A national inquiry is beginning this day into accusations that the international IT industry is ripping off Australian consumers.
The industry blames the cost of doing business in Australia, but consumer advocates reject that.
A House of Representatives inquiry is holding its first public hearing into the issue in Sydney today.
There are countless examples of electronic goods, software and entertainment products that cost more in Australia than overseas.
For example, an Arctic Monkeys album costs $17.99 on iTunes in Australia, but according to the Federal Department of Communications, it costs the equivalent of about $13 overseas.
The motion picture Toy Story costs $24.99 on iTunes in Australia, but buyers overseas pay only $10.
“In Australia you pay on average 52 per cent more than an American consumer for the same top 50 iTunes songs,” stated Choice’s head of campaigns, Matt Levy.
He states Australian consumers should not have to pay so much more.
“We’re speaking about a product here which doesn’t have the same sorts of overheads that industry often speak about in terms of rent, in terms of logistics and distribution,” he added.
“It’s the same file being downloaded more or less from the same server, but a 52 per cent price difference if you happen to be Australian.”
A spokeswoman for Apple declined to comment on why movies and music are more costly on iTunes in Australia.
The company’s Australian lobby group, the Australian Information Industry Association, states while downloadable software may have reduced transportation and manufacturing costs, other costs such as marketing, administration and advertising still remain.
The association’s submission to the House of Representatives inquiry looking into the pricing of software, hardware and downloads blames the cost of doing business in Australia for the higher prices.
“Costs associated with product and service sales in Australia include GST, customs duty and regulatory requirements such as consumer guarantees which impose strict warranty requirements on suppliers and which add to business costs,” stated the association’s chief executive Suzanne Campbell in a statement.
“Buyers in Australia have a much higher level of protection than consumers in many other markets and this protection has associated costs.”
The Australian Retail Association’s executive director Russell Zimmerman tells a similar story.
“We’ve probably seen some fairly strong price deflation in the hardware side of things but, still, we tend to think that our prices for even hardware are still high here in Australia and overseas,” he said.
“I think there is a number of reasons. I think you have got to look through the supply chain, the supply chain costs are much greater here in Australia, and whether that starts from the warehousing costs through to delivery, through to retail rents or through a lot of other areas that are picking up pricing structures on the way through, those costs are much greater here in Australia than they are overseas.”
However, Choice rejects the assertion that there are higher costs unique to Australia that account for all the price difference.
“We think the most obvious reason and likely reason in fact for these price differences is international price discrimination, so that is actually the practice of the international businesses who manufacture these products who own the copyright actually charging more in the Australian market,” Matt Levy argued.
“It certainly is their prerogative, but what we would state is that we have got an increasingly global market place and we have Australians who are able to access products on-line and actually see the sorts of price differences in a matter of seconds, whereas in the past there is been barriers if you like erected around our markets to actually, I guess, make this process less transparent.”
He states business practices which make it hard for consumers to purchase cheaper products from overseas should be stamped out.
“I think the practice we have seen for many years is that the international suppliers and manufacturers of these products have made it as hard as possible for Australian consumers to access them,” he observed.
“We see things like technological measures, whether it’s region coding or even IP address recognition, which often diverts Australians to the most costly place to purchase the exact same product.
“We do not think it’s justified, we think the more pressure we can put on these businesses to actually stop these anticompetitive practices the better.”
Apple and its rival Microsoft have refused to appear before the inquiry.
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Submited at Monday, July 30th, 2012 at 5:15 am on movie by robert
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