ACCC v Tel.Pacific Limited [2009] FCA 279 (30 March 2009)

Last Updated: 31 March 2009

FEDERAL COURT OF AUSTRALIA

ACCC v Tel.Pacific Limited [2009] FCA 279

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v TEL.PACIFIC LIMITED (ACN 073 079 268)
VID 65 of 2009

GORDON J
30 MARCH 2009
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 65 of 2009

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
AND:	TEL.PACIFIC LIMITED (ACN 073 079 268) Respondent

JUDGE:	GORDON J
DATE OF ORDER:	30 MARCH 2009
WHERE MADE:	MELBOURNE

THE COURT DECLARES THAT:

1. Tel.Pacific Limited (“Tel.Pacific”) from at least May 2007 until the date of this order, in trade or commerce:

(a) engaged in conduct that was misleading and deceptive or likely to mislead and deceive, in contravention of s 52(1) of the Trade Practices Act 1974 (Cth) (“the Act”);

(b) in connexion with the supply or possible supply of services or in connexion with the promotion of the supply or use of services, falsely represented that the services were of a particular value, in contravention of s 53(aa) of the Act;

(c) in connexion with the supply or possible supply of services or in connexion with the promotion of the supply or use of services, represented that the services had performance characteristics or benefits that they did not have, in contravention of s 53(c) of the Act; and

(d) engaged in conduct that was liable to mislead the public as to the nature, characteristics and suitability for their purpose of services in contravention of s 55A of the Act,

by publishing advertising material in relation to each of:

(i) the “hello India” pre-paid phone card;

(ii) the “hello China” pre-paid phone card;

(iii) the “hello Middle East” pre-paid phone card;

(iv) the “UTSAV” pre-paid phone card; and

(v) the “Voice Thailand” pre-paid phone card,

(copies of which are attached as Annexures A to E) (“the Advertising Material”), which contained statements including “No Connection Fee[s]” and/or “Flat Rate” and thereby represented that no fees other than timed call charges applied to use of the cards (the “No Fee Representation”), without disclosing or adequately disclosing that, in fact, service fees, disconnection fees and surcharges applied to those cards.

2. Tel.Pacific, from at least May 2007 until the date of this order, in trade or commerce:

(a) engaged in conduct that was misleading and deceptive or likely to mislead and deceive, in contravention of s 52(1) of the Act;

(b) in connexion with the supply or possible supply of services or in connexion with the promotion of the supply or use of services, falsely represented that the services were of a particular value, in contravention of s 53(aa) of the Act;

(c) in connexion with the supply or possible supply of services or in connexion with the promotion of the supply or use of services, represented that the services had performance characteristics or benefits that they did not have, in contravention of s 53(c) of the Act; and

(d) engaged in conduct that was liable to mislead the public as to the nature, characteristics and suitability for their purpose of services in contravention of s 55A of the Act,

by publishing advertising material in relation to each of:

(i) the “hello India” pre-paid phone card;

(ii) the “hello China” pre-paid phone card;

(iii) the “hello Middle East” pre-paid phone card;

(iv) the “UTSAV” pre-paid phone card; and

(v) the “Voice Thailand” pre-paid phone card,

(copies of which are annexed at Annexures A to E), which contained statements to the effect that a stipulated number of minutes of calls was available on that card and thereby represented that users can use the card for more than one connection and, in doing so, will be able to achieve the total stipulated call duration for the location and type of connection (landline or mobile) specified (the “Call Duration Representation”), without disclosing or adequately disclosing that, in fact, the stipulated call duration could only at best be achieved if one continuous phone call were made, that calls were charged in incremental periods and that surcharges, other additional charges or higher rates may be payable in respect of certain calls, thereby diminishing the value of the card and, therefore, the number of available minutes.

3. Tel.Pacific from at least August 2008 until the date of this order, in trade or commerce:

(a) engaged in conduct that was misleading and deceptive or likely to mislead and deceive, in contravention of s 52(1) of the Act;

(b) in connexion with the supply or possible supply of services or in connexion with the promotion of the supply or use of services, falsely represented that the services were of a particular value, in contravention of s 53(aa) of the Act;

(c) in connexion with the supply or possible supply of services or in connexion with the promotion of the supply or use of services, represented that the services had performance characteristics or benefits that they did not have, in contravention of s 53(c) of the Act; and

(d) engaged in conduct that was liable to mislead the public as to the nature, characteristics and suitability for their purpose of services in contravention of s 55A of the Act,

by publishing advertising material in relation to each of:

