ACCC v Optus: Misleading Advertisements and Contract Law

Running head: CONTRACT LAW
CONTRACT LAW
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ACCC V OPTUS:
FACTS OF THE CASE:
In the case of Australian Competition and Consumer Commission v Singtel Optus Pty Ltd
(No 4) [2011] FCA 76], the court ordered Optus to make a payment of 5.26 million dollars as a
pecuniary penalty to the Commonwealth for issuing misleading advertisements. The penalty was
imposed together with previous orders of injunctions. The case involved ACCC as the appellant
and Optus as the respondents. In this case, it was alleged by the appellant that false or misleading
representation was made by Optus to about 138,988 customers and such conduct being
misleading and deceptive can mislead public as per the provisions enumerated under the ACL
present in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (CCA).
It was alleged by the ACCC that about 138,988 customers were represented by Optus that
National Broadband Network (NBN) based service was required to be acquired by them in future
for continuing to receive broadband services because their existing broadband would be
subjected to disconnection very soon. It was further alleged by the ACCC that most of the
customers had no such need as they had no broadband services which were said to be
disconnected soon. It was further alleged by the ACCC that no reasonable grounds were present
that would be supporting the representation made by Optus.
Legal issue involved:
The main issue involved in the present case can be discussed in brief as follows. Optus by
making representation in relation to commerce and trade was involved in a conduct that can be
considered to be deceptive or misleading in nature or is likely to mislead as well as deceive

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regular consumers. This contravenes section 18 laid down in ACL (Pearson, 2017). Further
Optus was involved in making false representations or misleading representations to the
consumers by stating that every consumer will be requiring a service which is based on NBN for
future so that they are able to receive continued broadband services because the broadband
service that they were using presently would be subjected to disconnection very soon. This
amounts to breach of section 29(1)(l) of ACL (Corones, Christensen & Howell, 2016).
For Optus was involved in conduct that could easily mislead public regarding the nature,
character and also purpose of the broadband internet service received by the recipients. This
again resulted into contravention of section 34 of ACL (Corones, Christensen & Howell, 2016).
In brief it can be said that Optus had made representation which was regarding future
matter and for making such representation of matter Optus had no valid or reasonable grounds to
support its representation. As a result as per section 4 of ACL by making such type of
representation Optus allegedly contravened sections 18, 29(1)(l) and 34 of ACL (Bedi, 2017).
Analysis of Applicable Law:
Section 4 of the ACL discusses provisions related to the representations considered to be
misleading in relation to matters of future. A perusal of Section 4 provides that when any person
has made any representation regarding any future matter and when such person does not possess
any reasonable ground for doing it, such representation for the purpose of this schedule can be
considered to be misleading. Further for applying the provisions stated above regarding any
proceeding about up representation made in relation with the future matter by any party to the
preceding or by any third person such party or 3rd person is not required to have suitable
grounds for making such representation until and unless any evidence in contradiction is being

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produced to contradict it. However it does not mean that just because no evidence in
contradiction to the allegation, made by such party to the proceeding or any third person is
produced, the person who actually made the representation in relation to the future matter will be
considered to have sufficient and reasonable grounds of making such representation. Further
such allegation made by the party to the proceeding or any third party will not have the impact of
placing the burden of proof to prove that the person making such representation had sufficient
grounds for making it.
In this regard Section 18 of the ACL is required to be discussed. This section is related to
any conduct which is misleading or deceptive towards the consumers. Section 18 states that no
person shall involve in any conduct which can be deceptive or misleading or has a potential to
mislead or deceive any other party e in relation to any commerce or trade (Corones, Christensen
& Howell, 2016).
Further section 29 of the ACL also needs to be discussed in relation to the allegation
made against Optus. Section 29 provides representations either misleading or false in relation to
goods or services. Under section 29 it is said that any person in trade or in commerce, in relation
with supplying of services or goods or in connection with promotional activities for supplying or
using services or goods, shall not make any representation which can be considered to be
misleading or false regarding the need of such services or goods. As per section 29 of ACL, a
pecuniary penalty can be imposed on any person involved in violation of this section 29(1).
Application of the law in the present case:
From the facts of the case, it is seen that Optus was carrying on a business in relation to
commerce or trade, of promoting as well as supplying Internet and telephone services to