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Monday, 29 July 2013 20:52

The 'Australia Tax' - how vendors are ripping us off Featured

By
Committee chair Nick Champion Committee chair Nick Champion

A parliamentary report into the 'price gouging' of Australian technology consumers has confirmed we've been the victims of an 'Australia tax,' making 10 recommendations to fix the long-standing problem.

The committee, made up of eight MPs from across the political spectrum, wants restrictions on parallel imports lifted, formal monitoring of IT prices, and is urging Australians to bypass online geo-blocks to avoid price gouging.

In the report, released today, committee chair and Labor MP for Wakefield Nick Champion placed the price gouging blame squarely at companies like Adobe, Apple and Microsoft, who were all called before the committee earlier this year for questioning.

"Particularly when it comes to digitally delivered content, the committee concluded that many IT products are more expensive in Australia because of regional pricing strategies implemented by major vendors and copyright holders," Champion said.

The report, dubbed the 'Inquiry into IT Pricing', also took aim at geo-blocking, a practice used by some companies to restrict goods available in certain countries and control pricing.

"While the committee acknowledges that in some cases, geo-blocking is a necessary business practice, it also notes that many IT vendors appear to use geo-blocking as a means to raise prices by restricting consumers' ability to access the global marketplace," the report said.

"The committee considers this form of geo-blocking to be a significant constraint on consumer choice."

As part of its recommendations the committee also called on the Australian government to make amendments to Copyright Act's anti-circumvention provisions to "clarify and secure consumers' rights to circumvent technological protection measures that control geographic market segmentation".

Central to the report and the reason it was commenced in the first place was the price disparity between Australian prices and those of the US, and the committee found that Australians on average paid between 50 and 100% more than their US counterparts.

Adobe's Creative Master Suite for example is $1735 cheaper in the US than Australia, making it cheaper in some cases to buy a return ticket to the United States and purchase the software there.

The committee used evidence supplied to it during its hearings to determine that Adobe products are, on average, 42% more expensive in Australia, and Microsoft products are on average 66% dearer.

The committee also recommended a repeal of a section of the Competition and Consumer Act 2010, and the lifting of parallel importing restrictions under copyright law if necessary.

It noted that digital goods being sold online had no reason to be prohibitively expensive for Australian customers, and that the companies questioned hadn't given satisfactory reasons for the price disparity.

"The committee is of the view that in many instances, these higher costs cannot, even cumulatively, explain the price differences consumers experience in relation to many IT products, and especially those delivered via the internet," the report reads.

The MPs also investigated the effect higher IT prices locally had on Australian business, finding that they were hurting productivity and efficiency.

“High IT prices can have significant impacts given the critical role IT plays in many areas of Australian life,” Champion said.

“While companies should remain free to set their own prices, the committee took the view that there are a number of ways in which Australia can act to increase competition in IT markets, which should reduce prices over time,” he said.

The inquiry, which began in May 2012, received 133 submissions and 15 supplementary submissions, while details surrounding if/when the government will set about implementing any of the recommendations from the inquiry is unknown at this stage.

The report is available in full here.

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