(i) the “hello Middle East” pre-paid phone card; and

(ii) the “Voice Thailand” pre-paid phone card,

which contained statements to the effect that each phone card could be used for “up to” a specified number of minutes and thereby represented that users can use the card for more than one connection and, in doing so, achieve close to the stipulated call duration for the location and type of connection (landline or mobile) specified (the “Up To Call Duration Representation”), without disclosing or adequately disclosing that, in fact, the stipulated call duration could only at best be achieved if one continuous phone call were made, that calls were charged in incremental periods and that surcharges, other additional charges or higher rates may be payable in respect of certain calls, thereby diminishing the value of the card and, therefore, the number of available minutes.

BY CONSENT THE COURT ORDERS THAT:

Injunction

4. Tel.Pacific, whether by itself, its servants or agents or otherwise howsoever in connexion with the supply or possible supply of telecommunication services by way of pre-paid phone cards be restrained for a period of two years from the date of the Court’s order, in trade or commerce, from disseminating advertising material:

(a) representing that no fees other than the timed call charges apply to the use of pre-paid phone cards when such fees are applicable;

(b) representing that a stipulated number of minutes is available for calls using a specified pre-paid phone card when the stipulated call duration can only be achieved if one continuous phone call is made;

(c) representing that “up to” a stipulated number of minutes is available for calls using a specified pre-paid phone card when the stipulated call duration can only be achieved if one continuous phone call is made; and

(d) representing that a stipulated number of minutes or “up to” a stipulated number of minutes is available for calls using a pre-paid phone card without prominently disclosing:

(i) any charging by incremental periods; and

(ii) the surcharges, other fees or higher rates payable in respect of certain calls.

Other Orders

5. Tel.Pacific, within 45 days of the date of this order, at its own expense, take all reasonable steps to effect the removal from display and further publication by all retailers to whom Tel.Pacific pre-paid phone cards have been sold since 1 July 2008 (“the Retailers”) of the Advertising Material and any of its other promotional material that contains representations with similar purport or effect to the No Fee Representation, the Call Duration Representation and the Up To Call Duration Representation.
6. Tel.Pacific, within 21 days of the date of this order, at its own expense, cause to be published a notice in the terms and form set out in Schedule 1 ( the “Notice”) including the font size and form specified in the Notice and with the business logo on the top of the Notice as appearing on Tel.Pacific letterhead and:

(a) distribute the Notice to its Retailers and take all reasonable steps to require the display of the Notice in the form of an A4 poster in the same locations as the Advertising Material was located for a period of 90 days;

(b) cause the Notice to be published on the Internet at the home page of all websites which are owned, operated or maintained by or on behalf of Tel.Pacific, including the website accessible via uniform resource located at the address (“URL”) www.telpacific.com.au (the “Website”) (or if any such URL is replaced or changed, the Internet home page of the corresponding website) for a period of 90 days and use its best endeavours to ensure that:

(i) the Notice shall be viewable by clicking a ‘click-through’ icon located on the Website;

(ii) the ‘click-through’ icon referred to in the previous sub-paragraph is located in a central position on the page first accessed when the user clicks on the word “phone cards” (or the first page of the phone cards section of the Website if changes are made to the Website);

(iii) the ‘click-through’ icon shall contain the words “Misleading Advertising by Tel.Pacific – Corrective Notice Ordered by Federal Court of Australia” prominently in red and the words “click here”; and

(iv) the Notice shall occupy the entire webpage which is accessed via the “click-through” icon referred to above.

7. Tel.Pacific, within 45 days of the date of this order (“the Start Date”), at its own expense, cause to be printed prominently on each pre-paid phone card which has fees and charges in addition to time call charges, it creates or causes to be created for the period of one year from the Start Date, the text which is set out at Schedule 2.
8. Within 21 days of the date of this order, at its own expense, Tel.Pacific send by mail to its 20 largest competitors copies of the ACCC News Release Telco’s Told: Raise Standards or Risk ACCC Action attached in Schedule 3 and the notice attached in Schedule 4.
9. Tel.Pacific, within 21 days of the date of this order, establish a compliance policy and associated complaints handling system, training and review system in accordance with the program set out in Schedule 5 (the “Compliance Program”).
10. Tel.Pacific maintain and operate the Compliance Program for a period of 3 years from the date of this order.
11. Tel.Pacific file and serve on the ACCC within 60 days of the date of this order an affidavit of its proper officer verifying that it has carried out its obligations under paragraphs 5, 6, 7 and 8 of this order and detailing what it has done and:

(a) in respect of paragraph 6 of this order, how the 90 days period ordered will be complied with; and

(b) in respect of paragraph 8 of this order, a list of Tel.Pacific’s largest 20 competitors.

