Principles

87    An approach to penalties sought by consent was described by the Full Court in Minister for Industry, Tourism & Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 at [51] as follows (and see further [53]-[58]) (in relation to s 76 of the Trade Practices Act 1974 (Cth) (TPA)), now the CCA, but the same principles apply for s 224(2) of the ACL, see ACCC v Coles [2014] FCA 1405 at [84]):

(i)    It is the responsibility of the Court to determine the appropriate penalty to be imposed under s 76 of the [TPA] in respect of a contravention of the [TPA].

(ii)    Determining the quantum of a penalty is not an exact science. Within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another.

(iii)    There is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy. Accordingly, when the regulator and contravenor have reached agreement, they may present to the Court a statement of facts and opinions as to the effect of those facts, together with joint submissions as to the appropriate penalty to be imposed.

(iv)    The view of the regulator, as a specialist body, is a relevant, but not determinative consideration on the question of penalty. In particular, the views of the regulator on matters within its expertise (such as the ACCC’s views as to the deterrent effect of a proposed penalty in a given market) will usually be given greater weight than its views on more “subjective” matters.

(v)    In determining whether the proposed penalty is appropriate, the Court examines all the circumstances of the case. Where the parties have put forward an agreed statement of facts, the Court may act on that statement if it is appropriate to do so.

(vi)    Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court’s view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range.

Those principles were described as emerging from the reasoning in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285. The views in Mobil Oil and NW Frozen Foods have been adopted in later decisions including Fair Work Ombudsman v A Dalley Holdings Pty Ltd [2013] FCA 509; Tax Practitioners Board v Shanahan [2013] FCA 764; Australian Competition and Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030; Australian Competition and Consumer Commission v Hewlett-Packard Australia Pty Ltd [2013] FCA 653; Australian Competition and Consumer Commission v P & N Pty Ltd [2014] FCA 6 and Australian Competition and Consumer Commission v EnergyAustralia Pty Ltd [2014] FCA 336 (ACCC v EnergyAustralia). (Cf Australian Securities and Investments Commission v Ingleby (2013) 93 ACSR 274 where the Court of Appeal of the Supreme Court of Victoria recently criticised as incorrect the approach applied by the Full Federal Court in Mobil Oil and NW Frozen Foods in considering whether to make orders for pecuniary penalties sought by agreement).

88    The phrase “permissible range” refers to that range that would be permitted by the Court, which is neither manifestly inadequate nor manifestly excessive: Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [129].

89    The principles that might be applied in the imposition of penalties when they have been agreed between a regulator and respondent were also addressed in Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCA 1014 at [8]-[9] and [32]-[33] where I stated:

[8]    It is not unusual in modern litigation for proceedings commenced by a regulator against a defendant to be resolved and for the parties to jointly approach the Court with an agreed statement of facts. The beneficial consequences of such a resolution are well known: see, by way of example, [NW Frozen Foods at 290-1]. It has been suggested that cases which involve serious contraventions of the law cannot be “settled” by agreed facts that do not present a fair and accurate picture of the relevant offending to the Court: cf [Ingleby] at [31]. So much may be accepted. When this proceeding was settled, the only documents filed with the Court were the originating application and a statement of claim. As a result, in assessing whether the agreed facts and admissions present a fair and accurate picture of the offending conduct, the Court, in the exercise of its judicial power, must satisfy itself that it has sufficient facts and matters to enable it to assess and impose an appropriate penalty: cf Ingleby at [33] citing with approval [Mobil Oil] at [79]. If the Court forms the view that it does not have sufficient facts and matters, it can and should request the parties to provide additional evidence or information: Mobil Oil at [79].

[9]    Consistent with the exercise of judicial power, the first question to be asked is whether the Court does have sufficient facts and matters to enable it to assess and impose a penalty in the proper exercise of that judicial power? ….

...

[32]    The parties have agreed the penalties. The Court’s approach to agreed penalties has been the subject of considerable judicial ink: see, by way of example, Mobil Oil at [47]-[60]; Australian Securities and Investments Commission v Vizard (2005) 145 FCR 57 at [45]; and Ingleby.

