Don't ban Australian pricing discrimination: AIIA

Don't ban Australian pricing discrimination: AIIA

Summary: The industry group representing Apple, Microsoft, HP and IBM has argued that if Australian competition law is changed to ban the so-called Australia tax on technology, it might drive companies out of the country.

SHARE:

Companies should be allowed to charge more for tech products sold in Australia than they do overseas, according to the Australian Information Industry Association (AIIA).

Paying more for software, or the latest smartphone or computer in Australia compared to the cost for buying it elsewhere in the world has been a sore spot for many over the last few years, particularly as the Australia dollar reached parity with the US dollar, with some reporting a price difference of up to 50 or 100 percent more in Australia.

The parliament in 2013 conducted a review into the so-called Australia Tax for IT products, and in July 2013 the House of Representatives Standing Committee reported that ACCC powers should be extended to force global companies to offer Australians access to prices they would receive in other territories.

The election of a new government in September last year has meant that the government has yet to respond to the report, but the Competition Policy Review commenced in March this year specifically highlighted IT pricing discrimination referenced in the report as one issue worth assessing, and asked whether there was a case to regulate international pricing discrimination.

While consumer organisations such as Choice and the Australian Communications Consumer Action Network have backed regulation, the AIIA and the Australian Recording Industry Association have argued strongly against any changes to regulation.

In its submission (PDF) to the review, the AIIA — which represents companies such as Apple, Microsoft, HP, IBM, Oracle, Telstra, and Intel — said that the price differences faced by Australians are reflective of "different market and competitive conditions".

"Each market 'bears' a price that reflects relative levels of demand and supply, as influenced by consumers' willingness to pay and levels of demand/supply side substitution," the AIIA said.

"Different geographic markets have different supply and demand characteristics, different customer and consumer demographics, and different competitive conditions, independent of costs, which affect price."

In addition to the cost of labour, rent, marketing and other expenses differing in each market, the AIIA said that companies market their products differently in different countries. So in one place, a product might be considered the "premium" service, but might be the "budget-friendly" option in another country.

The AIIA said that any moves to ban price discrimination might lead to international companies abandoning the Australian market.

"In short there are efficient reasons that firms charge different prices in different geographies. To prohibit this practice risks banning legitimate price differences and forcing multinational firms towards uniform global pricing, thereby denying the very conduct that previous reviews of Australian competition policy deemed beneficial," the AIIA said.

"Reversing those earlier policy decisions via new legislation that limits firms' ability to control prices could also cause foreign suppliers to abandon or decide not to enter the Australian market, resulting in less competition and less choice for consumers in Australia.

"Likewise, Australian suppliers could also be discouraged from entering overseas markets, or be constrained from pricing competitively in an overseas market — putting them at a disadvantage vis-à-vis their overseas competitors."

ARIA and the AIIA agreed that changing the Competition and Consumer Act to ban geo-blocking services online would put Australia in breach of international trade agreements such as the Australia-United States Free Trade Agreement.

The Shopping, Distributive, and Allied Employees' Association (SDA) argued that retailers in Australia faced an unfair advantage to online retailers, with the Goods and Services Tax (GST) not being applied to goods worth less than AU$1,000 purchased online from overseas outlets.

The government is currently considering lowering the threshold, and this move would be supported by the union.

"Many countries deliberately protect domestic companies from overseas competition. Here, we are doing the opposite. Government policy actually penalises Australian retailers against their overseas online competitors," the SDA said in its submission (PDF).

"Overseas online retailers should pay the same taxes and duties as their Australian-based competitors."

Topics: Government, Government AU, Australia

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

11 comments
Log in or register to join the discussion
  • Tee hee

    ""Each market 'bears' a price that reflects relative levels of demand and supply, as influenced by consumers' willingness to pay and levels of demand/supply side substitution," the AIIA said.

    "We should be able to charge what the market will bear", says the AIIA to a market that is supporting regulatory reform to force prices lower, clearly refusing to bear the charge.
    elomis@...
    • AIIA

      The AIIA's weasel words are just double-speak.

      Translation: "Screw you Aussies, we'll charge you whatever we bloody well like."
      ITenquirer
  • Free Trade doesn't mean 'Free trade'

    Remember - we're using doublespeak here, so artificial trade restrictions, like geo-blocking actually means 'free trade' if you have the right perspective.

    So, a sort of "It's all free trade, just some is free-er than others" approach ?
    (apologies to George Orwell).
    Dalbs
  • I lolled.

    "The AIIA said that any moves to ban price discrimination might lead to international companies abandoning the Australian market."

    They probably need to speak to the multimedia content providers to see how that's working out for them.
    colonel.mattyman
    • Good Riddance Then

      "companies such as Apple, Microsoft, HP, IBM, Telstra, might abandon the Australian Market"

      Quite happy using my alternatives rather than continue being ripped off by these vultures.
      grump-a1eeb
  • And I thought...

    ...the subject was discriminating between customers (the usual attempt to charge each individual the highest price he's willing to pay). Price discrimination between countries is actually justifiable to the extent that the cost of doing business varies from place to place. But in practice, the price of anything is proportional to the perceived buying power of the clientele (this is why auto travelers are well advised to stop for meals in college towns), and it is almost impossible to stop these sorts of regional price differences.

    But really and truly it's not the job of national governments to make the world safe for multinationals. Goods can still be freely traded even if foreign vendors don't set up shop locally (that's what importers are for).
    John L. Ries
  • What the market can bear..

    But what if they have incorrectly judged what the market can bear? Adobe, have obviously judged that the market can bear the insane markup, however it clearly cant and majority of people are just resorting to piracy.

    I guess at the end of the day its mainly hurting them, resulting in people not paying for their product at all.
    Frenz9
  • See u later alligators!

    Apple, Microsoft, HP, IBM, Oracle, Telstra, and Intel either comply or bye bye.
    It's about time these jerks were run out of town, Microsoft "office 365 $89 in Australia", $69 in the US $73.5 after conversion. The product is bought from the same webpage as in the US and distributed from the same server it's a straight $16 "Australia Tax".
    Norton's products haven't been mentioned but they are huge Australia Taxers.
    A crucial MX100 a few days ago was being sold by Crucial for $199 (it's gone up to $224 Today obviously overwhelmed by Australian buyers, they will at least sell to Australians unlike the other jerks) this product in Australia retail at $289.
    If the current government won't fix these vampires vote for another government.
    Kevin Cobley
  • About Vampires!

    It's about time "inkjet cartridges" were banned, ink's more expensive than silver, $20-30" for a few grams. The printer companies are real bloodsuckers.
    I went to a third party source and bought refillable tanks an a full set of 100m bottles of ink for the price of 3 of the 5 colours, will run my printer for years.
    I'm not going to lay down and feed these vampires!
    Kevin Cobley
  • load of crap

    total load of crap the $1000 gst threshold was put in place because it costed too much to enforce anything less
    sparky525
  • Still doesn't explain

    the disparity between US and AU prices when it comes to digital downloads.

    As mentioned above, we pay more from these companies "because Australia".
    dmh_paul