Optus wins $1.6m reprieve in Think Bigger appeal

Court reduces fine for misleading advertisements.

Optus has won partial reprieve from a $5.26 million fine handed down by the Federal Court last year, and will instead be penalised $3.61 million for running misleading ads about its cable and ADSL broadband plans in 2010.

A full bench of judges this week found Optus was still liable for the advertisements, which did not clearly indicate key aspects of the broadband plans.

But the presiding judges - Justices Patrick Keane, Paul Finn and John Gilmour - did not “take quite as severe a view of Optus’ on-line contraventions” in handing down revised penalties.

The new fines saw reductions of between $150,000 and $300,000 for each of the 11 instances in which Optus contravened the Trade Practices Act, amounting to a $1.6 million discount on the fine initially handed down by Justice Nye Perram in July last year.

Though Optus was liable for fines of up to $12.1 million under existing legislation, the initial fine was proclaimed by the competition watchdog at the time to be the largest consumer protection penalty handed down to date.

Optus was found in both the initial and appeal cases to have misled customers with its 2010 'Think Bigger' and ‘Supersonic’ broadband advertisements, which did not adequately notify customers that their broadband service would be throttled during both on-peak and off-peak times if they exceeded the quota of one of the two periods.

The judgment sparked an apology from Optus chief executive Paul O’Sullivan, corrective advertisements and a scheme allowing affected customers to cancel their service free of charge.

The telco had appealed the penalties, however, on claims Justice Perram had erred in his judgment on key facts.

The appeal judges found some factual error in the initial judgment but maintained a substantial penalty was still required to make clear to Optus and other providers that contraventions of the Act were not an “acceptable cost of doing business”.

Their revised penalties were based on the notion that “a consumer minded to enter into a plan on line would soon appreciate the qualification of Optus’ headline promise in relation to broadband speed”.

“There is simply no satisfactory explanation for these contraventions,” the judgment reads.

“The sheer magnitude of the advertising campaign, and its likely effect in the market, mean a penalty which did not substantially affect the profitability of Optus’ campaign could not reasonably be countenanced.”

An Optus spokeswoman said the company was "satisfied by yesterday’s court decision reducing the penalty".

"We are pleased the court recognised that some of the court's original conclusions were not appropriate," she told iTnews.