Telstra Corporation Ltd v Singtel Optus Pty Ltd (No 2)
[2018] VSC 280
•30 May 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2018 00097
| TELSTRA CORPORATION LTD | Plaintiff |
| v | |
| SINGTEL OPTUS PTY LTD | Defendant |
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JUDGE: | Robson J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 22 May 2018 |
DATE OF JUDGMENT: | 30 May 2018 |
CASE MAY BE CITED AS: | Telstra Corporation Ltd v Singtel Optus Pty Ltd (No 2) |
MEDIUM NEUTRAL CITATION: | [2018] VSC 280 |
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CONSUMER LAW – Alleged misleading or deceptive conduct – Whether defendant’s advertisements breach Australian Consumer Law (sch 2 to the Competition and Consumer Act 2010 (Cth)) – False or misleading representations – Whether representations liable to mislead as to performance characteristics of services – held advertisement did not convey pleaded representations – Claim dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J W S Peters QC Ms M Marcus | King & Wood Mallesons |
| For the Defendant | Mr N J Young QC Mr N P de Young | Clayton Utz |
TABLE OF CONTENTS
Introduction.......................................................................................................................... 1
Telstra’s claims against Optus........................................................................................... 3
Misleading or deceptive conduct...................................................................................... 4
The relevant audience......................................................................................................... 5
The pleaded representation............................................................................................. 10
False or misleading representations as to services....................................................... 14
Conclusion.......................................................................................................................... 17
Orders.................................................................................................................................. 17
HIS HONOUR:
Introduction
This case involves an advertisement circulated by Singtel Optus Pty Ltd (‘Optus’) which is claimed by Telstra Corporation Ltd (‘Telstra’) to be misleading or deceptive. This matter first came before me on 11 May 2018, when Telstra applied for an interlocutory injunction restraining Optus from circulating the impugned advertisement. I granted the interlocutory relief sought, finding that there was a serious question to be tried.[1] In this judgment, I am to determine whether the impugned advertisement of Optus in fact contravenes prohibitions in the Australian Consumer Law (‘ACL’) against misleading and deceptive conduct.[2]
[1]Telstra Corporation Ltd v Singtel Optus Pty Ltd [2018] VSC 247 (16 May 2018).
[2]Competition and Consumer Act 2010 (Cth) sch 2.
I will summarise the facts of the case briefly.[3] Since 4 May 2018, Optus has widely circulated an advertisement promoting its mobile network. The advertisement has appeared on large-format digital billboards at several sites in Queensland, New South Wales, and Victoria.[4] The advertisement has also appeared in the form of ‘online banner ads’ on various online news websites.[5] Immediately following is a copy of the advertisement.
[3]The background of the case is explained in more detail in the judgment on the interlocutory application: Telstra Corporation Ltd v Singtel Optus Pty Ltd [2018] VSC 247 (16 May 2018) [1]–[25] (Robson J).
[4]Affidavit of Jeremy Anthony Nicholas, affirmed 9 May 2018, [12], [18] (‘first Nicholas affidavit’).
[5]First Nicholas affidavit, [18].
In my judgment on the interlocutory application, I described the advertisement as follows:[6]
The advertisement features an image of a sand-duned desert landscape. In the foreground of the image appears a phone box, half-sunk and lopsided, like the decayed remains of a past era, sticking up conspicuously from the lone and level sands. In the background of the image appear several pyramids.
With its distinctive shape, and blue-and-orange colour scheme, the phone box is easily recognisable as a Telstra phone box of the type that was once commonplace on Australian streets.
Overlaid on the image is the headline: ‘Empires end. That’s what they do.’ Below that, in smaller print, in bold, appear these words: ‘The Optus Mobile Network has been ranked the best overall in voice and data.’ Below that, in smaller, fainter print, appear these words: ‘By P3 Mobile Benchmark, Dec 2017.’
[6]Telstra Corporation Ltd v Singtel Optus Pty Ltd [2018] VSC 247 (16 May 2018) [7]–[9].
