When the price is not right:
Technology price gouging in Australia


This article is by Matthew Rimmer, ARC Future Fellow and Associate Professor in Intellectual Property at Australian National University. It first appeared on The Conversation and is replicated here with permission.

analysis Apple Inc. has often portrayed itself as the champion of consumers, with its advertising campaigns on “1984”, “Think Different”, and “Rip, Mix, Burn”. However, this reputation has been called into question after Apple refused to appear before the Parliament’s inquiry into IT Pricing in Australia and explain its pricing policies in Australia.

Apple is not alone. Adobe, Amazon.com, Nintendo, Lenovo, and others have come under criticism for price discrimination in Australia. Furthermore, there has been a concern that information technology companies have engaged in a deliberate strategy of stonewalling the Australian Parliament.

CHOICE Australia has provided compelling evidence to the inquiry that Australian consumers suffer from significant and unjustified price discrimination – particularly in respect of music downloads from iTunes, PC games, console games and computer software. For instance, Apple has been selling AC/DC’s complete collection on iTunes for $229.99 in Australia – but only $149 in the United States.

Given the evidence presented to the inquiry, there is a need for a range of legislative and regulatory changes to help stop unjustified price discrimination against Australian consumers of digital products. In particular, there is a need for reforms to copyright law and disability law, as well as action under Australian consumer law and competition law.

Copyright law and consumer rights
Since Federation, Australian consumers have suffered the indignity and the tragedy of price discrimination. From the time of imperial publishing networks, Australia has been suffered from cultural colonialism. John Keating complained in the Australian Parliament that import monopolies resulted in “blackmail”.

In respect of pricing of copyright works, Australian consumers have been gouged, ripped-off, and exploited. In the Cook Books case, Justice Lionel Murphy lamented that parallel importation restrictions were being used to raise the prices of copyright works: “Copyright is being used to manipulate the Australian market.”

Digital technologies have not necessarily brought an end to such price discrimination. Australian consumers have been locked out by technological protection measures; subject to surveillance, privacy intrusions and security breaches; locked into walled gardens by digital rights management systems; and geo-blocked.

In the Sony Mod-Chip case, Justice Michael Kirby feared that digital rights management systems also had an anti-competitive effect: “In effect, and apparently intentionally, those [technological] restrictions reduce global market competition. They inhibit rights ordinarily acquired by Australian owners of chattels to use and adapt the same, once acquired, to their advantage and for their use as they see fit.”

The Australian Recording Industry Association appeared before the Committee, and made an emotional case about the threat posed to the music industry by copyright piracy. In response, Ed Husic MP observed: “If you are on the one hand trying to pitch at an emotional level to stop piracy, what do you reckon consumers think when you then use price discrimination to justify the way the costs are structured here in Australia?”

Amazon.com and access to knowledge
There has been much concern about the ownership of digital products bought from Amazon.com. Linda Morris captured this sentiment with her piece, “No such thing as ownership when it’s an e-book.”, in which the position of readers was compared to that of tenant farmers.

In a pithy submission, Andrew Leigh MP lamented the technological restrictions on the Amazon Kindle. He emphasised the need to take into account larger considerations about access to knowledge: “Access to the world’s knowledge is as important as access to the world’s music, and Australians have a right to be treated equitably by Amazon.com.”

The author Cory Doctorow commented upon the problem of digital rights management (DRM) in respect of Amazon: “The Kindle is a “roach motel” device: its license terms and DRM ensure that books can check in, but they can’t check out”. He laments: “Readers are contractually prohibited from moving their books to competing devices; DRM makes that technically challenging; and competitors are legally enjoined from offering tools that would allow readers to break Kindle’s DRM and move their books to other devices.”

The book famine and disability rights
Article 30 (3) of the United Nations Convention on the Rights of Persons with Disabilities (2006) provides that ‘States Parties shall take all appropriate steps, in accordance with international law, to ensure that laws protecting intellectual property rights do not constitute an unreasonable or discriminatory barrier to access by persons with disabilities to cultural materials’.

In June 2012, the disability commissioner Graeme Innes encouraged the Australian Government to address this issue. He observed that only 5% of all books produced in Australia are published in accessible formats such as large print, audio or braille, while in developing countries it is just 1%. He commented: “People with a print disability throughout the world are currently experiencing a “book famine”, yet the Australian government has failed to take action that could change the situation.“ He observed: “Australia could lead the change to international law in this area and, at little cost to us, provide the opportunity to read to millions more people with print disability throughout the world.”

Wayne Hawkins, the disability policy advisor for ACCAN, appeared before the committee. He commented that “there is a significantly higher impact on vulnerable consumers and particularly consumers with disability”. He observed that “the assistive technology that people like myself—people who are blind—use such as the braille readers, braille displays, are considerably more expensive in Australia”.

It is time the legislation was introduced to put an end to these discriminatory practices under copyright law, and related fields. There needs to be greater effort to pass a Copyright Treaty for the Blind at the World Intellectual Property Organization.

Consumer law and the digital economy
In 2012, the current chairman of the Australian Competition and Consumer Commission Rod Sims emphasised that one of his key priorities was addressing the challenges of the digital and online economy.

Sims observed: “The two main challenges – for the ACCC – are: 1. Ensuring consumers enjoy the same protections in the digital and online economy as they do elsewhere; and 2. And, crucially for competition, ensuring the digital and online economy produces the benefits of new and innovative competitors to challenge incumbents that it promises, and that this promise is not eroded by anti-competitive conduct.”