[33]    In the end, the principles to be applied may be simply stated. First, the question of an appropriate penalty for a proven contempt or an established breach of a statutory prohibition is a matter for, and function of, the Courts in the exercise of judicial power. Secondly, contrary to statements in some cases, the role of the Court in addressing an agreed penalty is not to exercise an “appellate” role: Ingleby at [29] and [99]. The role of the trial judge is to give such weight to an agreed penalty as is appropriate and to treat the joint submission as it is – a joint submission – to be considered as a factor, an important factor, in the exercise of judicial power of fixing the appropriate penalty in the circumstances of the particular case. These principles are consistent with the observations of Lockhart J in Australian Competition and Consumer Commission v Pioneer Concrete (Qld) Pty Ltd (1996) ATPR 41-457 at 41,581-41,582. The role of the Court is to assess what it would do itself based on the facts. Whether the Court assesses for itself what is the appropriate penalty and then tests that against the agreed penalty, or the Court asks itself whether the agreed penalty is broadly in accord with what the Court would have done acknowledging that the fixing of quantum – the task is not an exact science. The role of the Court is the same – to impose a penalty that is proportionate to the gravity of the contravening conduct. Much of the current debate about the appropriate approach has descended into a debate about which goes first – the Court assessing the penalty having regard to the agreed penalty or assessing whether the agreed penalty is within the appropriate range. For my part, that debate is distracting. It is distracting because it ignores the important role of the fundamental principles of sentencing that must be considered by a trial judge.

90    I remain of the view there expressed – the role of the Court is to assess what it would do itself based on the facts. What penalty would the Court impose that is proportionate to the gravity of the contravening conduct? There is no prescribed method. The method will inevitably vary depending on the facts.

91    Before turning to the imposition of pecuniary penalties under the ACL and then the NERL, it is necessary to say something about the High Court decision in Barbaro v The Queen (2014) 88 ALJR 372 where the majority of the Court held that criminal prosecutors should not be permitted to make submissions to a sentencing judge as to the “available range” of sentences. The majority held that such a submission was no more than a statement of opinion that could not properly be taken into account by a sentencing judge: at [6]-[7], [22]-[23], [36]-[39], [42]-[43] and [49]. Barbaro does not to apply to civil penalty proceedings. It has been held that Barbaro did not overrule the principles in NW Frozen Foods and Mobil Oil, and that Barbaro was concerned with criminal custodial sentencing and the role of the crown in that process, not about the imposition of civil penalties: see, for example, ACCC v EnergyAustralia at [113]-[152] and Matthews v The Queen [2014] VSCA 291 at [29].

92    The Court’s approach to agreements on proposed pecuniary penalties to be imposed under s 44AAG(2)(a) of the CCA is the same: see Snowy Hydro Limited (No 2) at [126]-[137].

4.2.2    Penalties under the ACL – Legislation

93    Pursuant to s 224 of the ACL, the Court may impose a pecuniary penalty on a person who has contravened a provision of Pt 3-1 of the ACL (including s 29): s 224(1)(a)(ii). The Court may order the person to pay such pecuniary penalty in respect of “each act or omission” as the Court determines to be appropriate. The maximum penalty in respect of each act or omission for a body corporate is $1.1 million: Item 2(a) of s 224(3). Section 224(4) expressly permits the issue of proceedings against a person for conduct which contravenes more than one of the provisions the subject of s 224(4)(a). However, if the conduct constitutes a contravention of two or more penalty provisions, a person is not liable to more than one pecuniary penalty in respect of the same conduct: s 224(4)(b) of the ACL.

94    The “single course of conduct” principle recognises that “where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is ‘the same criminality’ and that is necessarily a factually specific inquiry”: see Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39 at [39] (and [39]-[43]).

95    Application of the “single course of conduct” principle does not convert the maximum penalty for one contravention into the maximum penalty for the course of conduct as a whole: Australian Competition and Consumer Commission v Reebok Australia Pty Ltd [2015] FCA 83 at [159]-[160]; Cahill at [42].

4.2.3    Penalties under the ACL – Considerations

96    Section 224 of the ACL empowers the Court to impose pecuniary penalties with respect to conduct that contravenes ss 29(1)(d) and/or 29(1)(m) of the ACL. Pecuniary penalties are not a remedy available for contraventions of s 18 of the ACL.

97    In determining the appropriate pecuniary penalty for relevant contraventions of the ACL, s 224(2) of the ACL requires the Court to have regard to all relevant matters, including (but not limited to):

(1)    The nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission;

(2)    The circumstances in which the act or omission took place; and

(3)    Whether the person has previously been found by a Court in proceedings under Ch 4 or Pt 5-2 of the ACL to have engaged in any similar conduct.

98    Section 224 of the ACL was preceded by, and is in substantially identical terms to, s 76E of the TPA. The principles relevant to the imposition of a civil penalty under the former s 76 of the TPA (relating to restrictive trade practices, which is similar in terms to s 76E) have application to s 76E(2) of the TPA and now s 224 of the ACL, unless the context of the infringements makes it plain that it cannot be so: see Global One Mobile Entertainment Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 134 at [114]-[119]. Other considerations may be relevant to an assessment of pecuniary penalty.

