Trade Practices Commission v Optus Communications Pty Ltd

[1995] FCA 733

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )   No. NG 459 of 1995
GENERAL DIVISION               )

Between:     TRADE PRACTICES COMMISSION
  Applicant

And:OPTUS COMMUNICATIONS PTY LTD

First Respondent

OPTUS MOBILE PTY LTD

Second Respondent

REASONS FOR JUDGMENT

EINFELD J                 SYDNEY              30 JUNE 1995

6 o'clock on a Friday evening is not an appropriate time for a detailed judgment in the matter, and I will not attempt to give other than a very summary judgment.  If detailed reasons are required, they can be requested at another time.  The Trade Practices Commission (the Commission) seeks two orders to prevent what is alleged to be a breach of the Trade Practices Act by Optus Communications and Optus Mobile (the Optus companies).  The orders sought are in addition to certain undertakings which have been offered to the Court by the Optus companies without admission of liability.  The matter arises as a result of certain advertising which the Optus companies have been carrying out on television, and presumably in other outlets of the mass media, in recent days.  The advertising seeks to sell Optus Mobile Phones, described as Optus Free Style, by offering with every purchase of a Free Style digital phone a special incentive in the form of $52 per month worth of free local weekend calls.

The television advertisement which has been shown to the Court does include the words, by way of superscript on the principal images being shown, "Some exclusions apply".  But I accept the argument on behalf of the Commission that the form and placement as well as the minimal emphasis given to those words and their very limited exposure are not sufficient to alert potential customers to the possibility that these exclusions include, as is the fact, that the free calls offer excludes calls made to mobile phones.

This is the principal subject of this litigation.  The Commission alleges, and it is not disputed, that the offer of the free local weekend calls does have exclusions one of which is calls from the purchased mobile phone to another mobile phone.  The Commission proposes to allege that this advertising is principally in that respect, perhaps also in some other respects, misleading and deceptive.  It has moved by way of motion returnable today for the orders which I shall refer to in a moment.

In response to which the Optus companies have offered undertakings to the Court without restriction.  The undertakings are in substance threefold:

1. that the Optus companies will not broadcast the Free Style advertisement or any other television advertisement for the
   Free Style phone or the plan which includes the free local weekend calls up to and including 14 July.

1. that the Optus companies will not within that period otherwise advertise either the Free Style phone or the Free Style plan in newspaper, magazine or other print advertisements unless in every such advertisement as mentions free calls there is a prominent statement in terms such as "Some exclusions apply, for example, free calls excludes calls to mobile phones" or some such substantially similar terms.

1. Optus Mobile will, as soon as possible and in any event not later than one week from today, send to all its so-called premium dealers, authorised dealers, selected retail outlets, retail stores, distribution account executives and support staff a bulletin in terms which it has stated.  I have been informed from the bar table that Optus Mobile has already commenced to circulate such a bulletin and it offers in its undertakings to use its best endeavours to complete the sending of the notice today.  It is not necessary at the moment for me to set out the notice but I shall do so in any detailed judgment which is prepared.

The Commission accepts these undertakings but seeks an alternative notice to be sent to what are described as the premium dealers, authorised dealers and retail outlets by not later than 4pm on Monday next 3 July.  Again, I do not set out
the notice on the same basis.  In addition, it seeks an injunction against the Optus companies and their employees preventing them from informing people that the offer of free local weekend calls exist without also a statement that the offer does not apply to inter-mobile calls.

Evidence has been brought that a significant amount of correspondence has passed between the Commission and the Optus companies in recent days drawing their attention to this particular problem.  Nevertheless calls made deliberately to test the response of Optus outlets and employees has resulted in a number of statements made by company representatives about this particular product without any mention that the free local weekend calls offer does not include calls to other mobile phones.

I have read the correspondence which has been antecedent to the proceedings today.  As this matter is only in its initial stages, it is not appropriate that I comment in detail upon that correspondence.  Suffice for present purposes to say that I am surprised at the response of the Optus companies to the matters which have been brought to its attention by the Commission.  One would normally expect companies of this size to respond in somewhat more concise and conciliatory terms than lengthy letters which in some respects do not even directly address the matters which are being replied to.  As a consequence, this litigation today has had to be undertaken when I should have thought that commonsense, including some give and take on the side of the Commission, might have resulted in a conciliated arrangement between the parties that would have dealt with the problem.

However, as it seems to me, the case made out by the Commission in principle entitles them to some relief in addition to the undertakings.  The orders sought are, however, both wordy and unclear and do not have regard to the fact that the people to whom they are intended to be directed are neither bureaucrats nor trained lawyers but are ordinary salespeople who are trying to earn a living  selling mobile phones to members of the public.  It is therefore appropriate that orders be made in much simpler terms.

I therefore propose to accept the undertakings given by the Optus companies but to make two orders one of which will have the effect of changing the nature of the notice which certain of the people who will be selling these mobile phones should receive.  Effective from the end of business on Tuesday 4 July 1995 I order that the respondents by themselves or their servants when dealing with or receiving inquiries from actual or potential customers for the Optus freestyle mobile phone inform such persons that the features of the Optus freestyle plan such as offers of free local calls on weekends up to $52 per month does not include calls to mobile phones and has other exclusions.

I also order that the respondents send to their employees, premium dealers, authorised dealers and retail outlets by not later than the end of business on Monday 3 July the following notice:

The Federal Court has ordered that persons inquiring about the Optus freestyle plan must be told by Optus employees and dealers that the $52 per month worth of free local weekend calls does not include calls to mobile phones.  They must also be told there are some other exclusions as well.

It is must important that you comply with this order.  If not, Optus itself and its employees will risk serious penalties.  Dealers and retail outlets risk the termination or cancellation of their agreement with Optus.

I stand the application and statement of claim over to 17 July 1995 at 9.30 and reserve to then the question of costs of the motion.  A copy of the precise orders that I have just made will be able to be collected from my chambers on Monday morning but I think the general content of it will be understood today.