International Companies Ripping Off Australian Consumers

According to CFA members ACCAN and CHOICE Australian consumers are paying higher prices than consumers in other countries for identical IT goods.

In a submission to the House Standing Committee on Infrastructure and Communications inquiry into IT pricing the Australian Communications Consumer Action Network (ACCAN) claimed that Australian consumers are being ripped off by international companies.

Of particular concern to ACCAN are disabled and disadvantaged consumers who have significantly more choice in IT products.

Whilst ACCAN recognised that there are factors which make the sale of goods in Australia more expensive (such as wages, rent and in some cases regulation) many companies are exploiting their market position and charging higher prices.

ACCAN identified international price discrimination in both hardware and software.  An iPhone 4S bought from the Apple store, for example, costs AUD$799 in Australia but only AUD$622.88 in Canada. The student version of Microsoft Office 2012 costs AUD$209 in Australia, but only USD$149.99 in the US. The product is the same in both countries and does not include any physical items in the purchase,.

ACCAN found that disadvantaged consumers including students and people with a disability are hardest hit. The submission notes that ‘higher prices for IT hardware and software are detrimental to all Australian consumers but particularly for those experiencing disadvantage’. ACCAN cited the Brailliant BI 32 which allows people with a vision impairment to have the information from a computer screen communicated to them in Braille or as a voice read out. In the US this item costs USD$6379, and in Canada CAD$6995, but in Australia AUD$8750. The Australian price is $2371 more than in the US.

The submission listed further examples and showed that international price discrimination is prevalent throughout the entire market for vision-impaired IT devices.

ACCAN’s submission accepts that due to the internationality of the companies involved it would be difficult to find a regulatory solution. ACCAN did, however, recommend two changes that would see Australian consumers better off than at present.

First, priority needs to be given to disadvantaged consumers’ IT needs; government should implement an accessible-IT procurement strategy which would assist those most at need to receive essential IT services.

Second, government should be more proactive in informing consumers of their warranty rights – often consumers can purchase goods from overseas suppliers but they may not be entitled to the warranty and other protections contained in Australian law.

ACCAN’s concerns were echoed by consumer watchdog CHOICE. Head of Campaigns, Matt Levey, said that they found that ‘in Australia you pay, on average, 52% more than an American consumer will for the same fifty top iTunes songs’ and that ‘a selection of 44 popular home and business software products were, on average, 34% more expensive in Australia than the US’.

Mr. Levey refuted claims that the differences were driven by significant costs associated with the Australian market.

‘These products are largely identical, regardless of where you buy them’ and that ‘in some cases, such as iTunes downloads, there are practically no overheads in delivering the product to Australian consumers’ he said.

In their submission to the Parliamentary inquiry CHOICE made three recommendations to minimise the cost impact on the consumer:

  • the Federal Government should be more proactive in informing consumers of their rights when shopping online;
  • the government should investigate whether technological measures that allow suppliers to discriminate against Australian consumers (such as region coding) should be allowed to continue; and
  • the Low Value Threshold exemption for GST and duty on imported goods should remain at $1000.

Ultimately CHOICE said that they believed that increasing competition between large international suppliers and parallel importers who charge cheaper prices would see Australian consumers paying a fairer price.

ACCAN summed up international price discrimination when they said that ‘while it isn’t illegal, it is unfair and doesn’t serve the interests of Australian consumers’.