99    Courts have typically accorded significance to the following factors (see Australian Competition and Consumer Commission v Pepe’s Ducks Ltd [2013] FCA 570 at [17]):

(1)    The size of the contravening company;

(2)    The deliberateness of the contravention and the period over which it extended;

(3)    Whether the contravention arose out of the conduct of senior management of the contravener or at some lower level;

(4)    Whether the contravener has a corporate culture conducive to compliance with the ACL, as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention;

(5)    Whether the contravener has shown a disposition to co-operate with the authorities responsible for the enforcement of the ACL in relation to the contravention;

(6)    Whether the contravener has engaged in similar conduct in the past;

(7)    The financial position of the contravener; and

(8)    Whether the contravening conduct was systematic, deliberate or covert.

100    For the purpose of imposing a penalty, relevant impact on consumers is not restricted to financial loss or damage. Inconvenience to, and intrusion into the lives of, affected consumers, may be relevant. However, the absence of quantifiable loss or damage can be a mitigating factor: ACCC v EnergyAustralia at [41]-[42].

101    Matters of deterrence, determining a penalty figure, the parity principle, and the totality principle will be considered in the following subsections.

4.2.3.1    Deterrence

102    The principal object of a pecuniary penalty is deterrence, both general and specific. The penalty “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”: Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20 at [60]. At the same time, the penalty should be no greater than necessary to achieve that objective and should not be so high as to be oppressive: Trade Practices Commission v Stihl Chain Saws (Aust.) Pty Ltd (1978) ATPR 40-091 at 17,896.

4.2.3.2    Determining penalty figure

103    The process applied in arriving at a particular penalty figure was considered by the High Court in the context of criminal sentencing in Markarian v The Queen (2005) 228 CLR 357. That process is also applicable to the assessment of pecuniary penalties under s 224 of the ACL: see Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2005] ATPR 42-070 at [68].

104    In Markarian, Gleeson CJ, Gummow, Hayne and Callinan JJ held:

(1)    Assessment of the appropriate penalty is a discretionary judgment based on all relevant considerations (at [27]);

(2)    “[C]areful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick” (at [31]);

(3)    It will rarely be appropriate for a Court to start with the maximum penalty and proceed by making a proportional deduction from that maximum (at [31]);

(4)    The Court should not adopt a mathematical approach of increments to or decrements from a predetermined range of sentences, or single out some of the considerations and attribute specific numerical or proportionate value to some features (at [37]);

(5)    It is not appropriate to determine an ‘objective’ sentence and then adjust it by some mathematical value given to one or more features such as a plea of guilty or assistance to authorities (at [37]);

(6)    The Court “may not add and subtract item by item from some apparently subliminally derived figure” to determine the penalty to be imposed (at [39]); and

(7)    Since the law strongly favours transparency, accessible reasoning is necessary in the interests of justice, and, while there may be occasions when some indulgence in an arithmetical process will better serve the end, this will not be the case where there are numerous and complex considerations that must be weighed (at [39]).

4.2.3.3    Parity principle

105    The parity principle requires that when penalties are imposed “there should not be such an inequality as would suggest that the treatment meted out has not been even-handed”: ACCC v EnergyAustralia at [87] citing NW Frozen Foods at 295. A list of penalties imposed in other cases, where the combination of circumstances is different, is unhelpful: Singtel Optus at [60].

4.2.3.4    Totality principle

106    The “totality principle” – that the total penalty for related offences ought not exceed what is proper for the entire contravening conduct involved (Trade Practices Commission v TNT Australia Pty Ltd (1995) ATPR 41-375 at 40,169) – operates as a “final check” to ensure that that “overall an appropriate sentence or penalty is appropriate and that the sum of the penalties imposed for several contraventions does not result in the total of the penalties exceeding what is proper having regard to the totality of the contravening conduct involved”: Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 145 ALR 36 at 53.

4.2.4    Penalties under the NERL – Legislation

107    These provisions have been addressed in Section 3.2 above.

4.2.5    Penalties under the NERL – Considerations

108    Section 294 of the NERL SA and the NERL ACT provides that civil penalties must be determined having regard to all relevant matters, including (but not limited to):

(1)    The nature and extent of the breach;

(2)    The nature and extent of any loss or damage suffered as a result of the breach;

(3)    The circumstances in which the breach took place;

(4)    Whether the person has engaged in any similar conduct and been found to be in breach of the NERL, the National Regulations or the Rules in respect of that conduct; and

(5)    For regulated entities (including retailers such as EnergyAustralia), whether the person has established, and has complied with, policies, systems and procedures under s 273, which requires regulated entities to establish policies, systems and procedures to enable it to efficiently and effectively monitor its compliance with the NERL, the National Regulations and the Rules.

109    The parties submitted (and I accept) that the principles relevant to determination of penalties under s 76 of the TPA and s 224 of the ACL are also relevant to the assessment of civil penalties under the NERL SA and the NERL ACT: see also Snowy Hydro at [116]-[125].

