Conroy outlines guidelines for inquiry into price gouging

By Claire Reilly

The Minister responsible for communications and the digital economy in Australia has outlined his desired terms of reference for an inquiry into pricing differentials between Australian and international markets.

According to Senator Stephen Conroy, “Over the course of the last year, there has been growing interest in the differentials that exist in prices for IT hardware and software sold in Australia, compared to others [sic] markets such as the US or the UK.

“This differential has become more noticeable with the appreciation of the Australian dollar relative to the US currency and may lead to consumers purchasing hardware or software from overseas suppliers,” he said.

While the inquiry encompasses a range of issues in its scope, its focus on the prices that individual retailers and suppliers charge for their products does have direct implications for the Australian retail industry as a whole.

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The House Standing Committee on Infrastructure and Communications’ Inquiry into IT Pricing was established following a investigation into the issue by the Productivity Commission.

Conroy said that, according to the Commission, the “longstanding practice by which some international suppliers set different regional prices…effectively treats consumers in one region as willing, or able, to tolerate significantly higher prices than those in other regions.

"A concern exists that small businesses and private consumers are facing price disparities that affect their international competitiveness due to IT price differentials that see some products cost up to 80 per cent more in Australia than compared to similar products being sod in the US," he said.

In addition, Conroy commented on the process of Government IT product procurement, noting that this represented a cost to taxpayers of approximately $2 billion, and that any reductions that could be made in this department would be positive for taxpayers.

Conroy requested that the House of Representatives Committee inquire into the following:

– Whether a difference in prices exist between IT hardware and software products, including computer games and consoles, e-books and music and videos sold in Australia over the internet or in retail outlets compared to markets in the US, UK and economies in the Asia-Pacific;
– Establish what these differences are;
– Determine why these differences exist;
– Establish what the impacts of these differences might be on Australian businesses, governments and households; and
– Determine what actions might be taken to help address any differences that operate to the disadvantage of Australian consumers.

In a statement released today, the Committee chair Nick Champion said, "The Committee is looking forward to hearing from the companies who set these prices and the consumers and businesses that purchase their products".

The deadline for submissions related to the inquiry has been set at 6 July 2012.

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