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IT pricing inquiry verdict: Australia is consistently ripped off

The IT pricing inquiry has found that "the price differences for IT products cannot be explained by the cost of doing business in Australia" and recommends the removal of geo-blocking restrictions.

The IT pricing inquiry has found that "the price differences for IT products cannot be explained by the cost of doing business in Australia" and recommends the removal of geo-blocking restrictions.

(2010_1310 - Coins_3 image by Ben Hosking, CC BY 2.0)

After a 12-month investigation into the pricing of IT products in Australia, the House of Representatives Standing Committee on Infrastructure and Communications has delivered its findings. It has recommended that the federal government lift the current restrictions on parallel importing and place a ban on geo-blocking.

In a report titled "At What Cost?", committee chairman Nick Champion wrote, "The committee has concluded that in many cases, the price differences for IT products cannot be explained by the cost of doing business in Australia. 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."

On average, Australians pay:

  • 50 per cent more for professional software

  • 46 per cent more for hardware

  • 52 per cent more for music

  • 84 per cent more for games

  • 16 per cent more for ebooks.

In March, Microsoft, Apple and Adobe were summonsed to appear before the committee to explain their pricing practices. Microsoft argued that its higher Australian prices are not illegal. Apple argued that higher prices in the iTunes store were set by copyright holders and, where Apple itself sets pricing, it is equitable. Adobe danced around the questions, but announced a whole new pricing structure two months later.

The committee made a list of 10 recommendations to the federal government, including an ongoing Australian Bureau of Statistics (ABS) audit on spending on IT products.

In addition, it recommended that the government lift the restrictions on parallel importation — that is, imports that bypass the official local distribution channels — found in the Copyright Act 1968, allowing vendors to operate on the "grey" market.

It also recommended that consumers be granted the right to circumvent geo-blocking, and provided education on the most effective ways to do so to allow Australians access to more equitable prices. It added a proposal "that the Australian government consider enacting a ban on geo-blocking as an option of last resort, should persistent market failure exist in spite of the changes to the Competition and Consumer Act and the Copyright Act recommended in this report."

Champion said in a statement, "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."