4.2.6    Penalties against EnergyAustralia

4.2.6.1    Nature, extent and duration of conduct and circumstances in which it took place

110    EnergyAustralia acknowledged that its contravening conduct was of a serious nature and should not have occurred. EnergyAustralia is responsible for its own conduct and the conduct of the third parties it engages to market its plans to consumers. EnergyAustralia acknowledged that it is no excuse that the contraventions admitted by EnergyAustralia stem from the conduct engaged in by Bright Choice.

111    Nevertheless, the conduct of each party is relevant to the appropriate relief.

112    As we have seen, the Services Agreement imposed a number of compliance obligations on Bright Choice: see [20]-[26] and [29] above. In addition, under the Services Agreement, EnergyAustralia conducted “train the trainer” sessions for Bright Choice senior sales managers in March 2012 and provided the Training Materials to Bright Choice: see [27] above.

113    Those Training Materials covered legal and regulatory compliance topics and included instructions in relation to sales techniques to be used, and to be avoided by Bright Choice sales representatives: see [27] above. EnergyAustralia also provided Bright Choice with questionnaires that were designed to test the adequacy of Bright Choice’s training program and which were required to be successfully completed by Bright Choice personnel before they conducted any telemarketing: see [28] above.

114    Next, it is important to place the admitted contravening conduct in context. As we have seen, after the problems were exposed, EnergyAustralia identified all current active EnergyAustralia customers (including those customers who were in the process of being transferred to EnergyAustralia) who had originated from Bright Choice since April 2012 and who had not made a complaint to the relevant state or territory energy ombudsman. A large number of customers – 35,886 – were identified: see [61] above. Of course, there may have been other customers who had since left EnergyAustralia. But to the extent known, the contravening conduct concerns 49 customers across both proceedings, or less than 1%.

115    So where did EnergyAustralia fall short? The ACCC and the AER submitted (and I accept) that it is reasonable to conclude that the presence of a significant financial incentive (see [29] above) at least increased the risk that sales calls to consumers would occur without all proper processes being observed. It is what EnergyAustralia did in response to the increased risk which is significant.

116    The additional “bonus fee” was agreed on 28 March 2013: see [29] above. As we have seen, the bonuses were significant sums by reference to the base fee for each gas and electricity sale. The timing of the increased bonuses is unfortunate. It is around four months after EnergyAustralia commenced its investigation into the conduct of Bright Choice and the very same day EnergyAustralia received details of concerns with Bright Choice’s telemarketing practices, including its failure to obtain explicit informed consent from customers: see [55]-[56] above.

117    This unfortunate timing exposes a potential flaw in EnergyAustralia’s internal processes. As we have seen, the Services Agreement imposed obligations on Bright Choice and contained within it mechanisms to ensure those obligations were discharged. A conclusion to be drawn is that despite the Services Agreement expressly providing for these mechanisms, EnergyAustralia did not, or did not adequately, exercise its audit powers under cl 1.16 of the Services Agreement: see [26] above. Although an investigation was commenced on 7 December 2012, it was only after identifying an increased number of customer complaints and cancellations from telesales made by Bright Choice in April and May 2013, that EnergyAustralia commenced an investigation into Bright Choice’s conduct in which it actually reviewed a sample of call recordings. EnergyAustralia then identified that Bright Choice representatives were not obtaining explicit informed consent from customers or following the scripts provided to them by EnergyAustralia. There was nothing to suggest that EnergyAustralia had reviewed call recordings at any time prior to April or May 2013. Given the size of the commissions being paid by EnergyAustralia and the numbers of telesales made by its agent, Bright Choice, EnergyAustralia’s internal procedures were deficient.

118    Put simply, the processes EnergyAustralia has now implemented to safeguard against new customers being transferred to EnergyAustralia or entered into a market retail contract without having provided their explicit informed consent (see [63] above), should have been in place from the outset.

119    EnergyAustralia’s contraventions of the ACL affected 22 consumers. Relevantly, the Telephone Representations were made to 21 consumers and the Contract Representations were made to 22 consumers (comprising the same 21 consumers affected by the Telephone Representations, and one additional consumer). The ACCC and EnergyAustralia submitted, and I accept, that when considering the total penalty to be imposed, it is appropriate to characterise the conduct in relation to each affected consumer as a single course of conduct. The oral and written representations made to each consumer essentially concerned the same subject matter and were directed to the same issue and the same circumstances – namely, whether the consumer would be free to decide, after the telemarketing call, whether or not to enter into a new energy plan with EnergyAustralia.

120    EnergyAustralia’s breaches of the NERL SA and the NERL ACT affected 27 customers. All 27 customers were entered into market retail contracts in breach of s 38(b) and 16 of the customers were transferred in breach of s 38(a). As with the ACCC proceeding, it is appropriate to characterise the conduct in relation to each affected consumer as a single course of conduct. The act of entering into a market retail contract and “transferring” that customer’s electricity and/or gas supply can be readily seen as part of the same dealing by EnergyAustralia with that customer.

