Federal Court of Australia

Telstra Corporation Limited v Singtel Optus Pty Ltd [2020] FCA 1372

ORDERS

THE COURT ORDERS THAT:

1.    The originating application be dismissed.

2.    The applicant pay the respondent’s costs as agreed or taxed.

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

REASONS FOR JUDGMENT

JAGOT J:

1    In this proceeding the applicant (Telstra) claims that by a series of advertisements (by television, in print, online and by digital billboards) which stated “covering more of [Australia/State] than ever before” the respondent (Optus) engaged in misleading and deceptive conduct in contravention of ss 18, 29(1)(b) and (g) and 34 of the Australian Consumer Law (Sch 2 of the Competition and Consumer Act 2010 (Cth)). According to Telstra the advertisements conveyed to the Australian public representations to the effect that:

(1)    the Optus network or networks cover more of Australia or the relevant State than any other network including Telstra’s networks have ever covered before; or

(2)    the geographical coverage of the Optus network or networks cover more of Australia or the relevant State than any other network including Telstra’s networks have ever covered before.

2    Optus contends that no such representations are conveyed and that all that is conveyed by the advertisements is that Optus’s mobile network has more geographic coverage than it has ever had before. In other words, according to Optus the advertisements do not convey any comparison between Optus’s network and the network of any other telecommunications provider.

3    I agree with Optus’s contentions. When each advertisement is viewed as a whole Telstra’s contentions as to the representations conveyed are untenable.

4    A few features of the advertisements should be identified. The advertisements feature images from rural, regional and urban Australia. Optus’s yellow “Yes” logo, which the evidence establishes is strongly identifiable as Optus’s brand, features prominently, being superimposed over each of the images. In the television advertisements the statement “covering more of [Australia/State] than ever before” appears after the images followed by the word “OPTUS”. The television advertisements are short (perhaps 15 seconds). The soundtrack to them consists of outdoor sounds.

5    Apart from the substance of what is conveyed by the advertisements the main debate between the parties concerned the correct legal test to be applied. Telstra contended that the representations it alleged were conveyed were plainly open and not extreme or fanciful, quoting Hill J in Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 (Tobacco Institute) at 50:

Where, as in the present case, the advertisement is capable of more than one meaning, the question of whether the conduct of placing the advertisement in a newspaper is misleading or deceptive conduct must be tested against each meaning which is reasonably open. This is perhaps but another way of saying that the advertisement will be misleading or likely to mislead or deceive if any reasonable interpretation of it would lead a member of the class, who can be expected to read it, into error…

6    Telstra also submitted that, with respect to the broad class of consumers to whom the advertisements were published:

That class of consumers includes the inexperienced and the gullible: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199 (Gibbs CJ, Mason and Brennan JJ); Google Inc v ACCC (2013) 249 CLR 435 at [7] (French CJ, Crennan and Kiefel JJ); ACCC v Coles Supermarkets Australia Pty Limited (2014) 317 ALR 73 at [43] (Allsop CJ). The Court must consider whether a not insignificant number of ordinary or reasonable consumers would be likely to be misled or deceived: Conagra Inc v McCain Foods (Australia) Pty Ltd (1992) 33 FCR 302 at 380–381 (French J); National Exchange Pty Ltd v ASIC (2004) 49 ACSR 369 at [70] (Jacobson and Bennett JJ); ACCC v Get Qualified Australia Pty Ltd (in liq) (No 2) [2017] FCA 709 at [42] (Beach J).

Such a consumer cannot be expected to pay close attention to the contents of the advertisements, and “certainly not the attention focused on viewing and listening to the advertisements by the judges obliged to scrutinise them” in legal proceedings: ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 at [47] (French CJ, Crennan, Bell and Keane JJ). The question is whether, based on a transient or perfunctory engagement with the relevant advertisements, a not insignificant number of ordinary consumers are likely to be enticed into the Optus marketing web by an erroneous belief, which has been engendered by Optus: ACCC v TPG at [47], [50].

