‘Australia Tax’ inquiry says Yes to grey market, No to geoblocking

A relaxation of the laws discouraging parallel importing (also known as the ‘grey market’) and the end of ‘geoblocking’ are the only material recommendations to emerge from the Australian Parliament’s inquiry into price differences between technology products in Australia and overseas countries; an issue known derisively as the ‘Australia Tax’.

Apart from these two findings, the industry will essentially maintain a status quo in pricing, with no changes to current system of free price-setting in a market economy.

In its findings handed down today, the Standing Committee on Infrastructure and Communications recommended the Copyright Act 1968 and the Trade Mark Act 1995 be modified to allow the parallel importation and marketing of “genuine goods”.

This would allow for greater competition between a subsidiary and a grey importer, potentially leading to the former adjusting its prices. These conflicts are often seen in the photography industry, where major price differences exist between retailers and importers of name-brand DSLRs.

The Committee further recommends that laws preventing the circumvention of geoblocking facilities, already something of a grey-area among Australians, be lifted, so that a user can access identical products that have artificial limitations in order to have different prices in different markets.

A prime example of this is the region coding on DVD players, which prevents users from sourcing cheaper content from overseas markets to playback on locally purchased hardware.

Although the Committee begins by recommending consumer and business education surrounding this issue, which includes vagaries such as whether someone can employ a Virtual Private Network (VPN) to access websites like Netflix and Hulu, the final recommendation says that, as a last resort, the Government should enact a law banning geoblocking.

To find out more about the impact of price discrimination, the Committee calls for greater research into the size of the technology hardware and software markets in Australia and the creation of a government-wide sourcing program to negotiate the best possible prices for all public sectors.

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