Updated: Parliamentary Committee urges sweeping changes to address IT pricing disparity

Updated: Parliamentary Committee urges sweeping changes to address IT pricing disparity

Finds Australians on average pay more than 50 per cent for hardware, software, music, and games

The Parliamentary committee investigating claims on IT prices disparity, has called for sweeping regulatory changes that govern some of the price differences related to the import of IT products into Australia.

Among other recommendations, the committee has called for the lifting of the parallel importation restrictions related to the Copyright Act, a review of certain provisions of the Trade Marks Act, as well as government action to educate Australian consumers and business to the extent to which they may circumvent geoblocking mechanisms in order to access cheaper goods, the tools they can use, as well as their related consumer rights.

It made the recommendations after it found that Australian consumers experience an average price difference of more than 50 per cent compared to US customers when purchasing IT hardware, software, music, and games.

The committee was set up in May last year to investigate claims that Australians were paying more for IT products than consumers overseas.

“Consumers are clearly perplexed, frustrated and angered by the experience of paying higher prices for IT products than consumers in comparable countries,” the report said. “High IT prices make it harder for Australian businesses to compete internationally and can be a significant barrier to access and participation for disadvantaged Australians.”

Its other recommendations include:

- Australian Bureau of Statistics develop a comprehensive program to monitor and report expenditure on IT products, hardware and software, both domestically and overseas, as well as the size and volume of the online retail market.

- The Australian government, in consultation with Universities Australia and Council of Australian University Directors of Information Technology (CAUDIT), conduct a comprehensive study of the future IT needs of and costs faced by Australian Universities, in order to provide clearer financial parameters for negotiations.

- The Australian government consider a whole-of-government accessible IT procurement policy, to be developed by relevant agencies including AGIMO, and in consultation with relevant stakeholder groups including the Australian Communications Consumer Action Network (ACCAN).

- The Australian government consider enacting a ban on geoblocking 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 that it has recommended.

Pricing differences

Its review of professional software compared more than 150 products, and found an average price difference of 50 per cent. In particular, products by Adobe showed an average difference of 42 per cent, Microsoft products were on average 66 per cent more expensive, and Autodesk products were on average 51 per cent more expensive, it claimed.

On hardware products, it found Australian prices were 46 per cent more expensive.

When it came to music and games, Australian prices on music products, on average, were 52 per cent more expensive, and average price difference on games was 84 per cent.

E-books showed the least price difference at 16 per cent.

Earlier this year, the committee summoned tech giants, Apple, Microsoft and Adobe to appear before the committee as part of its inquiry.

Several IT companies have already begun complying with allegations of wide price discrepancy.

In March, data backup software and disaster recovery vendor, Acronis, said will cut its product pricing across its entire product range by up to 12 per cent, ARN previously reported. Adobe also slashed its Australian prices following the launch of the inquiry.

The committee report also stated that differences for IT products cannot be explained by the cost of doing business in Australia, particularly when it comes to digitally delivered content.

"Many IT products are more expensive in Australia because of regional pricing strategies implemented by major vendors and copyright holders. Consumers often refer to these pricing strategies as the ‘Australia tax’," it noted.

The committee began looking into these pricing differences after consumers expressed grievances relating to the differences in pricing. Internet-savvy consumers, the increasing popularity of the Internet, and increased consumer awareness, have all contributed to these disparities coming to the fore, it noted.

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