12. Tel.Pacific pay the Applicant’s costs of the proceeding in the sum of $5,000.

SCHEDULE 1

TEL.PACIFIC FOUND BY COURT TO HAVE MADE FALSE REPRESENTATIONS REGARDING PRE-PAID PHONE CARDS

HAVE YOU PURCHASED ANY OF THESE CARDS?

• HELLO INDIA
• HELLO CHINA
• HELLO MIDDLE EAST
• UTSAV
• VOICE THAILAND
  

THE FEDERAL COURT DECLARED THAT TEL.PACIFIC ENGAGED IN FALSE MISLEADING AND DECEPTIVE CONDUCT IN RELATION TO THOSE PHONE CARDS BY:

• REPRESENTING THAT NO FEES OTHER THAN TIMED CALL CHARGES WOULD APPLY WHEN IN FACT SERVICE FEES, DISCONNECTION FEES AND SURCHARGES APPLIED
  
• REPRESENTING THAT A CERTAIN NUMBER OF MINUTES WAS AVAILABLE ON THE CARDS WHEN IN FACT THE TOTAL NUMBER OF MINUTES COULD, AT BEST, ONLY BE ACHIEVED THROUGH ONE CONTINUOUS CALL AND CALLS WERE CHARGED IN INCREMENTAL PERIODS, DIMINISHING THE NUMBER OF MINUTES AVAILABLE
  

CONSUMERS ARE URGED TO MAKE SURE THEY ARE AWARE OF ALL APPLICABLE FEES AND CHARGES WHEN BUYING THESE OR ANY OTHER PHONE CARDS

The Australian Competition and Consumer Commission brought the proceedings in the Federal Court of Australia in relation to breaches of sections 52, 53(aa), 53(c) and 55A of the Trade Practices Act 1974 which prohibit false, misleading and deceptive conduct.

The Court made orders that restrained Tel.Pacific from engaging in similar conduct for a period of 2 years, required it to publish this notice and to implement a trade practices compliance program and to pay the ACCC’s costs of the proceeding. A copy of the decision and the detailed orders can be found at www.fedcourt.gov.au

SCHEDULE 2

Timed charges and other fees apply to calls using this card. For further details please call customer service or visit www.telpacific.com.au.

SCHEDULE 3

SCHEDULE 4

Federal Court declares Tel.Pacific engaged in false, misleading and deceptive conduct in advertising its pre-paid phone cards

Following legal action by the Australian Competition and Consumer Commission (ACCC), the Federal Court of Australia declared Tel.Pacific Limited (Tel.Pacific) made false, misleading and deceptive representations in contravention of sections 52, 53(aa), 53(c) and 55A of the Trade Practices Act 1974 * (TPA).

Tel.Pacific engaged in the offending conduct over a sustained period of time in connexion with statements it made in advertising for the sale of various pre-paid phone cards including its hello India, hello China, hello Middle East, UTSAV and Voice Thailand cards.

The Court declared that Tel.Pacific’s conduct contravened the TPA because it represented in relation to certain phone cards that no fees other than timed call charges would apply when this was not the case. With some cards, service fees were charged at regular intervals from the date of activation, regardless of usage. Also, disconnection fees were charged for calls beyond certain durations and surcharges applied for calls to certain countries.

The Court also declared Tel.Pacific contravened the TPA because it represented that certain phone cards would have a specific number of minutes call time when this was not the case. In some instances, the total stipulated call durations could at best only be achieved if one continuous call was made. The ACCC alleged it was neither practical nor realistic for users to be able to achieve the advertised call duration as in one case it would require the consumer to make a continuous call of over 33 hours.

Further, calls on certain cards were charged in incremental periods, diminishing the total number of minutes available for use of the card for multiple calls. Also surcharges, other additional charges or higher rates were payable in respect of certain calls diminishing the value of the card and number of minutes available. Another factor was that service fees and disconnection fees applied to multiple uses of the card diminishing the value of the card and number of minutes available.

The Court made orders that restrained Tel.Pacific from engaging in similar conduct for a period of 2 years, required it to publish this notice and to implement a trade practices compliance program and to pay the ACCC’s costs of the proceeding.