4.2.6.2    Impact on consumers and remediation

121    The steps taken by EnergyAustralia are set out at [55]-[64] above. The steps included a voluntarily consumer remedial program (see [61]-[62] above)

122    As noted at [100] above, for the purpose of imposing a penalty, relevant impact on consumers is not restricted to financial loss or damage. The admitted contraventions caused inconvenience to, and intrusion into the lives of, affected consumers. However, in the present cases, it is a mitigating factor that there is no evidence of quantifiable loss or damage.

4.2.6.3    Past conduct

123    In 2013, the ACCC took action against EnergyAustralia, along with three marketing companies, regarding the conduct of door-to-door sales representatives engaged to market EnergyAustralia electricity and gas plans in relation to six consumers in 2012: ACCC v EnergyAustralia.

124    In April 2014, the Court made declarations that EnergyAustralia had:

(1)    Engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of s 18(1) of the ACL;

(2)    Made representations which were false and misleading in connection with the supply or possible supply of goods or services in contravention of ss 29(1)(g), 29(1)(h) and 29(1)(i) of the ACL; and

(3)    Contravened certain provisions of Div 2 of Pt 3-2 of the ACL concerning unsolicited consumer agreements.

125    The false and misleading representations made to the consumers by the sales representatives acting on behalf of EnergyAustralia included that:

(1)    There was a mandated electricity rate or tariff that consumers were required to be charged, and that the consumer’s current retailer was charging more than this mandated electricity rate or tariff;

(2)    The sales representative and EnergyAustralia’s rate or tariff had a sponsorship with, approval of, or affiliation with, the government;

(3)    The sales representative was attending the consumer’s premises for the purpose of a government initiative to make sure energy companies were charging the correct rate or tariff; and

(4)    The consumer would become eligible for additional government entitlements that would reduce their electricity bills if the customer changed from their current retail electricity supplier to EnergyAustralia.

126    EnergyAustralia was ordered to pay a pecuniary penalty of $1,200,000. The Court also ordered EnergyAustralia to publish corrective notices in newspapers and on its website and establish a trade practices compliance program.

4.2.6.4    Co-operation

127    Under s 274 of the NERL SA and the NERL ACT, EnergyAustralia is required to submit certain information to the AER relating to compliance with the requirements of the NERL, the National Regulations and the Rules. In accordance with those obligations, EnergyAustralia reported the conduct the subject of the AER proceeding to the AER in September 2013 and subsequently to the ACCC in October 2013, at the recommendation of the AER: see [60] above.

128    EnergyAustralia also co-operated with the ACCC’s and the AER’s investigations by voluntarily providing, in a timely manner, information and documents to the ACCC and the AER when requested to do so: see [60] above.

129    Following the institution of these proceedings, EnergyAustralia reached early agreed resolutions of the proceedings with the ACCC and the AER. EnergyAustralia is entitled to credit for having co-operated with the ACCC and the AER during their investigations and for having admitted contravening the ACL, the NERL SA and the NERL ACT, thereby saving the ACCC, the AER and the Court (and ultimately the community) the cost and burden of a trial: Australian Competition and Consumer Commission v Mitsubishi Electric Australia Pty Ltd [2013] FCA 1413 at [118]-[120].

130    In these circumstances the ACCC, the AER and EnergyAustralia submitted (and I accept) that EnergyAustralia is entitled to a discount on the penalties that otherwise would have been appropriate, which reflects appropriate admissions and substantial savings from costs that would have been incurred. Had EnergyAustralia not co-operated, and had liability been established following a contested trial, the ACCC and the AER would have sought, and the Court would have imposed, significantly higher penalties.

4.2.6.5    Compliance culture

131    EnergyAustralia was ordered to implement a trade practices compliance program in ACCC v EnergyAustralia. EnergyAustralia has agreed to maintain, for two years, a compliance program which nominates s 38 of the NERL as a critical regulatory obligation: see [64] above.

132    EnergyAustralia has now implemented a process to safeguard against telesales customers being transferred from their existing provider, or entering into a market retail contract, without having provided their explicit informed consent: see [63] above.

4.2.6.6    Deliberateness of contravening conduct

133    The parties do not contend that there was any deliberateness in the contravening conduct engaged in by EnergyAustralia itself. However, as stated at [110] above, EnergyAustralia acknowledged that it is no excuse that its admitted contraventions were the result of conduct engaged in by Bright Choice.

4.2.6.7    Involvement of senior management

134    There is no material before the Court which addresses this issue satisfactorily. I reject EnergyAustralia’s submission that its senior management was not involved in the contravening conduct.