7    Optus took issue with the references by Telstra to the question whether a not insignificant number of ordinary or reasonable consumers would be likely to be misled or deceived. Optus contended that the relevant test was established in Campomar Sociedad Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 (Campomar) at 85-86 (referring to Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 (Puxu)) as follows:

[103]    Where the persons in question are not identified individuals to whom a particular misrepresentation has been made or from whom a relevant fact, circumstance or proposal was withheld, but are members of a class to which the conduct in question was directed in a general sense, it is necessary to isolate by some criterion a representative member of that class. The inquiry thus is to be made with respect to this hypothetical individual why the misconception complained has arisen or is likely to arise…

…

[105]    … in an assessment of the reactions or likely reactions of the "ordinary" or "reasonable" members of the class of prospective purchasers of a mass-marketed product for general use, such as athletic sportswear or perfumery products, the court may well decline to regard as controlling the application of s 52 those assumptions by persons whose reactions are extreme or fanciful…

8    Optus noted that similarly in Google Inc v ACCC [2013] HCA 1; (2013) 249 CLR 435 (Google Inc) where the High Court said:

[7]    … where an issue in s 52 proceedings is the effect of conduct on a class of persons such as consumers who may range from the gullible to the astute, the court must consider whether “the ‘ordinary’ or ‘reasonable’ members of that class” would be misled or deceived…: per French CJ, Crennan and Kiefel JJ.

…

[118]    … Whether it [the advertisement] is likely to mislead or deceive depends upon how the ordinary or reasonable member of the class of persons to whom the publication was directed would understand what was published; per Hayne J

9    Optus referred to ACCC v TPG Internet Pty Ltd [2020] FCAFC 130 in which the Full Court of the Federal Court said “[t]he central question is whether the impugned conduct, viewed as a whole, has a sufficient tendency to lead a person exposed to the conduct into error (that is, to form an erroneous assumption or conclusion about some fact or matter)”: [22]. They continued at [22]:

(a)    First, conduct is likely to mislead or deceive if there is a real or not remote chance or possibility of it doing so: see Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 (Global Sportsman) at 87, referred to with apparent approval in Butcher at [112] by Gleeson CJ, Hayne and Heydon JJ; Noone (Director of Consumer Affairs Victoria) v Operation Smile (Australia) Inc (2012) 38 VR 569 at [60] per Nettle JA (Warren CJ and Cavanough AJA agreeing at [33]).

(b)    Second, it is not necessary to prove an intention to mislead or deceive: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228 per Stephen J (with whom Barwick CJ and Jacobs J agreed) and at 234 per Murphy J; Puxu at 197 per Gibbs CJ; Google Inc v ACCC (2013) 249 CLR 435 (Google) at [6] per French CJ and Crennan and Kiefel JJ.

(c)    Third, it is unnecessary to prove that the conduct in question actually deceived or misled anyone: Taco Bell at 202 per Deane and Fitzgerald JJ; Puxu at 198 per Gibbs CJ; Google at [6] per French CJ and Crennan and Kiefel JJ. Evidence that a person has in fact formed an erroneous conclusion is admissible and may be persuasive but is not essential. Such evidence does not itself establish that conduct is misleading or deceptive within the meaning of the statute. The question whether conduct is misleading or deceptive is objective and the Court must determine the question for itself: see Taco Bell at 202 per Deane and Fitzgerald JJ; Puxu at 198 per Gibbs CJ.

(d)    Fourth, it is not sufficient if the conduct merely causes confusion: Taco Bell at 202 per Deane and Fitzgerald JJ; Puxu at 198 per Gibbs CJ and 209-210 per Mason J; Campomar at [106]; Google at [8] per French CJ and Crennan and Kiefel JJ.

(e)    Fifth, where the impugned conduct is directed to the public generally or a section of the public, the question whether the conduct is likely to mislead or deceive has to be approached at a level of abstraction where the Court must consider the likely characteristics of the persons who comprise the relevant class to whom the conduct is directed and consider the likely effect of the conduct on ordinary or reasonable members of the class, disregarding reactions that might be regarded as extreme or fanciful: Campomar at [101]-[105]; Google at [7] per French CJ and Crennan and Kiefel JJ.