A copy of the decision can be found at www.fedcourt.gov.au.

*Section 52 of the TPA prohibits conduct that is misleading or deceptive or is likely to mislead or deceive, section 53 of the TPA prohibits the making of certain false or misleading representations about goods or services, and section 55 of the TPA prohibits conduct that is liable to mislead the public about the nature, characteristics, suitability or quantity of services.

SCHEDULE 5

TRADE PRACTICES COMPLIANCE AND EDUCATION / TRAINING PROGRAM

Interpretation

1. In this Schedule:

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

(b) “Act” means the Trade Practices Act 1974 (Cth);

(c) “Compliance Advisor” means the person defined in paragraph 6 below;

(d) “Compliance Officer” means the person appointed under paragraph 2 or 3 below;

(e) “Compliance Policy” means the policy defined in paragraph 8 below;

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

(g) “Compliance Program Review Report” is the report defined in paragraph 19 below;

(h) “Compliance Trainer” is defined in paragraph 14 below;

(i) “Contravening Conduct” means the conduct declared by the Federal Court of Australia in these proceedings to be in contravention of Division 1 of Part V of the Act;

(j) “Court’s Order” means the relevant order(s) of the Federal Court of Australia made in these proceedings;

(k) “External Reviews” means the reviews required by paragraph 18 below;

(l) “Relevant Provisions” means sections 52, 53(aa), 53(c) and 55A of the Act which were contravened by the Contravening Conduct, and Division 1 of Part V of the Act which deals with similar or related conduct;

(m) “Respondent’s Program” means the steps taken by Tel.Pacific Limited (Tel.Pacific) to comply with the Court’s Order in relation to the Compliance Program;

(n) “Reviewer” is defined in paragraph 18(b) below;

(o) “Risk Assessment” means the assessment required by paragraph 6 below;

(p) “Risk Assessment Report” means the report required by paragraph 7 below;

(q) “Training” means the training required by paragraph 13 below.
Compliance Officer

2. Tel.Pacific must, within 28 days of the date of the Court’s Order, appoint a Director or a senior employee with suitable qualifications or experience in corporate compliance as Compliance Officer with responsibility for ensuring that the Compliance Program is effectively established, maintained and administered in accordance with the Court’s Order.
3. After the appointment of the Compliance Officer in accordance with paragraph 2, Tel.Pacific must take all reasonable steps to ensure that, for the duration of the Court’s Order, there is a Director or a senior employee with suitable qualifications or experience in corporate compliance appointed as Compliance Officer with responsibility for ensuring that the Compliance Program is effectively established, maintained and administered in accordance with the Court’s Order.
4. Tel.Pacific must take all reasonable steps to ensure that for the duration of the Court’s Order the Compliance Officer discharges his or her responsibility of ensuring that the Compliance Program is effectively established, maintained and administered in accordance with the Court’s Order.
5. Tel.Pacific must take all reasonable steps to ensure that the Compliance Officer reports in writing to Tel.Pacific’s board of directors every six months with respect to the on-going maintenance and administration of the Compliance Program including, in particular, whether the Respondent’s Program is effectively:

(a) ensuring an awareness by the employees and other persons involved in Tel.Pacific’s business of their responsibilities and obligations in relation to the Relevant Provisions; and
(b) revising the internal operations of Tel.Pacific’s business which led to Tel.Pacific engaging in the Contravening Conduct.

Risk Assessment

6. Tel.Pacific must, within one month of the date of the Court’s Order, appoint a qualified external compliance professional with expertise in trade practices issues (Compliance Advisor) to conduct a risk assessment to:

(a) identify the areas of Tel.Pacific’s business where it is at risk of contravening the Relevant Provisions;
(b) assess the likelihood of any such contravention occurring;
(c) identify where there are deficiencies in Tel.Pacific’s procedures for managing any such risk;
(d) make findings concerning sub-paragraphs (a) to (c) above; and
(e) make recommendations for action having regard to sub-paragraphs (a) to (d) above (Risk Assessment).

7. Tel.Pacific must instruct the Compliance Advisor to set out, and must take all reasonable steps to ensure that the Compliance Advisor sets out, the findings and recommendations of the Risk Assessment in a written report (Risk Assessment Report), to be provided to Tel.Pacific’s board of directors within two months of his or her appointment.