4.2.6.8    Size of contravener and its financial position

135    EnergyAustralia is one of the largest energy retailers in Australia: see [8] above. EnergyAustralia’s size and position in the retail energy market has two implications.

136    First, EnergyAustralia has capacity to pay the penalties it has agreed with the ACCC and the AER. Second, a contravener’s size and significance within an industry is a factor to take into account when imposing a penalty: Australian Competition and Consumer Commission v Telstra Corporation Ltd [2010] FCA 790 at [208]-[210] and the cases cited.

4.2.6.9    Proposed penalty

137    The ACCC, the AER and EnergyAustralia submitted that the proposed penalties of $1 million on EnergyAustralia in the ACCC Proceeding and $500,000 in the AER Proceeding are appropriate, being neither excessive nor inadequate. I agree. The amount of the penalty is in each case sufficiently high to serve as a deterrent (both specific and general), and to mark the fact that the conduct is accepted by EnergyAustralia, the regulators, and the Court as serious conduct. At the same time the penalties are set at a level which acknowledges the mitigatory aspects of EnergyAustralia’s conduct, in particular the fact that it took concrete action to stop and remedy the infringing conduct, and that it cooperated with the ACCC and the AER in a real and timely way. That co-operation is a significant factor in the appropriateness of the agreed penalty amount. As noted earlier, but for that co-operation a higher penalty would have been imposed.

138    The penalty sought in the ACCC Proceeding is a lesser proportion of the maximum possible penalty than that sought in the AER Proceeding (see [71] and [93] above). The parties submitted that comparing the relative proportions of the maximum penalty sought in each case is not a particularly instructive exercise. The regimes are different. Civil pecuniary penalties for consumer contraventions of the ACL have been imposed by the Court since the amendments to the law in April 2010. This is the first time a penalty will be imposed on a company under the NERL regime. The possible penalty range for ACL matters is much broader than under the NERL regime. The provisions of the ACL are broadly expressed and intended to be flexible to catch a wide range of conduct, particularly as commercial behaviour changes over time. The maximum penalty available in a proceeding for contravention of the ACL will reflect a wider range of possible outcomes. The NERL regime is more specific and directed to particular marketing behaviour and the relevant maximum penalty reflects a narrower range of possible outcomes.

139    The contraventions were serious and the amount of the penalty is in each case appropriate, having regard to the applicable factors and principles. In my view, the differences between the two regimes make it difficult to compare penalty outcomes by reference to a proportion of the maximum. Having said that, it is important to recognise that the requirement that energy retailers obtain the explicit informed consent of consumers to contract with them and to transfer from another retailer (or from one market retail contract to another), goes to the very core of the stability and transparency of the energy markets, when considered from the perspective of consumer confidence. All participants in the industry must not only understand the central importance of the need to obtain the explicit informed consent of consumers but ensure that they have procedures in place which ensure that this is achieved.

4.2.7    Penalties against Bright Choice

4.2.7.1    Nature, extent and duration of conduct and circumstances in which it took place

140    Bright Choice accepted responsibility for 21 contraventions of the ACL in relation to the Telephone Representations and acknowledged that its conduct was of a serious nature and should not have occurred.

141    Bright Choice submitted however that:

(1)    The conduct was of relatively limited scope. The admitted contraventions of the ACL arose out of 21 telemarketing calls made by persons engaged by Bright Choice during a period of around 18 months when Bright Choice was engaged by EnergyAustralia. During that time, representatives of Bright Choice made tens of thousands of recorded telemarketing calls on behalf of EnergyAustralia: see [61(1)] above.

(2)    There is no evidence of any loss or damage to consumers arising from the conduct engaged in by Bright Choice representatives.

142    Bright Choice’s submission only goes so far. Bright Choice’s conduct amounted to a fundamental failure to do what it was required to do under the Services Agreement it had with EnergyAustralia. No less importantly, the conduct was systemic in that a number of Bright Choice personnel were involved in the conduct, for a period of at least eight months (see Annexure A) and, subsequent to the hearing, it was disclosed that Bright Choice in fact engaged telemarketing contractors: see [16]-[18] above.

4.2.7.2    Impact on consumers and remediation

143    There is no material before the Court regarding any remedial steps taken by Bright Choice.

144    As noted above, for the purpose of imposing a penalty, relevant impact on consumers is not restricted to financial loss or damage. The admitted contraventions caused inconvenience to, and intrusion into the lives of, affected consumers. However, in the present cases, it is a mitigating factor that there is no evidence of quantifiable loss or damage.

4.2.7.3    Past conduct

145    Bright Choice has not been the subject of any prior enforcement action by the ACCC.

4.2.7.4    Co-operation

146    EnergyAustralia reported the conduct to the AER in September 2013, and subsequently to the ACCC. Bright Choice met with the ACCC during the course of its investigation and provided information and documents to the ACCC in response to notices issued under s 155 of the CCA.