The advertisement’s mention of the ‘P3 Mobile Benchmark’ is a reference to a report written by P3 Communications GmbH (‘P3’), an independent company with headquarters in Germany. Telstra led evidence, which Optus did not challenge, as to the nature and methodology of the report.[7] In brief, it is an annual report on the quality of mobile networks.[8] In October 2017, P3 conducted a study on the mobile network performance of telecommunications services in Australia, the results of which it published in a report (the ‘2017 P3 Report’). In the study, P3 assigned points based on each mobile network’s performance in different tasks, such as uploading a file or accessing a website. Optus scored higher than Telstra in the voice category, and Telstra scored higher than Optus in the data category. The overall results put Optus three points ahead of Telstra out of a possible 1000 points.
[7]Affidavit of Channa Seneviratne, affirmed 8 May 2018 (‘Seneviratne Affidavit’).
[8]More detail as to the report’s methodology can be found in my judgment on the interlocutory application: Telstra Corporation Ltd v Singtel Optus Pty Ltd [2018] VSC 247 (16 May 2018) [15]–[16].
Telstra’s claims against Optus
Telstra claims that by circulating the advertisement, Optus is in breach of ss 18, 29(1)(b) and (g) of the ACL. Telstra claims that the circulation of the advertisement constitutes conduct that is misleading or deceptive, or likely to mislead or deceive.[9] If this is true, then Optus is in breach of s 18 of the ACL. According to Telstra’s pleadings, the advertisement conveys the representation that ‘there has been a significant and permanent change in the relationship between the Telstra and Optus mobile networks with Optus now undisputedly operating a better mobile network overall than Telstra.’[10] Telstra claims that this representation is misleading and deceptive.
[9]Telstra, Statement of Claim, 9 May 2018, [10].
[10]Telstra, Statement of Claim, 9 May 2018, [7].
Telstra’s case against Optus in relation to s 29 of the ACL rests on the same alleged representation. Telstra alleges that Optus, through its circulation of the advertisement, is in breach of s 29(1)(b) of the ACL. Section 29(1)(b) relevantly prohibits a person from making a false or misleading representation that services are of a particular standard, quality, value or grade. Telstra further alleges that Optus is in breach of s 29(1)(g) of the ACL, which relevantly prohibits a person from making a false or misleading representation that services have ‘sponsorship, approval, performance characteristics, accessories, uses or benefits.’ In the event that Optus is found to be in breach of s 18, Telstra does not press the case in relation to s 29.[11]
[11]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 57 (J W S Peters).
Misleading or deceptive conduct
The relevant principles for assessing whether conduct is misleading or deceptive, or likely to mislead or deceive, have been well traversed in the authorities.[12] Determination of the issue requires a two-step process.[13] In the context of an impugned advertisement, the steps are: first, to ask whether the pleaded representation is conveyed by the advertisement; and secondly, to ask whether the representation conveyed is misleading or deceptive, or likely to mislead or deceive. In these proceedings the conduct complained of is an advertisement displayed to the public at large, as opposed to conduct that is directed at a specific individual. It is therefore necessary first to identify the class of consumers likely to be affected by the conduct.[14]
[12]See, eg, Australian Competition and Consumer Commission v Valve Corp (No 3) (2016) 337 ALR 647, 688–93 [207]–[228] (Edelman J) (‘ACCC v Valve (No 3)’); Flexopack S A Plastics Industry v Flexopack Australia Pty Ltd [2016] FCA 235 (11 March 2016) [259]–[277] (Beach J); Australian Competition and Consumer Commission v Telstra Corporation Ltd [2007] FCA 1904 (6 December 2007) [14] (Gordon J) (‘ACCC v Telstra’).
[13]Reckitt Benckiser (Australia) Pty Ltd v Procter & Gamble Australia Pty Ltd [2015] FCA 753 (23 July 2015) [35] (Gleeson J); ACCC v Telstra [2007] FCA 1904 (6 December 2007) [14]–[19] (Gordon J).
[14]ACCC v Telstra [2007] FCA 1904 (6 December 2007) [16] (Gordon J); Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45, 85 [103] (‘Campomar’); Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592, 604 [36] (Gleeson CJ, Hayne and Heydon JJ).
The relevant audience
To assess whether conduct is misleading or deceptive, or likely to mislead or deceive, a court must identify the conduct’s likely effect on the audience to whom it is directed.[15] In this case the relevant audience is a class of consumers, as opposed to a specific individual.
[15]Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592, 604 [36] (Gleeson CJ, Hayne and Heydon JJ).
