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Industry body defends 'Australia Tax', labels regulation anti-competitive

​The local industry body that represents Apple and Microsoft has defended the right of companies to set their own prices in Australia, warning that brands may "abandon" the Australian market if they can't charge what they wish.

Image by Claire L. Evans, CC BY-ND 2.0

Forcing companies to bring Australian IT pricing in line with foreign prices would "deter" competition and could force foreign suppliers to "abandon" the Australian market.

That's according to the Australian Information Industry Association, the industry body that represents global brands such as Apple, Microsoft, Google and Intel in the local market.

In a submission to the Federal Government's Competition Policy Review, the AIIA outlined its opposition to the regulation of international pricing differences. Known colloquially as the "Australia Tax", these price differences can see Australians paying significantly more than their American counterparts for the same product.

The AIIA defended the practice of varying pricing in "distinct geographic markets" listing a raft of factors that could result in discrepancies. These included different "supply and demand characteristics", demographics, competitive conditions and supply costs such as labour, raw materials and supply chain.

"The way that firms compete and position products and services in different markets can vary," the submission added. "The strategy is likely to be different in different countries, particularly if the competitive landscape is different.

"Regulation and risk may be greater in some jurisdictions than other markets...Taxes and tariffs often vary by country.

"Perceived price differences may be based on exchange rate fluctuations. At the same time, in the interest of certainty and stability, firms typically do not change prices daily to reflect fluctuations, so such price differences may not be reflective of actual exchange rates.

"It is typical and justifiable that there may be different pricing in distinct geographic markets."

As well as justifying the right for Australian companies to set their own local pricing, the AIIA warned of the consequences of legislating against the practice.

"To prohibit this practice risks banning legitimate price differences and forcing multinational firms towards uniform global pricing," the submission read. "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. Even legislation targeted at 'unjustified' international price discrimination would likely deter legitimate and pro-competitive conduct."

The comments come more than a year after both Apple and Microsoft fronted the House of Representatives Standing Committee on Infrastructure and Communications inquiry into IT pricing, during which both companies were grilled on product pricing differences between Australia and the US.