FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Australian Private Networks Pty Ltd (trading as Activ8me) [2019] FCA 384

ORDERS

THE COURT DECLARES THAT:

1.    Activ8me, in trade or commerce, in connection with the supply or possible supply, or the promotion of the supply, of internet services:

(a)    engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18(1) of the Australian Consumer Law (‘ACL’), which is Schedule 2 to the Competition and Consumer Act 2010 (Cth); and

(b)    made false or misleading representations with respect to the price of the services in contravention of s 29(1)(i) of the ACL,

by making representations in direct mail advertisements sent during the period June to November 2018 to recipients in Western Australia, Queensland, New South Wales and Victoria and in digital advertisements published online during the period September to November 2018 that:

(c)    in return for the payment of $59.95 per month, a customer could acquire Activ8me’s ‘100 Mbps speed pack’, when in fact the cost of Activ8me’s ‘100 Mbps speed pack’ was $89.95 per month;

(d)    the total minimum cost payable by a customer on a 12 month contract for the ‘100 Mbps speed pack’ was $719.40 when in fact the total minimum cost payable for the ‘100 Mbps speed pack’ on a 12 month contract was $1,079.40;

(e)    in return for the payment of $59.95 per month, a customer could acquire a Fibre to the Premises (‘FTTP’) broadband service with speeds of, or up to, 100 megabits per second (‘Mbps’) when in fact customers who paid $59.95 per month were provided with a FTTP broadband service with substantially slower speeds of only 12/1 Mbps;

(f)    in return for the payment of $59.95 or $69.95 per month, a customer would receive unlimited data when in fact a customer’s data usage was limited by Activ8me’s Acceptable Use Policy which applied to all its so called “unlimited” service offers; and/or

(g)    there were no setup fees payable by a customer who signed up to Activ8me’s internet services when in fact Activ8me charged a customer a setup fee of a $99.95 by default unless the customer opted to sign up for a minimum 12 month contract term.

2.    Activ8me, in trade or commerce, in connection with the supply or possible supply, or the promotion of the supply, of internet services:

(a)    made false or misleading representations that the services were of a particular standard, quality or value in contravention of s 29(1)(b) of the ACL;

(b)    made false or misleading representations that the services had performance characteristics, uses or benefits in contravention of s 29(1)(g) of the ACL; and

(c)    engaged in conduct that was liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of the services in contravention of s 34 of the ACL,

by making representations in direct mail advertisements sent during the period June to November 2018 to recipients in Western Australia, Queensland, New South Wales and Victoria and in digital advertisements published online during the period September to November 2018 that:

(d)    in return for the payment of $59.95 per month, a customer could acquire a FTTP broadband service with speeds of, or up to, 100 Mbps when in fact customers who paid $59.95 per month were provided with a FTTP broadband service with substantially slower speeds of only 12/1 Mbps; and/or

(e)    in return for the payment of $59.95 or $69.95 per month, a customer would receive unlimited data when in fact a customer’s data usage was limited by Activ8me’s Acceptable Use Policy which applied to all its so called “unlimited” service offers.

3.    Activ8me, in trade or commerce, in connection with the supply or possible supply, or the promotion of the supply, of internet services, contravened s 48(1) of the ACL by making representations with respect of amounts that, if paid, would constitute a part of the consideration for the supply of the services, without specifying in a prominent way the single price for the services.

THE COURT ORDERS BY CONSENT THAT:

Injunction

4.    Activ8me be restrained for a period of three years from the date of the Court’s order, whether by itself, its servants, agents, affiliates or howsoever otherwise, in trade or commerce, and in connection with the supply of telecommunications services, from making a representation that:

(a)    a customer can acquire an internet service of a particular speed for a particular cost per month, when in fact the actual cost per month of the broadband service of that particular speed is greater than the cost represented;

(b)    a customer can receive unlimited data on the internet service, when in fact the customer’s data usage is limited by Activ8me’s policies, terms and conditions;

(c)    there are no setup fees payable by a customer, when in fact Activ8me charges a setup fee unless the customer opted to sign up for a contract term.

Pecuniary penalty

5.    Activ8me pay to the Commonwealth of Australia a pecuniary penalty in the amount of $250,000 in respect of the contraventions of ss 29(1)(b), 29(1)(g), 29(1)(i), 34 and 48(1) of the ACL declared by the Court.