At the interlocutory hearing, Telstra submitted that the class of consumers likely to be affected by the alleged representation in the advertisement was ‘a broad cross-section of the Australian public, including members of the Australian public who are considering, or may in future consider, acquiring a mobile telephone service or changing the carrier who supplies their existing mobile telephone service.’[16]
[16]Telstra, Statement of Claim, 9 May 2018, [6]; Transcript of Proceedings, Telstra Corporation Ltd v Singtel Optus Pty Ltd (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 11 May 2018) 24 (M J Collins). See also Telstra Corporation Ltd v Singtel Optus Pty Ltd [2018] VSC 247 (16 May 2018) [35] (Robson J).
I will identify the class more simply as potential purchasers of mobile telephone services in Australia. This includes those who currently use mobile telephone services and are considering switching networks, as well as those few who have yet to embrace mobile telephone technologies and are considering purchasing a service for the first time. This class does indeed encompass a broad cross-section of the Australian public.
At this stage it is convenient to describe the evidence which Optus led from Telstra’s witness as to the reach of the Telstra brand. The relevance of this evidence is that it goes to the background knowledge which may be imputed to reasonable members of the identified class of consumers.
Mr Jeremy Nicholas is Telstra’s Executive Director of Brand, Consumer and Business Marketing. Telstra called Mr Nicholas to give evidence in connection with Optus’ advertisement, particularly its reach and its effect on consumers. In cross-examination, Mr Young, one of Her Majesty’s counsel, led evidence from Mr Nicholas in relation to an advertising campaign of Telstra’s that was, at that time, the subject of Federal Court proceedings.[17] Mr Young submitted, and I accept, that Mr Nicholas’ evidence in relation to Telstra’s advertisements is relevant to the current proceedings because it goes to the knowledge base that is to be ascribed to a reasonable person in the identified class viewing the Optus advertisement.[18]
[17]Gleeson J has since handed down judgment in those proceedings: Optus Mobile Pty Ltd v Telstra Corporation Ltd [2018] FCA 745 (23 May 2018) (‘Optus v Telstra’).
[18]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 21–2, 28 (N J Young).
Under cross-examination, Mr Nicholas gave evidence that he is the second most senior executive at Telstra responsible for marketing, after his direct superior, Ms Joanne Pollard. Mr Nicholas is responsible for the brand marketing of Telstra’s mobile network. He has been in his role for two years, which is as long as he has been an employee of Telstra.[19]
[19]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 17–18.
Mr Nicholas gave evidence that during his two years at Telstra, Telstra has engaged in extensive marketing in relation to its mobile network. Telstra advertises its mobile network across a wide range of media, including newspapers, magazines, Telstra’s customer catalogue, Telstra’s website, social media, billboards, television and radio. Mr Nicholas agreed that over the last six months, Telstra has marketed itself on a series of performance claims about its mobile network.[20]
[20]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 18.
Mr Nicholas gave evidence that Telstra provides approximately 17.6 million mobile services in Australia. A single person may take out more than one service, but nevertheless Mr Nicholas agreed that this figure indicates that a substantial percentage of the Australian population are subscribers to Telstra’s mobile services. The percentage would be in the vicinity of 50 per cent, and the number of subscriptions taken out by people in Australia for Telstra mobile services is growing.[21]
[21]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 18–19.
On 15 May 2018, Mr Nicholas made an affidavit (‘second Nicholas affidavit’) that was filed in the Federal Court proceedings mentioned above between Optus Mobile Pty Ltd and Telstra.[22] Those proceedings related to an advertising campaign of Telstra’s. The second Nicholas affidavit was tendered into evidence in these proceedings along with extracts from the exhibits to that affidavit. The exhibit extracts comprise five images of Telstra advertisements that were, at the time of the hearing before me, still being published and displayed.
[22]Optus Mobile Pty Ltd v Telstra Corporation Ltd [2018] FCA 745 (23 May 2018).
The first of these five images is a copy of an advertisement that appeared in Telstra’s consumer catalogues on 5 September 2017 with the headline: ‘Best entertainment. Best network. Now mobile.’ Mr Nicholas gave evidence that between 3 to 4 million copies of Telstra’s consumer catalogue are produced every eight to 10 weeks. He gave evidence that the catalogues are distributed in Sunday newspapers in capital cities around Australia, in Telstra retail outlets, and into people’s letterboxes.[23]
[23]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 24–5.