147    Following the institution of the ACCC proceeding, Bright Choice reached early agreed resolution of the proceeding with the ACCC. In particular:

(1)    Bright Choice sought a meeting with the ACCC by letter dated 9 December 2013, four days after Bright Choice was notified by the ACCC that it was under investigation; and

(2)    During the course of the proceeding, Bright Choice and the ACCC held three meetings to discuss the matter and its resolution, all instigated by Bright Choice.

148    Bright Choice is entitled to credit for having co-operated with the ACCC’s investigation and for having admitted contravening the ACL, allowing for an early resolution of the matter. The importance of co-operation and its relevance in fixing penalties has been addressed earlier (see [129]-[130] above) and is equally applicable in this context.

4.2.7.5    Compliance culture

149    There was no material before the Court regarding a culture of compliance at the time of the contraventions. There are two aspects to this matter – internal compliance culture and the steps Bright Choice took, if any, to seek compliance by its numerous telemarketing contractors. Nothing was disclosed.

150    Bright Choice has agreed to establish and maintain, for three years, a compliance program which is specifically designed to:

(1)    Ensure an understanding and awareness of the responsibilities and obligations in relation to the conduct declared by the Court in the ACCC Proceeding to be in contravention of ss 18 and 29 of the ACL and any similar or related conduct; and

(2)    Review and revise the internal operations of its business which led to it engaging in the conduct declared by the Court in the ACCC Proceeding to be in contravention of ss 18 and 29 of the ACL.

151    That compliance program extends to its agents (and therefore contractors).

4.2.7.6    Deliberateness of contravening conduct and involvement of senior management

152    There is no material before the Court which addresses either of these issues.

4.2.7.7    Size of contravener and its financial position

153    Bright Choice’s capacity to pay a penalty is currently limited. Over the relevant period, its only client was EnergyAustralia. Bright Choice has not traded since its contract with EnergyAustralia was terminated.

154    Bright Choice has agreed with the ACCC that if a penalty of $100,000 is imposed it will pay that amount in 12 monthly instalments of $8,333.

155    Bright Choice and the ACCC submitted that Bright Choice’s financial position and limited assets are relevant to the size of the penalty to be imposed. Bright Choice submitted that it is relevant that Bright Choice is a small proprietary company which presently has no employees or business activities. As noted at [14]-[19] above, after the hearing Bright Choice was invited to address certain matters. The answering affidavit and submission provided by Bright Choice raised more questions than it answered: see, for example, [15]-[18] above.

4.2.7.8    Proposed penalty

156    The parties submitted that the proposed penalty of $100,000 is appropriate. The parties also proposed that Bright Choice pay that penalty by instalments. I reject that proposal.

157    The principal, if not the sole, purpose of imposing a pecuniary penalty is to act as a personal deterrent and as a general deterrent to others against engaging in the type of conduct that is the subject of the contravention: Australian Competition and Consumer Commission v High Adventure Pty Limited [2005] FCAFC 247 at [11]; Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [65]-[66]. Moreover, although size of a contravener at the time when the penalty comes to be imposed is relevant (Australian Competition and Consumer Commission v BAJV Pty Ltd [2014] FCAFC 52 at [42]-[43]), capacity to pay is not decisive in relation to the imposition of penalty: Australian Competition and Consumer Commission v TF Woollam & Son Pty Ltd (No 2) [2011] FCA 1216 at [29]-[30]. As the Full Court explained in Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liquidation) (2007) 161 FCR 513 at [20]:

… a court may impose a penalty on a company in liquidation if, to do so, would clearly and unambiguously signify to, for example, companies or traders in a discrete industry that a penalty of a particular magnitude was appropriate (and was of a magnitude which might be imposed in the future) if others in the industry sector engaged in the same or similar conduct.

See also Australian Competition and Consumer Commission v SIP Australia Pty Limited [2003] FCA 336 at [59].

158    In the circumstances of this case, including but not limited to the amount of revenue raised by Bright Choice over the relevant period and the amount of “management fees” paid by it to third parties (whose ultimate owners were not disclosed) over the same period (see [13]-[18] above), a penalty of $100,000 payable by instalments over 12 months is not a pecuniary penalty of appropriate deterrent value. The penalty for contravention of the Act must be fixed with a view to ensuring that the penalty is not such as to be regarded by Bright Choice or others as an acceptable cost of doing business. The possibility that an offender will become insolvent must not prevent the Court from doing its duty, otherwise the important object of general deterrence will be undermined: High Adventure at [11]. A pecuniary penalty of $100,000 will be imposed but it is to be paid within 30 days.

4.2.8    Parity

159    The penalties for EnergyAustralia and Bright Choice are appropriate having regard to the circumstances and conduct of each company.