Publication order

6.    Within 30 days of the Court’s order, Activ8me, at its own expense, send a notice in the terms of the Annexure to each person who was sent a direct mail advertisement referred to in the ACCC’s concise statement.

Non-party consumer redress

7.    Activ8me:

(a)    must permit any customer who was sent a direct mail advertisement referred to in the ACCC’s concise statement, and who entered into a plan with Activ8me to acquire internet services, to:

(i)    terminate their plan; or

(ii)    change to a $59.95 12/1 Mbps plan,

on giving oral or written notice to Activ8me;

(b)    must, within 30 days of receipt of a notice by a customer under sub-paragraph 7(a)(ii), refund the difference in each monthly fee paid to Activ8me by the customer and $59.95; and

(c)    be prohibited from charging any fee for, or passing on any costs associated with, any such termination or change of plan.

8.    Activ8me must, within 60 days of the Court’s order, refund to each customer who:

(a)    was sent a direct mail advertisement referred to in the ACCC’s concise statement;

(b)    entered into an agreement with Activ8me to acquire internet services; and

(c)    was charged a setup fee of $99.95,

the setup fee paid by the customer.

Compliance program

9.    Activ8me must, at its own expense:

(a)    within 90 days of the date of the Court’s order, establish and implement an ACL compliance program in a form to be agreed by the ACCC which accords with the Level 4 Compliance Program template published by the ACCC, or failing that, in a form to be ordered by this Court, to be undertaken by all directors, officers and employees of Activ8me whose duties could result in them being concerned with conduct that may contravene ss 18, 29 and 34 of the ACL, being a program designed to minimise Activ8me’s risk of future contraventions of ss 18, 29 and 34 of the ACL; and

(b)    maintain the ACL compliance program referred to in paragraph 9(a) above for a period of three years from the date of the Court’s order.

Costs

10.    Activ8me pay the ACCC’s legal costs of the proceeding in the sum of $10,000.

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

ANNEXURE

[Activ8me letterhead]

[Customer name & Address]

You may be entitled to exit your contract without penalty and have setup fees refunded

Following action by the Australian Competition and Consumer Commission (ACCC), the Federal Court of Australia has declared that Activ8me engaged in conduct that was misleading and deceptive, liable to mislead the public, and made false or misleading representations in contravention of the Australian Consumer Law in relation to the advertisements referred to below.

As a result, you may be entitled to a setup fee refund from Activ8me or to exit your contract with Activ8me without penalty.

The advertisements

During the period June to September 2018, Activ8me sent direct mail advertisements to households in Western Australia, Queensland, New South Wales and Victoria. These advertisements misrepresented the price, speed and data limits of Activ8me’s broadband services at estates and developments on Opticomm’s fibre network.

The advertisements represented that:

•    customers could acquire Activ8me’s ‘100 Mbps speed pack’ for $59.95 per month when the true cost of Activ8me’s ‘100 Mbps speed pack’ was $89.95 per month; and

•    there were no setup fees payable when Activ8me actually charged a setup fee of $99.95 by default unless the customer signed up for a minimum 12 month contract term.

Your rights to change or terminate your plan

Contact us on 13 22 88 if you entered into an Activ8me internet services plan after seeing one of the Activ8me advertisements referred to above and want to terminate your plan without incurring any fees or charges.

Alternatively, if you entered into a higher priced plan after seeing one of the Activ8me advertisements referred to above, you may elect to switch to the $59.95 12/1 Mbps plan with the difference in monthly fees to be refunded.

Refund of setup fee

Customers who received the advertisements and were charged a setup fee of $99.95 are entitled to a refund of the setup fee paid. Refunds will be processed automatically via your current payment method. If your payment method does not allow for automatic refunding we will contact you to make alternative arrangements to refund your setup fee.

The Federal Court ordered that this letter be sent. More information in relation to the action taken by the ACCC is available on the ACCC’s website at www.accc.gov.au.

REASONS FOR JUDGMENT

MIDDLETON J:

INTRODUCTION

1    On 15 March 2019, the Court made orders in this proceeding. These are the reasons for those orders.

2    This proceeding stems from an investigation conducted by the applicant, the Australian Competition and Consumer Commission (the ‘ACCC’), into representations made by the respondent, Australian Private Networks Pty Ltd (trading as Activ8me) (‘Activ8me’), in certain of its public advertisements for internet services which it supplies to retail consumers.