The second image is a copy of an advertisement that Telstra was displaying on outdoor billboards. The advertisement bears the words: ‘One word from Australia’s best mobile network. Unlimited.’ The billboards were on display in multiple locations within each of Australia’s capital cities.[24] Mr Nicholas estimated that the advertisement might be appearing in approximately 100 locations in Melbourne.[25]
[24]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 25–6.
[25]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 26.
The third image is a copy of an advertisement with the same text and visuals as that in the second image, but which was in the form of an internet advertisement. Mr Nicholas gave evidence that the advertisement was appearing on numerous websites, such as the website of The Sydney Morning Herald.[26]
[26]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 26.
The fourth image is a screenshot of the opening frame of an advertisement displayed on Telstra’s Facebook page.[27] The opening frame displays the words: ‘One word from Australia’s best mobile network.’ The advertisement involved a dancing poodle, and Mr Nicholas agreed that this element was designed to add humour to the advertisement.[28]
[27]‘Screenshot’ is a computing term referring to a digital image of all or part of what is displayed at a given time on a computer screen: ‘screenshot, n.’ OED Online (Oxford University Press, March 2018) < of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 26–7.
The fifth image was a copy of a website landing page on Telstra’s website dated 15 May 2018. This advertisement bears the words: ‘One word from Australia’s best mobile network. Unlimited.’ The words are overlaid onto a photograph of a smiling young couple reclining on grass, the woman looking into the screen of a mobile telephone. This advertisement had been displayed continuously on Telstra’s website since 3 May 2018.[29]
[29]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 27.
Mr Young also showed the Court six photographs of locations at which Telstra advertisements were being displayed. Mr Nicholas agreed that the first of the photographs showed an advertisement displayed at Doncaster Shopping Centre on 4 May 2018.[30]
[30]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 30.
The second photograph showed a Telstra advertisement that appeared in The Canberra Times on or around 5 May 2018 that bears the words: ‘As reliable as slippers for Mother’s Day / Join Australia’s most reliable mobile network.’ Mr Nicholas agreed that this advertisement is an example of the use of humour in advertising which is a common feature of mobile advertisements circulated by both Telstra and Optus.[31]
[31]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 31.
The third photograph showed a small billboard advertisement displayed at the Telstra store at the shopping centre known as ‘Macquarie Centre’ on 8 May 2018. The advertisement bears the words: ‘Unlimited data. Now on Australia’s best mobile network.’ Mr Nicholas gave evidence that Telstra stores had been displaying a small version of the billboard advertisement throughout May 2018.
The fourth photograph showed an outdoor billboard in Epping Road, Sydney. The billboard is displayed on an overpass, and displays the words: ‘One word from Australia’s best mobile network. Unlimited. Visit us today.’[32]
[32]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 31.
The fifth photograph showed a small, electronic billboard at Chatswood Station in Sydney which displayed a Telstra advertisement with those same words.[33]
[33]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 31.
The sixth photograph showed some small displays of the same advertisement in an unidentified shopping centre. Mr Nicholas agreed that Telstra displayed in shopping centres small-form billboards such as that appearing in the photograph, although he was not able to confirm at which particular shopping centre this photograph was taken.[34]
[34]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 31.
The pleaded representation
Telstra alleges that the advertisement conveys a single representation which contains two interwoven aspects, namely that:[35]
(a) ‘there has been a significant and permanent change in the relationship between the Telstra and Optus mobile networks’; and
(b) ‘Optus [is] now undisputedly operating a better mobile network overall than Telstra.’
[35]Telstra, Statement of Claim, 9 May 2018, [7].
If it is established that this representation arises out of the advertisement, and that the representation is misleading or deceptive, or likely to mislead or deceive, then the Court will find that Optus has breached the prohibition in s 18 of the ACL.
In Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc,[36] Hill J observed the following, in relation to a newspaper advertisement:[37]
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.
[36](1992) 38 FCR 1 (‘Tobacco Institute’).
