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Glass half full or empty for Corrs and Mallesons

Glass half full or empty for Corrs and Mallesons

The fine of just under $19 million handed to Telstra by the Federal Court yesterday was a victory of sorts for both law firms involved.Mallesons Stephen Jaques acted for Telstra and Corrs…

The fine of just under $19 million handed to Telstra by the Federal Court yesterday was a victory of sorts for both law firms involved.

Mallesons Stephen Jaques acted for Telstra and Corrs Chambers Westgarth acted for the Australian Competition and Consumer Commission (ACCC). Melbourne-based trade practices and insurance litigation partner Daniel Marquet and Brisbane-based commercial litigation special counsel Frances Williams led the Corrs team.

The ACCC sought a $34 million fine for the telco giant, which said it had not consciously engaged in anti-competitive practices after unwittingly denying broadband competitors access to its telephone exchanges.

Telstra admitted it had breached the Trade Practices Act (TPA) and Telecommunications Act on 49 occasions, however, as no one person is liable for more than one pecuniary penalty, Telstra was only liable to receive penalties with regard to 27 breaches of the TPA, with each separate contravention carrying a fine of up to $10 million.

The ACCC argued that a fine of $40 million was appropriate, with a 15 per cent reduction (bringing the fine sought to $34 million), on account of admissions of breaches by Telstra in the proceedings. This figure was less than 13 per cent of the total maximum penalty, with the ACCC giving regard to the duration of the conduct, whether multiple contraventions arose from the conduct, and mitigating or aggravating circumstances arising from the conduct.

Telstra argued that its total penalty should be a portion of the maximum penalty for a singe breach, namely $10 million, and that admissions of liability and its co-operation in proceedings should mean an appropriate total penalty of between $3-5 million.

Justice Middleton found a $26.5 million fine was appropriate, with a discount of 30 per cent for Telstra's co-operation during proceedings bringing the fine to $18,550,000.

Justice Middleton rejected Telstra's contention that it had only committed "one wrong" and commented that he was not satisfied that Telstra had demonstrated any remorse or appreciated the seriousness of its conduct. He criticised the telco for "failure to specifically express remorse through its counsel", and highlighted previous comments by a manager of Telstra that described the proceedings as focusing on "unimportant" issues.

However, Justice Middleton found Telstra's conduct was not characterised by a deliberately discriminatory approach to access seekers, and that responsibility for decisions in regard to Telstra's exchange access obligations were not well understood within the company. He rejected any suggestion that the contraventions occurred as a result of any implicit or express direction from the then chief executive, and that Telstra's conduct was not deliberately anti-competitive.

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