3    The ACCC seeks relief in respect of misleading or deceptive conduct and conduct liable to misleading the public engaged in by, and false or misleading representations made by Activ8me, regarding the price, speed and data limits of internet services, in contravention of ss 18(1), 29(1)(b), 29(1)(g), 29(1)(i) and 34 of the Australian Consumer Law (‘ACL’) being Sch 2 to the Competition and Consumer Act 2010 (Cth) (the ‘CCA’). The ACCC also seeks relief in respect of Activ8me’s failure to specify in a prominent way and as a single figure, the single price for internet services in contravention of s 48(1) of the ACL.

4    The parties have reached agreement as to the terms on which they seek to resolve this proceeding and on 1 March 2019, jointly filed the following documents:

(1)    a statement of agreed facts and admissions setting out the facts agreed between the parties and the admissions made by Activ8me (the ‘Statement of Agreed Facts and Admissions’);

(2)    agreed minutes of proposed declarations and orders setting out the relief (including as to penalty) which the parties submit is appropriate (the ‘Proposed Declarations and Orders’); and

(3)    submissions jointly prepared by solicitors for the parties in support of the Proposed Declarations and Orders.

5    First, in the Statement of Agreed Facts and Admissions, Activ8me has admitted for the purposes of this proceeding that it has, in trade or commerce:

(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)    in connection with the supply or possible supply of internet services, made false or misleading representations:

(a)    that the services were of a particular standard, quality or value in contravention of s 29(1)(b) of the ACL;

(b)    that the services had performance characteristics, uses or benefits in contravention of s 29(1)(g) of the ACL;

(c)    with respect to the price of the services in contravention of s 29(1)(i) of the ACL;

(3)    engaged in conduct that was liable to mislead the public as to the nature, characteristics, the suitability for purpose or the quantity of internet services, in contravention of s 34 of the ACL; and

(4)    in connection with the supply or possible supply, or the promotion of the supply, of internet services, contravened s 48(1) of the ACL by making representations with respect of amounts that, if paid, would constitute a part of the consideration for the supply of the services, without specifying in a prominent way the single price for the services.

6    Second, the terms of the Proposed Declarations and Orders provide for:

(1)    declarations to be made pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) (‘Federal Court Act’) in relation to the admitted contraventions of the ACL;

(2)    an injunction to be made pursuant to s 232 of the ACL;

(3)    Activ8me to pay a pecuniary penalty in the total sum of $250,000 pursuant to s 224 of the ACL in respect of the contraventions of ss 29(1)(b), 29(1)(g), 29(1)(i), 34 and 48(1) of the ACL;

(4)    a publication order pursuant to s 246(2)(d) of the ACL;

(5)    a non-party consumer redress order pursuant to s 239 of the ACL;

(6)    Activ8me to implement an ACL compliance program pursuant to s 246(2)(b) of the ACL; and

(7)    Activ8me to pay the ACCC’s costs in the proceeding fixed in the sum of $10,000 pursuant to s 43 of the Federal Court Act.

7    And third, the parties’ joint submissions have formed the basis for my reasons which follow as to why I am prepared to make declarations and orders substantially in the form of the Proposed Declarations and Orders.

APPLICABLE LEGISLATION AND LEGAL PRINCIPLES

8    Section 18(1) of the ACL states that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

9    Section 29(1)(b) relevantly prohibits the making of false or misleading representations “in connection with the supply or possibly supply of goods or services ... that services are of a particular standard [or] quality”.

10    Section 29(1)(g) relevantly prohibits the making of false or misleading representations “in connection with the supply or possibly supply of goods or services ... that goods or services have ... particular performance characteristics ... uses or benefits”.

11    Section 29(1)(i) relevantly prohibits the making of false or misleading representations “in connection with the supply or possibly supply of goods or services ... with respect to the price of goods or services”.

12    Finally, s 34 of the ACL provides that a person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services.

13    The principles applicable to determining whether conduct contravenes s 18 of the ACL are well-known, and I accept the parties’ submissions that there are broad similarities between the type of inquiry required by s 18 and that required by ss 29 and 34.

