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Aussies are still paying over the odds and it’s time for ACCC action

Yet another survey has found Australians are paying more than their American and British counterparts for the same entertainment goods and services. In its submission to the government’s Competition Policy…

Tired of paying more for movie downloads? Shutterstock

Yet another survey has found Australians are paying more than their American and British counterparts for the same entertainment goods and services.

In its submission to the government’s Competition Policy Review, consumer advocacy group Choice compared the prices of popular entertainment content. They looked at the Game of Thrones series, films in Apple’s iTunes store and Playstation 4 video games. Choice found that for all of these products, Australians were paying substantially more than people in the UK or US.

This tallies with the findings of the Parliamentary IT Pricing Review from last year. This report found that for the same content and software goods, Australians were sometimes paying a huge amount - 50% - more than their counterparts in the US and the UK. This premium, known as the “Australia tax”, was not justified by higher costs of doing business here.

I have argued elsewhere that these higher prices for Australian consumers should be a priority for government action. Lowering prices to be more in line with what consumers are paying in similar countries could address the alleged “problem” that Australia has with pirating content, as well as ensuring films and TV series have similar release dates here to other parts of the world.

Ensuring Australians can enjoy legal and cheap imports of these products from other countries would also help the situation, as Choice suggests. The IT Pricing Review also recommended restrictions on this practice, known as parallel importation, should be lifted. However, the Trans Pacific Partnership agreement (if it is ever finalised) may stymie this as the US has been supporting a provision that would allow big entertainment companies to prevent copies of their content made legally in another country from being imported into Australia without their permission.

These high prices and other restrictive conduct by the entertainment industry may also suggest a lack of competition in markets for digital content and software. If these companies are in some way coordinating with each other to ensure their prices are high, then this may constitute anti-competitive agreements between competitors, which is illegal. Alternatively, a company which has a monopoly or market power may be acting illegally if it misuses that power with anti-competitive effects.

There is also a prohibition on exclusive dealing in Australian competition law. Arguably, the Game of Thrones exclusive deal with Foxtel might fall within this illegal behaviour.

Firms are prohibited from engaging in exclusive agreements if these have the purpose or effect of “substantially lessening competition” in the market at issue. There have been concerns about Foxtel’s market power over pay TV in the recent past, and this exclusive deal may be another area the ACCC should investigate. However, similar competition investigations into UK pay TV provider Sky and its control over “premium movie content” came to nothing in the end, and resulted in no regulatory remedies.

Yet, there have been some inroads made into anti-competitive prices for digital content in other countries. In the last couple of years Apple and the big book publishers were considered by competition authorities in the US and EU to have fixed the prices of e-books being sold to Apple device holders. Earlier this year, a similar investigation into the major publishers was closed in Canada, with them making a deal with the Competition Bureau “that is expected to lower prices for consumers by 20% or more”. Australian consumers and their wallets could benefit from more proactive competition investigation and enforcement from the ACCC in this area, similar to what has been happening elsewhere.

The ACCC responds to complaints it receives from consumers and businesses about alleged anti-competitive practices, but it does not have the resources to pursue them all, and so must prioritise those which “harm the competitive process or result in widespread consumer detriment”. One of the ACCC’s current enforcement priorities is “emerging consumer issues in the online marketplace” and given the mounting evidence that Australians are paying over the odds for digital content and software, the ACCC may turn its attention to this issue.

If the ACCC finds illegal conduct via an investigation, it has a number of options for action. The companies involved can be persuaded to remedy their behaviour in the form of enforceable undertakings. If they are not cooperative, the ACCC can take them to court, which may result in large fines for companies or even prison sentences for particular individuals.

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12 Comments sorted by

  1. Jeremy Culberg

    Electrical Asset Manager at Power Generation

    Australian retailers should not complain that consumers are deserting them for either pirated copies, or material purchased from the US or UK. When the identical product can be sourced from either the UK or US at prices that are up to 66% better than any achievable in Australia (which is my experience on books, CDs, DVDs, video games and BluRay discs), and typically many weeks if not months ahead of the local release date, I am surprised that anyone is buying locally at all.
    In products in other…

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    1. Suzy Gneist
      Suzy Gneist is a Friend of The Conversation.