10    The Full Court described the test as to whether a not insignificant number of reasonable persons within the relevant class would be misled as “superfluous to the principles stated by the High Court in Puxu, Campomar and Google Inc and, at worst, an erroneous gloss on the statutory provision”. Further at [23] their Honours observed that:

…

(b)    The test has never been embraced by the High Court. As early as 1981 in Puxu, the High Court formulated the relevant question as the effect of the impugned conduct on reasonable or ordinary members of the class of persons to whom the conduct was directed: see at 199 per Gibbs CJ and 210 per Mason J. In the High Court cases that have followed Puxu, particularly Campomar and Google, the test has always been stated in substantially the same terms.

(c)    The correctness of the “significant number” test was doubted by Finkelstein J at first instance in Australian Securities and Investments Commission v National Exchange Pty Ltd [2003] FCA 955; 202 ALR 24 at [11] and, a short time later in .au Domain Administration v Domain Names Australia Pty Ltd [2004] FCA 424; 207 ALR 521 at [22]-[26], Finkelstein J concluded that the test had been overtaken by the test stated by the High Court in Campomar. In the appeal from the National Exchange decision, the Full Court expressed the view that the “significant number” test was merely an alternative way of expressing the test stated by the High Court in Campomar: National Exchange Pty Ltd v Australian Securities and Investment Commission [2004] FCAFC 90; 49 ACSR 369 (National Exchange) at [23] per Dowsett J and at [70] per Jacobson and Bennett JJ.

…

(g)    While, in our view, s 18 of the ACL (and analogous provisions) do not require the satisfaction of the “significant number” test in order to establish contravention, a party may choose to put its particular case that way. That is, it is open for a party to seek to establish that conduct is misleading by establishing that persons were in fact misled, and in such cases it may be necessary to establish that the number of such persons was significant in order to persuade the court that the conduct was misleading or deceptive or likely to mislead or deceive: see National Exchange at [23]. But that will be a function of how the case is put; it is not a requirement inherent in the statute.

11    Telstra appeared to accept in its oral submissions that the test it advanced was merely another way of expressing the question of the effect of the impugned conduct on ordinary and reasonable members of the class and that no different result would be reached on either expression of the test. Nevertheless I consider that Optus’s submissions must be accepted. The test established by the High Court in Puxu, Campomar and Google Inc is clear and should be applied. Insofar as the judgment of Hill J in Tobacco Institute is concerned the relevant passage must be read as a whole. Once that is done it is apparent that his Honour is not suggesting that the meaning conveyed by the impugned conduct is to be determined outside of the context of ordinary and reasonable members of the class of persons to whom the conduct is directed.

12    Telstra placed weight on the fact that in the television advertisements the impugned statements about coverage came at the end of the advertisement. According to Telstra, however, until that point it would be unclear to the viewer whether the Optus mobile or fixed telecommunication network was being referenced. This ambiguity was said to support the more fundamental ambiguity as to the relevant comparator, be it Optus or any other telecommunications provider. I disagree with this analysis and do not consider it represents the effect the advertisements convey to ordinary and reasonable members of the class. The cascade of different scenes, resolving from rural to urban, each superimposed with the Optus “Yes” logo clearly conveys the message that Optus’s network is available in each of these locations. The reference to “covering more of [Australia/State] than ever before” followed by the word “OPTUS” merely confirms what is already apparent – that the advertisements concern Optus’s mobile network which is the only context in which the concept of more coverage makes sense. As Optus pointed out the fact that coverage is associated with mobile networks and not fixed networks is confirmed by Telstra’s own evidence (the affidavit of Mr Nicholas, Telstra’s head of marketing) and is reinforced by the rural and remote locations shown which would be associated by the ordinary and reasonable viewer of the advertisements as associated with a mobile network.