14    Conduct is misleading or deceptive if it has a tendency to lead into error. It may involve the doing of, or refusal to do, any act. Whether conduct in relation to a particular class of consumers is misleading or deceptive is a question of fact to be resolved by a consideration of the whole of the impugned conduct in the circumstances in which it occurred.

15    The purpose underlying provisions such as ss 18, 29 and 34 of the ACL is remedial. Accordingly, these sections should be interpreted broadly “so as to give the fullest relief which the fair meaning of its language will allow”: see Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470, 503 (Lockhart and Gummow JJ) and ACCC v AGL South Australia Pty Ltd [2014] FCA 1369, [60] (White J).

16    There is no significant difference between the words and phrases “misleading or deceptive” and “mislead or deceive” in s 18, “misleading” in s 29(1) and “mislead” in 34. In the present case, the legal principles relevant to a finding that a representation is false or misleading in contravention of s 29(1) are similar to those applicable to ss 18 and 34. However, a distinction may be drawn between “likely to mislead or deceive” (s 18) and “liable to mislead” (s 34). The latter may apply to a narrower range of conduct, however, in the present case, the conduct engaged in by Activ8me’s fit that narrower range: that is, its conduct was liable to mislead consumers into forming a more favourable impression of the suitability for their purpose of Activ8me’s internet plans and the quantity of services that they would obtain, than would have been the case if Activ8me had not engaged in the impugned conduct.

17    As regards s 34, the statements in the relevant advertisements were made to the public, being the large number of intended recipients of the direct mail advertisements.

18    Section 48(1) requires the single price to stand out so as to “strike the attention”, “be conspicuous”, “be easily seen” or “be very noticeable”: TPG Internet Pty Ltd v ACCC [2012] FCAFC 190, [88]. “Single price” is defined in s 48(7) as being the minimum quantifiable consideration for the supply of the goods or services at the time of the representation.

ADMITTED CONTRAVENTIONS

Activ8me’s conduct

19    During the period June to September 2018, Activ8me sent by direct mail to over 81,000 recipients in Western Australia, Queensland, New South Wales and Victoria the following advertisements for its internet services:

(1)    in June and July 2018, the advertisement contained in Annexure A to the Statement of Agreed Facts and Admissions (the ‘First Direct Advertisement’);

(2)    in August 2018, the advertisement contained in nnexure B to the Statement of Agreed Facts and Admissions (the ‘Second Direct Advertisement’); and

(3)    in September 2018, the advertisement contained in Annexure C to the Statement of Agreed Facts and Admissions (the ‘Third Direct Advertisement’),

(each a ‘Direct Advertisement’ and collectively, the ‘Direct Advertisements’).

(A redacted form of the Statement of Agreed Facts and Admissions and Annexures is available for inspection on the Court file).

20    During the period 16 September to 15 November 2018, Activ8me caused to be published on the websites www.domain.com.au and www.realestate.com.au the advertisement contained in Annexure D to the Statement of Agreed Facts and Admissions (the ‘Digital Advertisement’). It is unknown to the parties how many times the Digital Advertisement was viewed, however, the Digital Advertisement was clicked on 1,738 occasions by persons who were then directed to Activ8me’s website.

21    By the First Direct Advertisement, Activ8me admits that it made the following representations which were false, misleading or deceptive, and/or likely to mislead or deceive:

(1)    in return for the payment of $59.95 per month, a customer could acquire Activ8me's ‘100 Mbps speed pack’ (the ‘100 Mbps Cost Representation’). This was false, misleading or deceptive, and/or likely to mislead or deceive because at all relevant times the cost of Activ8me’s ‘100 Mbps speed pack’ was in fact $89.95 per month;

(2)    the total minimum cost payable by a customer on a 12 month contract for the ‘100 Mbps speed pack’ was $719.40 (the ‘Total Minimum Cost Representation’). This was false, misleading or deceptive, and/or likely to mislead or deceive because at all relevant times the total minimum cost payable for the ‘100 Mbps speed pack’ on a 12 month contract was $1,079.40 (being $89.95 x 12);

(3)    in return for the payment of $59.95 per month, a customer could acquire a Fibre to the Premises (‘FTTP’) broadband service with speeds of, or up to, 100 Mbps (the ‘100 Mbps Speed Representation’). This was false, liable to mislead the public, misleading or deceptive, and/or likely to mislead or deceive because at all relevant times customers who paid $59.95 per month were provided with a FTTP broadband service with substantially slower speeds of only 12/1 Mbps (ie 12 Mbps for downloads and 1 Mbps for uploads);