[37]Tobacco Institute (1992) 38 FCR 1, 50, citing Keehn v Medical Benefits Fund of Australia Ltd (1977) 14 ALR 77, 81 (Northrop J). Hill J’s observation in Tobacco Institute has been quoted with approval in REA Group Limited v Fairfax Media Limited [2017] FCA 91 (13 February 2017) [23] (Murphy J) (‘REA Group’); Samsung Electronics Australia Pty Ltd v LG Electronics Australia Pty Ltd [2015] FCA 227 (16 March 2015) [73] (Nicholas J) (‘Samsung v LG’); Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd (2014) 317 ALR 73, 83 [46] (Allsop CJ) (‘ACCC v Coles Supermarkets’).
The observation of Hill J stands for the proposition that where an advertisement may sustain more than one reasonable interpretation, then each interpretation must be examined in relation to its capacity to mislead or deceive reasonable members of the relevant audience.[38]
[38]See also Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435, 443 [7] (French CJ, Crennan and Kiefel JJ) (‘Google v ACCC’); Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 199 (Gibbs CJ) (‘Puxu’); Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 104 FCR 61, 77 [57]; Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397; Bodum v DKSH Australia Pty Ltd (2011) 280 ALR 639; Mars Australia Pty Ltd v Sweet Rewards Pty Ltd [2009] FCA 606 (5 June 2009). See further LexisNexis, Halsbury’s Laws of Australia (at 28 April 2015) 110 Contract, ‘3 Legislative Prohibition of Misleading or Deceptive Conduct’ [110-5320].
In Google v ACCC,[39] the majority of the High Court of Australia observed that it was a ‘well-established proposition’ that courts must consider whether the representation would mislead or deceive ordinary or reasonable members of a particular class of consumers:[40]
[W]here an issue in s 52 [now, s 18] 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.
[39](2013) 249 CLR 435.
[40](2013) 249 CLR 435, 443 [6]–[7] (French CJ, Crennan and Kiefel JJ), quoting Campomar (2000) 202 CLR 45, 85 [102].
This followed the High Court’s earlier decision in Campomar,[41] where it was held that:[42]
Where the persons [to whom the conduct is directed] are not identified individuals to whom a particular misrepresentation has been made … 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.
[41](2000) 202 CLR 45.
[42]Campomar (2000) 202 CLR 45, 85 [103].
In the current proceedings, the relevant class of persons comprises potential purchasers of mobile telephone services in Australia. It is therefore necessary to consider the effect of the advertisement on ordinary and reasonable people within the class of potential purchasers of mobile telephone services.
In the present case, Telstra has pleaded one representation. Whether more than one possible meaning might reasonably be said to arise from the advertisement is not relevant; I need only consider the representation that was pleaded, and whether it is reasonably open.
In cases of representations to the public, such as the present, ‘[t]he initial question which must be determined is whether the misconceptions, or deceptions, alleged to arise or to be likely to arise are properly to be attributed to the ordinary or reasonable members of the classes of prospective purchasers.’[43] Reactions that are extreme or fanciful are excluded.[44]
[43]Campomar (2000) 202 CLR 45, 86–7 [105]. See also Optus v Telstra [2018] FCA 745 (23 May 2018) [19] (Gleeson J).
[44]Campomar (2000) 202 CLR 45, 86–7 [105]; REA Group [2017] FCA 91 (13 February 2017) [18] (Murphy J).
In my view, the pleaded representation is not capable of arising from the impugned conduct of circulating the advertisement. Reasonable members of the class of consumers to whom the advertisement is directed will not perceive the pleaded representation as arising from the advertisement. In making this finding, I point to two elements of the pleaded representation.
First, there are the words ‘permanent change.’ In my view, the advertisement does not convey to reasonable members of the identified class that the relative market positions of Telstra and Optus have undergone a permanent change. To support this finding, I refer to the evidence led by Optus as to the background knowledge of reasonable members of the identified class.[45]
[45]Note that this evidence was not led at the interlocutory hearing.
Reasonable people who are potential purchasers of mobile telephone services in Australia are aware that: first, there are three major players in the market (Telstra, Optus and Vodafone); and secondly, the market is highly competitive. It would be fanciful to imagine that the humorous image of a Telstra phone box in a desert landscape would persuade a reasonable person that Telstra’s strong position in the market has been permanently destroyed. The far-reaching nature of Telstra’s recent advertising campaign, as described above in the evidence of Mr Nicholas, indicates that Telstra’s presence in the market is prominent in the minds of members of the identified class of consumers.