13    I am unable to accept Telstra’s contention that the advertisements convey any representation about the coverage of Optus’s network compared with the coverage of any other telecommunications network including Telstra. As Optus submitted:

(1)    The advertisements contain no reference to any provider other than Optus.

(2)    The focus is on Optus from the beginning to the end of the advertisements given the superimposition of the Optus “Yes” logo over each image before the statement “covering more of [Australia/State] than ever before” followed by the word “OPTUS”.

(3)    The superimposition of the Optus “Yes” logo over the images conveys the message that Optus’s mobile network is available to those areas or areas like them.

(4)    By the time the final image and the allegedly offending words are reached the viewer knows that the advertisement is about the areas where Optus’s mobile network is available. The viewer will construe the statement “covering more of [Australia/State] than ever before” followed by the word “OPTUS” as meaning that Optus is covering more of [Australia/State] than ever before”.

(5)    The natural and ordinary meaning of the statement, in the context of the advertisements as a whole, is that Optus is “covering more of [Australia/State] than it has ever covered before”.

(6)    The context is critical. By the time the viewer reaches the impugned statement they are aware from the use of the “Yes” logo that they are being told something about Optus’s mobile network and they understand the sentence in that context as inherently self-referential.

(7)    The words “ever before” do not suggest that Optus has achieved something no telecommunications provider has achieved ever before. The words must be considered in the overall context of each advertisement. In that sense they are manifestly self-referential.

14    I also consider that the transient or perfunctory attention that viewers are likely to give to the advertisements supports Optus’s case that the ordinary and reasonable members of the class of viewers will understand the advertisements to be solely concerned with Optus’s mobile network coverage. They will not read into the advertisements an implicit comparison with other telecommunications providers who are not mentioned or referenced in any way in the advertisements.

15    Otherwise I accept Optus’s submissions that:

(1)    The fact that in other advertisements Optus has been expressly self-referential does not mean that these advertisements are impliedly referring to a comparison with other telecommunications providers.

(2)    The fact that a de minimis improvement to Optus’s coverage might, in theory, be the subject of the advertisements is mere speculation. Telstra and Optus accepted that the geographical extent of coverage is important to mobile telecommunications consumers. Consumers would expect providers to advertise material improvements in their geographical coverage and would expect them to do so by reference to the coverage they previously offered.

(3)    The ordinary and reasonable members of the broad class to whom the advertisements are directed would not be likely to be misled or deceived by the advertisements. They contain no false, misleading or deceptive implicit comparison with the networks of other telecommunications providers.

16    I do not accept Telstra’s submission that the advertisements would covey to a not insignificant number of ordinary and reasonable consumers that the Optus network now covers more of the relevant geographic region than any telecommunication provider has previously covered. That representation is not plainly open when the advertisements are each considered as a whole. It is a strained and fanciful interpretation of the advertisements which does not occur to ordinary and reasonable members of the class.

17    The fact that the advertisements could have contained expressly self-referential words may be accepted. But context is all. In context the only reasonable meaning to be given to the advertisements is that they are concerned solely with the geographical reach of Optus’s mobile network.

18    It cannot be assumed or inferred that Optus’s intention was for consumers to understand the advertisements in the manner for which Telstra contends. That argument is circular.

19    Telstra’s parsing of the words “ever” and “before” do not suggest that Optus has done something no other telecommunications provider has ever done before. Again, context is all. In context, the advertisements are saying Optus now has more geographic reach than it has ever had before. This is a meaningful message for Optus to convey given the importance of retaining and obtaining customers to its network. The customers would want to know that Optus is making material improvements to its geographic reach. Such a claim would not be unremarkable as it would show a provider committed to improving a key matter for consumers.

20    The fact that consumers apparently do not know that Telstra has a vastly superior coverage to Optus is immaterial. It does not support Telstra’s case about the alleged misrepresentations.

21    For these reasons, none of Telstra’s claimed contraventions are sustainable. Telstra’s originating application should be dismissed, with costs.

Associate:

Dated:    25 September 2020