(4)    in return for the payment of $59.95 per month, a customer would receive unlimited data (the ‘$59.95 Unlimited Data Representation’). This was false, liable to mislead the public, misleading or deceptive, and/or likely to mislead or deceive because a customer's data usage was limited by cl 2.8 of Activ8me’s Acceptable Use Policy which applied to all its so called “unlimited” service offers, and provided that:

Activ8me may offer “unlimited” access to specific sites or services from time to time; where we consider your use of such sites or services, or data accessed from and within such sites or services is unreasonable, then we may suspend your access to such sites or services immediately and without notice to you. We may then charge you correspondingly for some or all of the data used.

(5)    there were no setup fees payable by a customer who signed up to Activ8me’s internet service (the ‘No Setup Fees Representation’). This was false, misleading or deceptive, and/or likely to mislead or deceive because at all relevant times Activ8me charged customers a setup fee of $99.95 by default unless the customer opted to sign up for a minimum 12 month contract term.

22    By the Second Direct Advertisement, the Third Direct Advertisement and the Digital Advertisement, Activ8me admits that it made the following representations which were false, misleading or deceptive, and/or likely to mislead or deceive:

(1)    in return for the payment of $69.95 per month, a customer would receive unlimited data (the ‘$69.95 Unlimited Data Representation’). This was false, liable to mislead the public, misleading or deceptive, and/or likely to mislead or deceive because at all relevant times a customer’s data usage was limited by cl 2.8 of Activ8me’s Acceptable Use Policy (set out above); and

(2)    the No Setup Fees Representation. This was false, misleading or deceptive, and/or likely to mislead or deceive because at all relevant times Activ8me charged a customer a setup fee of $99.95 by default unless the customer opted to sign up for a minimum 12 month contract term.

23    By the Direct Advertisements and the Digital Advertisement, Activ8me also admits that it made representations with respect to an amount, namely $59.95 per month or $69.95 per month, that, if paid, would constitute a part of the consideration for the supply of the internet services, but did not specify in a prominent way the single price for those services. The single price was included in very small print in each of the advertisements, and did not stand out so as to “strike the attention”, “be conspicuous”, “be easily seen” or “be very noticeable”, and thus was not prominent in contravention of s 48(1).

Activ8me’s formal admissions

24    Activ8me has admitted that by making the 100 Mbps Cost Representation, the Total Minimum Cost Representation, the 100 Mbps Speed Representation, the $59.95 Unlimited Data Representation, the $69.95 Unlimited Data Representation and the No Setup Fees Representation, in trade or commerce, it:

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

(2)    in connection with the supply or possible supply, or the promotion of the supply, of internet services, made false or misleading representations with respect to the price of the services in contravention of s 29(1)(i) of the ACL.

25    Activ8me has admitted that by making the 100 Mbps Speed Representation , the $59.95 Unlimited Data Representation and the $69.95 Unlimited Data Representation, in trade or commerce, in connection with the supply or possible supply, or the promotion of the supply, of internet services, it also:

(1)    made false or misleading representations that the services were of a particular standard, quality or value in contravention of s 29(1)(b) of the ACL;

(2)    made false or misleading representations that the services had performance characteristics, uses or benefits in contravention of s 29(1)(g) of the ACL; and

(3)    engaged in conduct that was liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of the services in contravention of s 34 of the ACL.

26    Activ8me has admitted that, in trade or commerce, in connection with the supply or possible supply, or the promotion of the supply, of internet services, it made a representation with respect of an amount that, if paid, would constitute a part of the consideration for the supply of the services, but did not specify in a prominent way, the single price for the services, in contravention of s 48(1) of the ACL.

DECLARATORY RELIEF

27    The declarations proposed by the parties are those the Court has made.

28    The Court has a wide discretionary power to make such declarations under s 21 of the Federal Court Act.

29    I accept the joint submissions in respect of the declarations proposed and consider them to be appropriate in all the circumstances insofar as:

(1)    the declarations proposed identify with precision the conduct that contravened the ACL and are directed to the determination of an extant legal controversy rather than any abstract or hypothetical question;

(2)    it is in the public interest for the ACCC to seek the declarations proposed and for such declarations to be made. The ACCC is the regulator under the CCA and ACL and therefore has a real interest in the declarations proposed being made; and

(3)    Activ8me is a proper contradictor because it is the subject of the declarations proposed and had an interest in opposing said declarations.