Compliance Policy

8. Tel.Pacific must, within 30 days of the date of the Court’s Order, establish a policy (Compliance Policy) which is communicated in writing to all employees and other persons involved in Tel.Pacific’s business regarding compliance with the Act, which must include:

(a) a statement of commitment by Tel.Pacific to comply with the Relevant Provisions;
(b) a direction to all employees or other persons involved in Tel.Pacific’s business to report any compliance related issues and Act compliance concerns to the Compliance Officer;
(c) a statement guaranteeing that employees or other persons involved in Tel.Pacific’s business making a complaint or report in relation to Tel.Pacific’s compliance with the Relevant Provisions will not be prosecuted or disadvantaged in any way by reason of their complaint or report and that their complaint or report will be kept confidential and secure; and
(d) a statement that Tel.Pacific will take disciplinary action against any persons who are knowingly or recklessly concerned in a contravention of the Relevant Provisions and will not indemnify them.

9. Tel.Pacific must take all reasonable steps to ensure that the Compliance Program is maintained and administered in a manner that is consistent with the Compliance Policy for the duration of the Court’s Order.
10. Tel.Pacific will provide a copy of the Compliance Policy to all new staff at the commencement of their employment with Tel.Pacific.

Complaints Handling System

11. Tel.Pacific must establish, maintain and administer a trade practices complaints handling system.
12. Tel.Pacific must take all reasonable steps to ensure that the trade practices complaints handling system is in accordance with AS/ISO 10002:2006 Customer satisfaction – Guidelines for complaints handling in organizations, though tailored to its own circumstances (Complaints Handling System).

Training

13. Tel.Pacific must take all reasonable steps to ensure that all directors, officers, employees, representatives and agents of Tel.Pacific, whose duties could result in them being concerned with conduct that may contravene the Relevant Provisions, receive practical training regarding the Act (Training) no less than once annually.
14. The Training must be conducted by either a suitably qualified compliance professional or legal practitioner with expertise in the Act (the Compliance Trainer).
15. Tel.Pacific must instruct the Compliance Trainer to design the Training, and must take all reasonable steps to ensure that the Training is designed, to ensure that the persons at the Training are made aware of:

(a) the responsibilities and obligations in relation to the Relevant Provisions;
(b) the potential consequences of contravening the Relevant Provisions;
(c) the areas of Tel.Pacific’s business where it is at risk of contravening the Relevant Provisions, as identified in the Risk Assessment Report; and
(d) the content of the Compliance Program.

16. Tel.Pacific must provide to the Compliance Trainer, for the purposes of conducting the Training, a copy of:

(a) the Court’s Order;
(b) the Compliance Policy;
(c) the Complaints Handling System; and
(d) the Risk Assessment Report.

17. Tel.Pacific must take all reasonable steps to ensure that an awareness of the Compliance Program forms part of the induction of all new directors, officers, employees, representatives and agents, whose duties could result in them being concerned with conduct that may contravene the Relevant Provisions.

External Review

18. Tel.Pacific must take all reasonable steps to ensure that annual reviews of Tel.Pacific’s compliance with the Court’s Order are carried out in accordance sub-paragraphs (a) to (d) below (External Reviews):

(a) Scope of the External Reviews – The External Reviews are to ascertain whether the Respondent’s Program:

(i) has made the employees and other persons involved in Tel.Pacific’s business aware of their responsibilities and obligations in relation to the Relevant Provisions;
(ii) has revised the internal operations of Tel.Pacific’s business in relation to the Relevant Provisions and the circumstances that led to the Contravening Conduct;
(iii) is effectively maintaining and administering the Compliance Program.

(b) Independence of Reviewer – Tel.Pacific must take all reasonable steps to ensure that all External Reviews are carried out by a suitably qualified, independent compliance professional with expertise in the Act (Reviewer). The Reviewer will qualify as independent on the basis that he or she:

(i) is not a present or past director, employee or officer of Tel.Pacific;
(ii) has no significant shareholding or other interests in Tel.Pacific;
(iii) has not acted for or consulted to, and does not act for or consult to, Tel.Pacific in any matters involving alleged contraventions of the Act;
(iv) has not acted for or consulted, and does not act for or consult to, Tel.Pacific or provide other services in relation to this Compliance Program, other than as the Reviewer in a previous year; and
(v) has no conflict of interest in carrying out the Reviews.