      Multi-tasker at Graphic Design & Montville Coffee

      In reply to Jeremy Culberg

      Particularly when it comes to movies and TV serials, I find no disadvantage buying from UK sellers - their postage costs are often lower than Australia Post costs, quality/region is the same and release dates are mostly earlier than here and still, the price is lower.

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  2. George Michaelson

    Person

    If Brandis wants to succeed in a "dont steal" campaign, then he will have to come up with a cogent reason why we are forced to accept IPR regional pricing monopolies.

    He cannot argue this is in our interests easily. I am very interested what he will claim is the justifier. I doubt he can really believe it enhances Australian content sales, I haven't noticed 'Game of Thrones, Downunder' a big seller..

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  3. Steve Hindle

    logged in via email @bigpond.com

    It seems as if piracy is occurring at both ends of the spectrum. The complaints against Australians engaging in online piracy are weakened when they come from large corporations who themselves are profiteering using methods that are legally questionable.
    I have heard scary rumours about the TPP agreement and the extra powers it gives to foreign corperate organisations. Eg, forcing ISPs to cut people's internet connection for copyright violations. I hope the government does not sell out the public to lobbyists and corporations when if they sign this document.

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    1. Trevor S

      Jack of all Trades

      In reply to Steve Hindle

      "I hope the government does not sell out the public to lobbyists and corporations when if they sign this document."

      It doesn't really seem to matter what they do, people keep voting for them. So they'll do whatever is in their interest and people will still vote for them...

      I mean really, Shorten and Abbott .. one of those will be the next PM.

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  4. grant moule

    Consultant

    Yes I agree. I often find kindle ebooks that I want to read over double the price of the same ebook on the US site. This seems nothing more than publishes trying to protect their very large profit margins in Australia.

    So many other non-electronic products are often double the price in Australia versus the US, even items that are manufactured in Japan. There is no justification for this geographic discrimination.

    It seems that many producers are utilising globalisation to find the lowest costs for manufacture, but still wish to protect high profit margins based on country of sale.

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  5. Henry Verberne

    Once in the fossil fuel industry but now free to speak up

    Copyright Infringement (CI) of digital media( I do not think that the pejorative term "piracy" is justified) is facilitated by the ease of distribution via peer to peer file sharing compared to the old analogue media. It is also facilitated, encouraged even, by high prices of digital media here, lack of or lack of perceived timely availability of media here compared to the US.

    The old media model also supplies media on their screening schedules rather than an "on demand" model whereby consumers…

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  6. John Kelmar

    Small Business Consultant

    It is not only games but all products are far more expensive in Australia than in many other countries. It's generally the wholesalers and retailers who are profiteering. Some items have a mark-up of 1,000%, just because the wholesaler/retailer needs to buy a new Mercedes, or move into a new two story house in a flash suburb.

    Some retailers claim that they "Will Not Be Beaten On Price", but fail to realise that a large number of their competitors are doing just that without telling them.

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    1. Zeo maz

      Untrained Monkey.

      In reply to John Kelmar

      Also a lot of the products arent even sold in Australia. You would be surprised at the range of products, that are better than the ones you can get here, that you dont see here!

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  7. John Saint-Smith

    Concerned Citizen

    It has not escaped my notice that at least some of the US companies mentioned in this article are also under a cloud of controversy over their 'tax avoidance' behaviour. They rip us off coming and going.
    They must laugh themselves silly all the way to the bank.
    "There's fools, damned fools and then there's Aussies!"

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    1. Brian Westlake

      Common Sage

      In reply to John Saint-Smith

      Even funnier is how the system is gamed through advertising revenues to add a "content" tax on all your consumables. Even though the "content providers" claim they are being ripped off via piracy we all get ripped off for "content" most of us will never consume.

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