It might be suggested that the pleaded representation would be conveyed to a reasonable person, if the competition between Telstra and Optus was something of which that person were unaware. For example, a recently arrived immigrant might consider purchasing a mobile telephone service without understanding the nature of the Australian market. My response to this suggestion is twofold. First, such a person would still not perceive in the advertisement the pleaded representation: lacking an awareness of Telstra and Optus, he would not recognise the Telstra phone box in the sand, nor understand the rivalry to which the advertisement alludes. Secondly, as among the varied reactions which the advertisement must elicit from members of so broad a class, it may be that the view of this hypothetical immigrant is on the extreme end, such that the Court would be right to overlook it for the purposes of an analysis under s 18 of the ACL.[46]
[46]See Campomar (2000) 202 CLR 45, 86–7 [105]; REA Group [2017] FCA 91 (13 February 2017) [18] (Murphy J).
It is true that the reference to the 2017 P3 Report lends a legitimising air to the advertisement’s allusions to empires ending;[47] however, in my view, this does not overcome the background knowledge of reasonable consumers, nor the obviously humorous nature of the advertisement.
[47]See Telstra Corporation Ltd v Singtel Optus Pty Ltd [2018] VSC 247 (16 May 2018) [34] (Robson J).
The second element of the pleaded representation to which I will refer is the word ‘undisputedly’. The word ‘undisputed’ means ‘beyond argument’, ‘incontrovertible’, or ‘unquestionable’. Telstra pleads that the advertisement conveys, in its second aspect, that Optus is ‘now undisputedly operating a better mobile network overall than Telstra.’ A single report, the name and pedigree of which is unlikely to be widely recognised among the broad cross-section of the Australian public that constitutes the identified class of consumers, is insufficient to convey to a reasonable person that the claimed superiority of Optus is ‘undisputed.’
False or misleading representations as to services
Telstra also claims that Optus, through its circulation of the advertisement, is in breach of ss 29(1)(b) and (g) of the ACL. Section 29 of the ACL is the equivalent provision to s 53 under the Trade Practices Act 1974 (Cth). Section 29 sets out specific types of conduct which will give rise to a breach of the Competition and Consumer Act 2010 (Cth).[48]
[48]The conduct will be a breach provided that other requirements, which are not in issue in the current proceedings, are met: conduct must be engaged in by a corporation, in trade or commerce, in connection with the promotion or supply of goods or services.
Section 29(1)(b) relevantly provides that a person must not make a false or misleading representation that services are of a particular standard, quality, value or grade. Telstra further claims that Optus is in breach of s 29(1)(g) of the ACL, which relevantly provides that a person must not make a false or misleading representation that services have ‘sponsorship, approval, performance characteristics, accessories, uses or benefits.’ Although ss 29(b) and (g) use the term ‘false or misleading’ rather than ‘misleading or deceptive’, the cases have held that there is no meaningful difference.[49]
[49]REA Group [2017] FCA 91 (13 February 2017) [13] (Murphy J); Comité Interprofessionnel du Vin de Champagne v Powell (2015) 330 ALR 67, 104 [170] (Beach J); ACCC v Coles Supermarkets (2014) 317 ALR 73, 81 [40] (Allsop CJ); Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682 (24 June 2009) [14] (Gordon J).
The principles at play under s 29 are very similar to those relevant for s 18 of the ACL. In Insight Radiology Pty Ltd v Insight Clinical Imaging Pty Ltd,[50] Davies J summarised them:[51]
[50][2016] FCA 1406 (23 November 2016).
[51][2016] FCA 1406 (23 November 2016) [143].
(a) conduct is, or is likely to be, false or misleading if it tends to lead into error, even if there was no intention to mislead or deceive;[52]
[52]Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640, 651–2 [39] (French CJ, Crennan, Bell and Keane JJ).
(b) whether conduct is, or is likely to be, false or misleading must be determined objectively by reference to the class of people likely to be affected by the conduct;[53]
(c) a court must ask whether or not a ‘not insignificant number’ of ‘reasonable’ or ‘ordinary’ members of that class of people would, or are likely to, be misled or deceived;[54]
(d) the plaintiff need not demonstrate actual deception, but conduct that may cause confusion or uncertainty is not necessarily ‘false or misleading’.[55]
[53]Campomar (2000) 202 CLR 45, 85–7 [103]–[105].