(c) Evidence – Tel.Pacific must take all reasonable steps to ensure that in the conduct of the External Reviews the Reviewer has access to all relevant sources of information in Tel.Pacific’s possession or control, including access to:

(i) any officers, employees, representatives or agents of Tel.Pacific;
(ii) any relevant records of Tel.Pacific, including its complaints register/reports and any documents relevant to the Training or its induction program; and
(iii) any documents created by Tel.Pacific’s consultants or legal advisers for use in relation to the Respondent’s Program.

(d) Timing – Tel.Pacific must take all reasonable steps to ensure that the first External Review is completed within one year of the date of the Court’s Order and that each subsequent External Review is completed within one year thereafter, save that all steps to be taken by Tel.Pacific in relation to the final External Review are to be completed one month prior to the expiration of the Court’s Order.

19. Tel.Pacific must instruct the Reviewer to set out, and must take all reasonable steps to ensure that the Reviewer sets out, the findings of each of the External Reviews in a written report (Compliance Program Review Report) which addresses each of the following:

(a) details of the evidence gathered and examined during the External Review;
(b) the name and relevant qualifications/experience of the person appointed as the Compliance Officer;
(c) if, and to what extent, the Respondent’s Program includes all the elements and requirements of the Compliance Program;
(d) if, and to what extent, the Respondent’s Program covers the areas identified in the Risk Assessment; and
(e) recommendations that the Reviewer considers are reasonably necessary to ensure that the Respondent’s Program effectively maintains and administers the Compliance Program.

20. Tel.Pacific must instruct the Reviewer to complete and provide the Compliance Program Review Report to it, and must take all reasonable steps to ensure that the Compliance Program Review Report is completed and provided to it, within one month of each Review.
21. Tel.Pacific must retain each Compliance Program Review Report.
22. Within 30 days of the receipt of each Compliance Program Review Report, Tel.Pacific’s board of directors must hold a meeting to consider the matters described in paragraph 23 below.
23. At the meeting referred to in paragraph 22 above, Tel.Pacific’s board of directors must consider:

(a) the Compliance Program Review Report;
(b) whether to make any changes to the Respondent’s Program to more effectively implement the Compliance Program for the purposes of:

(i) ensuring an awareness for the employees or other persons involved in Tel.Pacific’s business of their responsibilities and obligations in relation to the Relevant Provisions; and
(ii) revising the internal operations of Tel.Pacific’s business in relation to the circumstances that led to the Contravening Conduct;

(c) any recommendations of the ACCC for the purposes of sub-paragraph (b) above.

24. Within 14 days of holding the meeting referred to in paragraph 22 above, Tel.Pacific must advise the ACCC in writing of:

(a) details of when the meeting was held and who was present;
(b) the outcome of the meeting, including:

(i) what, if any, changes Tel.Pacific decided to make to the Respondent’s Program to more effectively implement the Compliance Program and details of the proposed implementation of any changes; and
(ii) the decisions made by Tel.Pacific about each of the recommendations that had been made by the ACCC (if any).

25. Within 14 days of holding a meeting referred to in paragraph 23 above at which Tel.Pacific decides to make changes to the Respondent’s Program it must take all reasonable steps to communicate those changes to all employees or other persons involved in Tel.Pacific’s business.

Supply of Documents to the ACCC

26. Tel.Pacific must within 14 months of the date of the Court’s Order, cause to be produced and provided to the ACCC copies of each of the following documents:

(a) documents evidencing the appointment of the Compliance Officer and Compliance Adviser;
(b) the Risk Assessment Report;
(c) the Compliance Policy and the documents evidencing its implementation; and
(d) documents evidencing the provision of Training, including all materials used in the Training.

27. Tel.Pacific must provide a copy of each Compliance Program Review Report to the ACCC within 14 days of its receipt from the Reviewer.

If requested in writing by the ACCC, Tel.Pacific must, at its own expense, provide copies of documents and information constituting or evidencing compliance or non-compliance with the Court’s Order.