INJUNCTIVE RELIEF

30    Section 232(1) of the ACL empowers the Court to grant an injunction in such terms as it considers appropriate, if the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes, or would constitute, a contravention of a provision of Chapter 2 of the ACL. Pursuant to s 232(4)(a), the Court may grant an injunction whether or not there is a likelihood of the conduct being repeated.

31    Further, under s 233 of the ACL, if an application is made under s 232, the Court may if it considers it appropriate to do so, grant an injunction by consent of all the parties to the proceedings, whether or not the court is satisfied as required by s 232(1).

32    Activ8me has consented to the injunction made by the Court and in any event, such an injunction is appropriate in all the circumstances to prevent Activ8me from contravening Chapter 2 of the ACL in the future.

PECUNIARY PENALTY

Statutory scheme and applicable principles

33    Under s 224(1) of the ACL, the Court may, in respect of contraventions of the provisions of Part 3-1 of the ACL (which relevantly includes ss 29, 34 and 48), order the contravener to pay such pecuniary penalties in respect of “each act or omission” as the Court determines to be appropriate.

34    Section 224(2) of the ACL requires the Court, in determining the appropriate pecuniary penalty, to have regard to all relevant matters including:

(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 Chapter 4 or Part 5.2 to have engaged in similar conduct.

35    Under s 224(3) of the ACL, the maximum civil pecuniary penalty for a corporation for each act or omission that constitutes a contravention of Part 3-1 of the ACL:

(1)    was $1.1 million in respect of conduct up to 31 August 2018;

(2)    is $10 million in respect of conduct since 1 September 2018 (following the royal assent of the Treasury Laws Amendment (2018 Measures No. 3) Act 2018 (Cth) on that date).

36    In this proceeding, the contravening conduct spanned both periods.

37    The principles to be applied to the statutory provisions referred to above are well understood. These include the course of conduct, totality and parity principles, the objective of specific and general deterrence, and the process of “instinctive synthesis” by which courts are to arrive at the appropriate penalty (as explained by the High Court in Markarian v The Queen (2005) 228 CLR 357). I need not rehearse those principles here.

Consideration of mandatory and other relevant factors

Nature and extent of the act or omission and loss or damage suffered

38    The impugned advertisements had a wide audience, and were published over several months. The Direct Advertisements sent by Activ8me were distributed to over 81,000 recipients in Western Australia, Queensland, New South Wales and Victoria. The Digital Advertisement was published on websites which attract large volumes of internet traffic. A total of 793 customers who received the Direct Advertisements signed up with Activ8me.

39    As a result of the admitted conduct, consumers were or were likely to be misled about the price, speed and data limits of the services offered by Activ8me. The harm suffered by consumers includes:

(1)    the loss, or serious distortion, of genuine consumer choice in the ability to select the most suitable and cost effective internet plan for their needs;

(2)    financial harm, being the difference between the price they were charged by Activ8me and the price that they expected to pay or the price they could have obtained from alternative retailers; and

(3)    the inconvenience and other adverse effects associated with a much slower internet service than was promoted (in connection with the 100 Mbps Speed Representation).

Prior findings by a court in proceedings under Chapter 4 or Part 5.2

40    Activ8me has not previously been found to have engaged in contraventions of the ACL, the CCA or its predecessor legislation.

41    In March 2018, Activ8me paid an infringement notice issued to it by the ACCC under s 134A of the CCA in respect of alleged false and misleading representations that its internet services were endorsed or approved by the ACCC, though payment of the infringement notice did not constitute an admission of liability or guilt by Activ8me.

Other relevant factors

42    The following factors are also relevant to my consideration, in all of the circumstances, of the appropriate penalty. The parties submit, and I accept, that:

(1)    Activ8me is a privately owned and operated business with no dedicated legal or regulatory staff. It is a relatively small operation with a small customer base.

(2)    Activ8me did not deliberately set out to contravene the ACL. The contravening conduct arose because responsibility for compliance with the ACL was vested in Activ8me’s marketing department which lacked expertise in Activ8me’s legislative obligations. There was not a sufficient focus on ensuring Activ8me complied with its obligations under the ACL and Activ8me did not have a corporate culture conducive to compliance.

