By Patrick Avenell

Tech giants Apple, Microsoft and Adobe have been summoned to Canberra to appear before parliamentary inquiry investigating price differences between technology products sold in Australia and overseas. Representatives of these three American companies are excepted to appear before the House Committee on Infrastructure and Communications on 22 March 2012.

This inquiry has been driven by Federal MP Ed Husic (ALP-Chifley). He issued a statement this morning expressing happiness at this summons.

“This is an important move – but one we shouldn’t have to take,” Husic said.
“These firms should have cooperated and been prepared to be more open and transparent about their pricing approaches.
“In what’s probably the first time anywhere in the world, these IT firms are now being summonsed by the Australian Parliament to explain why they price their products so much higher in Australia compared to the US.
“Adobe, Apple and Microsoft are just a few firms that have continually defied the public’s call for answers and refused to appear before the IT Pricing Inquiry.
“While television and computer prices fell 14 per cent according the to the latest Consumer Price Index Figures, there’s still a long way to go – with some estimates suggesting that Australian prices are up to 60 per cent higher than the US."

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Although Husic is happy that technology prices are falling, senior management inside Australian technology subsidiaries have told that price eroision has been a disaster for the industry. Gary Lamb, managing director of GfK Retail & Technology, described the current retail economy as the most challenging he's witnessed in one-quarter of a century.

"In 25 years of analysing GfK market data in many corners of the world, the current retail environment in Australia could be the toughest I’ve seen," Lamb said. "Ironically, it’s not because consumers have stopped buying — volumes are quite buoyant in many categories — it’s the unprecedented levels of price erosion, stripping hundreds of millions of dollars from the value of some of the major categories, that’s at the root of the problem."

Not everyone in the industry is as opposed to price parity as Lamb. Peter Michael, managing director of the iconic Michaels camera store in Melbourne, said that if suppliers didn't correct their prices to match overseas markets, local retailers would continue to lose business to the grey market.

"Price parity is a critical factor," he said. "It’s a critical factor in our future and also for the future of consumers. If we don’t have similar pricing, consumers will vote with their feet. If you can buy an expensive product for half the price and have it delivered in two days from the United States, you’d be a nut not to. But if it were only 10 per cent cheaper, it would be a no-brainer, people wouldn’t take the risk."

A large proportion of Husic's focus in this price inquiry is on products for business use. He argues that for Australian business, especially the small business typical of his western Sydney electorate, to be competitive in a global marketplace, they shouldn't have to pay more that similar businesses in other countries.
“Given the widespread use of IT across businesses and the community, the prices paid for hardware and software can have a major commercial and economic impact," Husic said.
“Getting downward movement on IT prices and easing the bite of price discrimination should be an important micro-economic priority, so I’m looking forward to hearing from these firms about their pricing approaches.”

Read's editorial: In defence of 'price gouging'