ANNEXURE A

ANNEXURE B

ANNEXURE C

ANNEXURE D

ANNEXURE E

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 65 of 2009

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant
AND:	TEL.PACIFIC LIMITED (ACN 073 079 268) Respondent

JUDGE:	GORDON J
DATE:	30 MARCH 2009
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

INTRODUCTION

1. Tel.Pacific Limited (ACN 073 079 268) (“Tel.Pacific”), a publicly listed company, provides telecommunication services to the public including by way of sale of pre-paid phone cards to consumers throughout Australia. It sells approximately 54 different pre-paid phone cards which provide consumers with credit to access telephone services to various overseas countries.
2. This proceeding concerns advertising material, usually in the form of A4 sized posters, for 5 of Tel.Pacific’s pre-paid phone cards. A copy of the advertising material in issue in these proceedings is attached as Annexures A to E to the Orders (“the Advertising Material”). The advertising material was usually placed in the windows or behind the counters of newsagents and other retailers located throughout most of Australia (“Retailers”) who purchase pre-paid phone cards from Tel.Pacific through Tel.Pacific sales representatives and on sell them to the public.
3. By application dated 3 February 2009, the Australian Competition and Consumer Commission (“the ACCC”), alleged that the Advertising Material contravened ss 52, 53(aa), 53(c) and / or 55A of the Trade Practices Act 1974 (Cth) (the “Act”). It will be necessary to return to consider the representations which were conveyed and the manner in which the representations were false, misleading and deceptive later in these reasons for decision.
4. It is sufficient for present purposes to note that on 12 March 2009, Tel.Pacific filed its points of defence in which it accepted the ACCC’s allegations in relation to the contraventions of the Act and stated that it had ceased to distribute the Advertising Material. However, at that time, Tel.Pacific took issue with aspects of the relief sought by the ACCC in its Application.
5. On 24 March 2009, an initial scheduling conference was to be held at 2.00pm. That conference was deferred, at the request of the parties, until 4.15pm on 24 March 2009. When the matter was called, the Court was informed that the ACCC and Tel.Pacific had resolved the entirety of the proceeding. The parties submitted to the Court declarations, injunctions and others orders which they sought by consent. The terms of the proposed consent orders were the subject of discussion and amendment. At the conclusion of the hearing, I made orders in the terms proposed by the parties subject to certain amendments. These reasons for decision record why, in my view, it was appropriate for the Court to grant the declarations and make orders in the terms that it did on 24 March 2009 and why the declarations and orders were amended from that proposed by the parties.
6. The proposed consent orders provided for declarations, an injunction and other orders in relation to Tel.Pacific’s contraventions of ss 52, 53(aa), 53(c) and / or 55A of the Act. I will deal in turn with the declarations (paras 1, 2 and 3 of the proposed consent orders), the injunction (par 4 of the proposed consent orders) and the other orders (pars 5-12 of the proposed consent orders).

Declarations

7. In my view, it is appropriate for there to be declarations in accordance with paragraphs 1, 2 and 3 of the minute of proposed orders. As a general principle, a court does not make declarations on matters relating to public rights by consent or on admissions, unless it is satisfied by evidence: Australian Securities & Investment Commission v Rich (No 2) [2004] NSWSC 836; (2004) 50 ACSR 500 at [10]; Williams v Powell [1894] WN (Eng) 141; Gramophone Co Ltd v Magazine Holder Co (1911) 28 RPC 221 at 225–227; Termijtelen v Van Arkel [1974] 1 NSWLR 525; Wallersteiner v Moir [1974] 3 All ER 217; Metzger v Department of Health and Social Security [1977] 3 All ER 444 at 451; BMI Ltd v Federated Clerks Union of Australia (NSW) Branch (1983) 51 ALR 401; Young P W, Declaratory Orders (2nd ed, 1984) [601].
8. In the present case, that is not an issue. The Advertising Material was annexed to the ACCC’s case summary. Tel.Pacific admitted that it distributed the Advertising Material. Further, it admitted that the following three representations were conveyed by the Advertising Material which contained statements:
   1. including “No Connection Fee[s]” and “Flat Rate”, thereby representing that no fees other than timed call charges applied to use of the cards (“the No Fee Representation”);
   2. to the effect that a stipulated number of minutes of calls was available on the card, thereby representing that users can use the card for more than one connection and, in doing so, will be able to achieve the total stipulated call duration for the location and type of connection (landline or mobile) specified (“the Call Duration Representation”);
   3. to the effect that each phone card could be sued for “up to” a specified number of minutes, thereby representing that users can use the card for more than one connection and, in doing so, achieve close to the stipulated call duration for the for the location and type of connection (landline or mobile) specified (“the Up To Call Duration Representation”),

(collectively, the “Representations”).