(3)    Activ8me’s senior management were involved in the contravening conduct insofar as each of the impugned advertisements were approved by a senior member of Activ8me’s marketing department who reported to the company’s chief executive officer.

(4)    Activ8me has agreed to resolve this proceeding at an early stage and it is entitled to credit for this co-operation. Such co-operation saves the ACCC, this Court and the community at large the cost and burden of fully litigating this dispute.

Determination of appropriate penalty

43    I accept the parties’ joint submissions that, in respect of the admitted conduct engaged in by Activ8me, the proposed penalty of $250,000 is appropriate.

44    The proposed penalty is appropriate to deter Activ8me and other potential wrongdoers from engaging in like conduct in the future. It takes account of the size and financial position of Activ8me, together with the nature and extent of the contravening conduct and the cooperation of Activ8me in resolving the proceeding at this early stage. Having regard to all of the circumstances of this case, the proposed penalty would not be seen as a mere disgorgement of profits or the “cost of doing business”, but would serve to secure compliance by Activ8me and by other potential wrongdoers.

45    Each time a Direct Advertisement was received by a consumer amounted to a separate contravening act for the purposes of s 224. Similarly, each time a consumer viewed the Digital Advertisement on one of the platforms where they were featured, there was a separate contravening act for the purposes of s 224. It follows that the notional maximum penalty to which Activ8me is exposed may be in the hundreds of thousands to the extent that it can be calculated, but such a mathematical approach is not appropriate in the circumstances.

46    From one perspective, the course of conduct principle may be of little assistance in this case. As it has been applied in other cases, the principle would not, in any event, operate to constrain the total maximum penalty, and should not be given primacy or undue weight in relation to the determination of an appropriate penalty of sufficient deterrent value.

47    Applying the totality principle, the penalty is appropriate because it reflects both the extent and nature of the contravening conduct. The agreed penalty strikes the right balance and reflects the need for deterrence and the particular circumstances of Activ8me.

CONSUMER REDRESS ORDERS

48    Under s 239 of the ACL, if a person has engaged in conduct in contravention of Chapter 2, Part 3-1 of the ACL, and the contravening conduct has caused or is likely to cause a class of persons to suffer loss or damage, the Court has power to make such orders (other than an award of damages) as the Court thinks appropriate against the person who engaged in the contravening conduct.

49    Order 7 (as proposed):

(1)    requires Activ8me to permit affected customers to terminate their plan or switch to Activ8me’s $59.95 plan and refund the difference in each monthly fee paid to Activ8me by the customer $59.95; and

(2)    prohibits Activ8me from charging any fee, or passing on any costs associated with, any such termination of the plan.

50    Paragraph 8 of the Proposed Declarations and Orders requires Activ8me to refund any setup fees charged to affected customers.

51    Activ8me consents to these orders being made and I consider that such orders are appropriate to redress the loss or damage suffered by affected customers.

COMPLIANCE PROGRAM

52    The Court has power under s 246(2) of the ACL to order that a respondent establish and implement a training program to assist in ensuring that it avoids future contraventions of the ACL.

53    Activ8me acknowledges that it needs to improve its compliance culture and has agreed to implement an ACL compliance program as set out in Order 9 (as proposed). Such orders are appropriate in the circumstances.

CORRECTIVE PUBLICATION ORDER

54    Under s 246(2)(d) of the ACL, the Court has the power to make orders for the publication of corrective notices. That power assists to inform the relevant markets of the outcome of the litigation so that those in the market have at least a broad understanding of the type of conduct engaged in by the contravener, the penalties imposed for doing so, and how the contravener has been required by the Court to change their conduct.

55    The parties submit, and I accept, that the corrective publication order in the form proposed and now Order 6 is appropriate in the present case. It requires Activ8me to send a notice to each person who was sent a Direct Mail Advertisement, with such notice informing customers who signed up to an Activ8me plan of their rights to change or terminate their plan and, if applicable, their entitlement to a refund of the setup fee paid.

COSTS

56    Activ8me has agreed to pay the ACCC’s legal costs of the proceeding in the sum of $10,000, and I see no reason not to make such an order.

Associate:

Dated:    20 March 2019