[54]Bodum v DKSH Australia Pty Ltd (2011) 280 ALR 639, 679–82 [204]–[210] (Greenwood J).
[55]Google v ACCC (2013) 249 CLR 435, 443 [6], [8].
In the current proceedings, the alleged representation is that ‘there has been a significant and permanent change in the relationship between the Telstra and Optus mobile networks with Optus now undisputedly operating a better mobile network overall than Telstra.’[56] The class of consumers to whom the representation is directed comprises potential purchasers of mobile telephone services in Australia.[57]
[56]Telstra, Statement of Claim, 9 May 2018, [7].
[57]See above [10].
The pleaded representation, if conveyed to reasonable members of this class, and if false or misleading, will constitute a breach of s 29(1)(b). This is because a representation that one’s own mobile network is ‘better than’ another’s is a claim as to the standard or quality of the former. I find that Optus’ advertisement conveys the representation that Optus’ mobile network is better than Telstra’s, but not that it is ‘undisputedly’ better, as I have discussed above.[58]
[58]See above [42].
Section 29(1)(g) of the ACL relevantly provides that a person must not make a false or misleading representation that services have ‘sponsorship, approval, performance characteristics, accessories, uses or benefits.’ Given that the current proceedings do not involve sponsorship, approval, accessories, uses or benefits, I assume that Telstra’s claim relates to a representation as to performance characteristics. Counsel for Telstra, Mr Peters, one of Her Majesty’s counsel, submitted that in Optus’ advertisement there is ‘a specificity of objective ranking evoked by the text and the imagery.’[59] This submission goes to the level of specificity required of a representation before it becomes false or misleading. Mr Young, appearing for Optus, made the contrary submission that the advertisement does not ‘descend to any level of detail that conveys anything about performance characteristics.’[60]
[59]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 55 (J W S Peters).
[60]Transcript of Proceedings (Supreme Court of Victoria, S ECI 2018 00097, Robson J, 22 May 2018) 50 (N J Young).
In past cases involving alleged contraventions of s 29(1)(g), impugned representations as to performance characteristics have only been held to contravene the section when they contain a certain level of specificity. For example, in Australian Consumer Commission v DuluxGroup (Aust) Pty Ltd (No 2),[61] the ACCC succeeded in establishing that various advertisements for a certain range of the respondent’s roof paint contravened s 29(1)(g). The advertisements claimed that these lines of roof paint had cooling benefits which standard roof and exterior wall paints did not. One such representation was that ‘applying heat reflective paint to the roof of a house can reduce the interior temperature of the living zones of that house by up to 10 degrees Celsius.’[62] The respondent reached a settlement with the ACCC admitting liability. Following this, the Court made orders declaring that the respondent had made false or misleading representations as to the performance characteristics of the roof paint such that the advertisements constituted contraventions of s 29(1)(g) of the ACL.[63]
[61][2016] FCA 1286 (2 November 2016) (‘ACCC v DuluxGroup’).
[62]ACCC v DuluxGroup [2016] FCA 1286 (2 November 2016) [13] (Siopsis J).
[63]ACCC v DuluxGroup [2016] FCA 1286 (2 November 2016) [75] (Siopsis J).
The representations held to be false or misleading in ACCC v DuluxGroup were specific and detailed. There is no such specificity in the current proceedings. The only performance characteristic referred to in Telstra’s pleaded representation is ‘better’. As I have said above, the representation that Optus’ network is undisputedly better than Telstra’s is not conveyed by the advertisement.
Conclusion
For the reasons given above, I find that Telstra has failed to establish that Optus has engaged in conduct that is misleading or deceptive, or likely to mislead or deceive, in contravention of s 18 of the ACL; or that Optus has made false or misleading representations as to its services as prohibited under ss 29(b) and (g) of the ACL. Telstra’s pleaded representation is not one that is conveyed by the conduct complained of.
Orders
I will make orders that the interlocutory injunction imposed by me in my orders dated 16 May 2018 be dissolved, and that the writ of Telstra dated 9 May 2018 be dismissed. I award costs, including reserved costs, to the defendant, Optus. I will hear the parties on any damages claim arising under the undertaking given by Telstra.
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