9. Having read the Advertising Material, I accept that each representation was conveyed by the Advertising Material. Finally, Tel.Pacific admitted that each of the Representations was false, misleading and deceptive in contravention of ss 52, 53(aa), 53(c) and / or 55A of the Act because Tel.Pacific’s Advertising Material failed to disclose or adequately disclose:
   1. in relation to the No Fee Representation, that service fees, disconnection fees and surcharges applied to the cards;
   2. in relation to both the Call Duration Representation and the Up to Call Duration Representation, that the stipulated call duration could only at best be achieved if one continuous call was made, that calls were charged in incremental periods and that surcharges, other additional charges or higher charges may be payable in respect of certain calls, thereby diminishing the value of the card and the number of available minutes.
10. In those circumstances, it is appropriate for the Court to grant the declarations that were sought by consent. There is, however, in the circumstances of this case, a further reason for granting the declarations. In the absence of them, the contravening conduct would not otherwise be clearly identified and, as will become apparent, there is at least some public benefit in that contravening conduct being clearly identified.

Injunctions: par 4 and par 5

11. In my view, the injunctions proposed in paragraphs 4 and 5 are appropriate: s 80 of the Act. The terms of the injunctions are limited by reference to the conduct in contravention of the Act in which Tel.Pacific has engaged and is designed to prevent a repetition of that conduct: cf Foster v Australian Competition and Consumer Commission [2006] FCAFC 21; (2006) 149 FCR 135. After discussion with the parties, the term “Retailers” in paragraph 5 of the proposed consent orders was defined. The order reflects that amendment.

Other orders: pars 6 to 12

12. The other orders are within power and otherwise appropriate: Australian Consumer & Competition Commission v Target Australia Pty Ltd [2001] FCA 1326; [2001] ATPR 41-840 at [24] and Australian Consumer & Competition Commission v Econovite Pty Ltd [2003] FCA 964; [2003] ATPR 41-959 at [12].
13. Paragraph 8 of the orders requires some explanation. Initially, the proposed consent order was in more expansive terms that the order ultimately made by the Court. The consent order proposed that the list of materials to be sent to the top 20 of Tel.Pacific’s competitors extend to include not only the documents set out in Schedules 3 and 4 but also a copy of the orders and any reasons for decision. Two questions arose – should such an order be made and, if so, what was the appropriate form of any such order. The ACCC submitted that such an order should be made and that it was in the nature of a “Community Service Order” within the meaning of ss 86C(2) (a) and (4) of the Act. Whatever it is, it is not such an order. It is more akin to an order of the kind described in s 86C(2)(c) of the Act, namely “an order requiring the person (ie Tel.Pacfic) to disclose, in the way and to the persons specified in the order, being information that the person has possession of or access to”.
14. Counsel for the ACCC could not refer me to any previous authority where such an order had been made. On reflection, the proposed consent order was in substance akin to a limited form of corrective advertising. The difference in this case is that the audience to whom the correcting publication is to be sent is not the consumers of Tel.Pacific’s pre-paid cards (see s 86C(2)(d)) but to its competitors.
15. Section 86C of the Act is directed at protecting the public interest. The sole consideration of the Court is the protection of the consumers. It achieves those objectives by raising public awareness of the type of conduct that may contravene the Act and as to the outcome of particular litigation: see eg ACCC v On Clinic Australia Pty Ltd (1996) ATPR 41-517. As is well established, these orders are not intended to be punitive: ACCC v On Clinic Australia Pty Ltd. Tel.Pacific did not submit that the order was punitive. In fact, it consented to the order. In the present case, I consider that the proposed order does not merely announce a “win” for the ACCC and the contrition of Tel.Pacific (cf ACCC v Real Estate Institute of WA Inc [1999] FCA 18; (1999) 95 FCR 114). It is “directed to informing the relevant market ... of the outcome of the litigation so that those in the market have at least a broad understanding of the ways in which [Tel.Pacific has] had to change [its] conduct”: ACCC v Real Estate Institute of WA Inc [1999] FCA 18; (1999) 95 FCR 114.
16. Finally, in the circumstances, it is clearly in the public interest that these proceedings between the ACCC and Tel.Pacific are settled: see Kiefel J in NW Frozen Foods Pty Ltd v Australian Consumer & Competition Commission [1996] FCA 1134; (1996) 71 FCR 285 at 291.
17. For those reasons, I made orders substantially in accordance with the minute of proposed orders subject to the amendments identified.
    

I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.

Associate:

Dated: 30 March 2009

Counsel for the Applicant:	Ms F Forsyth
Solicitor for the Applicant:	Corrs Chambers Westgarth
Solicitor for the Respondent:	Truman Hoyle Lawyers

Date of Hearing:	24 March 2009
Date of Judgment:	30 March 2009