160    Although a larger monetary penalty is sought in respect of EnergyAustralia, in light of the respective size of each company and the scope of their undertakings, the penalty sought in respect of Bright Choice is arguably more significant for it, than the larger penalty is for EnergyAustralia. Those relativities cannot be calculated precisely in a mathematical manner.

161    The ACCC submitted, and I accept, that it is appropriate that the penalties be weighted in that way because Bright Choice engaged in conduct that went to the core of its business, was contrary to the training it had received and was systemic in that it involved a significant number of employees and occurred over a number of months. On the other hand, EnergyAustralia, while it is responsible for the conduct of its agent, did attempt, albeit imperfectly, to put in place a system of training intended to avoid contraventions of the law. EnergyAustralia also attempted to remedy the conduct and voluntarily co-operated with the ACCC throughout the investigation.

162    The penalties, when considered in context, are appropriate to recognise serious contraventions and will be imposed on EnergyAustralia and Bright Choice.

4.3    Other Orders

4.3.1    Action by EnergyAustralia to prevent recurrence

163    EnergyAustralia has agreed to introduce and maintain for a period of two years a process which applies to all customer transactions where EnergyAustralia is informed by a contractor who is acting on its behalf or as its agent in marketing or selling its electricity and/or gas plans by way of telemarketing that a customer has agreed to enter into a market retail contract or agreed to transfer from their existing retailer to EnergyAustralia, so that EnergyAustralia takes steps to safeguard against the customer being transferred to EnergyAustralia or entered into a market retail contract without having provided explicit informed consent to the entry into a contract or transfer from their existing retailer, as the case may be: see [63] above.

164    Under s 44AAG(2)(c) of the CCA, if the Court has declared that a person has breached the NERL, the Court has the power to make an order requiring a person to take such action, or adopt such practice, as the Court requires for preventing a reoccurrence of the breach.

165    The implementation of a safeguard process should assist in preventing the reoccurrence of further breaches of the NERL SA and the NERL ACT. The order will be made in the AER Proceeding for this action to be taken by EnergyAustralia. Although the order provides for the process to be implemented for a period of two years, it is presently difficult to identify a reason why it should not continue until a better safeguard has been devised and put in place. This is a matter for EnergyAustralia to consider.

4.3.2    Injunction

166    Bright Choice has agreed to be restrained for a period of five years from representing to consumers during the course of telemarketing that the consumers are not being taken as having agreed to purchase or enter into a contract or agreement for the purchase of goods or services, or that the consumer can decide whether or not they want to purchase or enter into a contract or agreement for the purchase of goods or services after considering information sent to them, if in fact Bright Choice or the supplier of the goods or services will act as if the consumer had agreed to purchase the goods or services or enter into a contract or agreement for the purchase of the goods or services.

167    The Court has the power to order this injunction agreed by the ACCC and Bright Choice under s 232 of the ACL. The power of the Court to grant an injunction under s 232 of the ACL is broad, and is subject to three limitations:

(1)    The power is confined by reference to the scope and purpose of the ACL. The relief should be designed to prevent a repetition of the conduct for which the relief is sought.

(2)    There must be a sufficient nexus or relationship between the contravention and the injunction; and

(3)    The injunction must relate to the case or controversy the subject of the proceeding.

See Australian Competition and Consumer Commission v Artorios Ink Co Pty Ltd (No 2) [2013] FCA 1292 at [48]-[50]; Australian Competition and Consumer Commission v Renegade Gas Pty Ltd (trading as Supagas NSW) [2014] FCA 1135 at [84].

168    The injunction is limited to the conduct Bright Choice has admitted contravened the ACL. The injunction is within the Court’s power and is appropriate to deter a repetition of contraventions by Bright Choice. The injunction will be granted.

4.3.3    Compliance programs

169    EnergyAustralia has agreed to maintain, for two years, a compliance program: see [64] above. Under s 44AAG(2)(d) of the CCA, the Court has the power to make an order requiring a person to implement a specified program for compliance with the NERL if the Court has declared the person to be in breach of the NERL. That order will be made.

170    Bright Choice has agreed to establish and maintain, for three years, a compliance program: see [150] above. The Court has the power to make this order under s 246(2)(b) of the ACL. The Court was provided with the terms of Bright Choice’s Compliance and Education/Training Program. The order for the compliance program will be made. The Compliance and Education/Training Program will be annexed to the order.

4.3.4    Costs

171    EnergyAustralia has agreed to make a contribution of $25,000 to each of the ACCC and the AER in respect of their costs of the proceedings. Bright Choice has also agreed to make a contribution to the ACCC’s costs of the ACCC Proceeding. Those orders will be made.

Associate:

Dated:    27 March 2015

ANNEXURE A

ACCC Proceeding (ACCC, EnergyAustralia and Bright Choice) – New South Wales, Queensland and Victoria