The ACCC have been involved in a number of high-profile consumer law disputes with Apple, Google, and Optus. The Commission also made some cautionary remarks about Facebook and advertising standards. The ACCC has also taken firm action against companies engaging in misleading and deceptive carbon price hikes. The ACCC should build upon its success investigating cases of misleading and deceptive advertising by IT companies by also considering issues of price, the terms of access to a particular product or a particular service and the need for international warranties.

Rod Sims has warned that the ACCC will take legal action if vendors lie about the reasons for price discrimination against Australian consumers.

Competition Law, Mergers, and Conspiracies
In light of alleged overseas conspiracies involving price fixing by Apple and large multinational publishers, there is clearly a need for the ACCC to investigate whether there have been any such restrictive trade practices in respect of information technology products in Australia.

On the 11th April 2012, the United States Department of Justice filed an antitrust lawsuit against Hachette, HarperCollins, Macmillan, Penguin and Apple Inc. over the pricing of e-Books. The Department alleged that the defendants had conspired to raise retail prices of E-Books in violation of Section 1 of the Sherman Act. United States Attorney-General Eric Holder noted: “As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles.”

There is also a need to consider the impact upon consumers and competition of mergers of large content providers – such as that between the record companies Universal and EMI; the publishers Penguin and Random House; and Disney and Lucasfilm.

The Trans-Pacific Partnership and Parallel Trade
Parliament should make reforms to copyright law, disability law, consumer law, and competition law in order to address the problem of discriminatory IT pricing in Australia. In addition, there is a need to ensure that trade agreements such as the proposed Trans-Pacific Partnership do not harm the interests of Australian consumers in obtaining a fair price for digital products.

Sean Flynn of Information Justice has warned that the United States Trade Representative has been pushing for parallel importation restrictions. He notes: “The issue of parallel trade arises because rights owners desire the ability to segment markets and determine their own prices and policies for entry into each market”. There is a need to ensure that the Australian Parliament’s IT Pricing inquiry is not undermined or subverted by the Trans-Pacific Partnership.

Dr Matthew Rimmer is an Australian Research Council Future Fellow, working on Intellectual Property and Climate Change. He is an associate professor at the ANU College of Law, an associate director of the Australian Centre for Intellectual Property in Agriculture (ACIPA), and a member of the ANU Climate Change Institute. Dr Matthew Rimmer receives funding as an Australian Research Council Future Fellow working on "Intellectual Property and Climate Change: Inventing Clean Technologies" and a chief investigator in an Australian Research Council Discovery Project, “Promoting Plant Innovation in Australia”.

This article was originally published at The Conversation. Read the original article. Image credit: Josh Hallett, Creative Commons

The Conversation


  1. I don’t disagree with the sentiment of the article, but Apple doesn’t set music prices.

    • No, they just take a flat 30% cut, and ‘encourage’ the studios to all sell at the same price…

      Why is it that every music publisher out there sells their music on iTunes at $1.69 a track, if Apple don’t “set the prices”?

      Must be coincidence, eh?

  2. The TPP needs to have petrol thrown over it, burnt and have a nice party to celebrate the destruction of the insidious piece of Totalitarian power grab. How anyone could champion such a horrendous agreement is beyond me. Lets just call those who do, inhumane monsters and guilty of crime against humanity. Applicable and true.

  3. Its easy to solve, have no copyright protection for digital items sold overseas, yet not available in Australia, or more expensive then they are sold overseas.

    The result would be an instant readjustment of prices and expansion of items available from overseas.

  4. As hinted at by @TechinBris and Paul K, these are Government failings. The TPP is being negotiated in secret by all parties including the Australian Government and will be imposed on us without any review by the Australian people. Why is that? Copyright also could be addressed by the Australian Government but it sits largely idle and supports this overseas price gouging.

    I have been chasing a price gouging issue in another market segment and surprise surprise, guess who is responsible; the Australian Government. In short, they have written legislation that permits manufacturers of motorcycles (all foreign corporations) to charge significantly more for their products here than in other countries. The Australian Government has crippled our ability to force market competition. They have set us up to be hosts for blood-sucking foreign leaches that in the case of motorcycles take approximately $300,000,000 in excess profits (profits at margins 30% greater than what these organisations take in other markets) and for no benefit to the Australian people. Why?

    An example, though it is just one of many companies doing this, is Harley Davidson Australia, wholey owned by Harley US, manages both the Australian and NZ markets. They charge 30% more for motorcycles they import and sell in Australia than for the identical motorcycle they sell in NZ.

    Motorcycles are manufactured to UN ‘harmonised’ standards worldwide so these bikes are virtually identical, in fact, bikes sold in NZ may be completley identical to those sold here. Why do we pay 30% more?

    Government! The at-fault legislation that permits this is encapsulated in the Motor Vehicles Standards Act 1983 and supporting guidelines.

    Our Government is the issue.

  5. I’m totally disgusted with our government when it comes to this. Instead of working for the people that elect them, they actively support the companies that are ripping us off, and with deals like the TPP, that’s only going to get worse.

    And where are all the media that were screaming about the Carbon Tax cutting in to “Aussie battlers/families incomes”? The Murdoch media is just as bad as the government I’m afraid, they seem more than happy to turn a blind eye to the real costs to Aussie families when it’s “private enterprise” that are the ones doing it…

  6. Tinman_au, it is called distracting the attention of the public away from where they should be looking. Smoke and mirrors, or “Quick! look over there” approach. The MSM and the two major players of the Parliament at the moment, are screaming at us to be distracted and listen to crap whilst some nasty deals are taking place right in front of us by themselves and their partners in “crime”. But most Plebs are looking in every other direction than the way we should be looking. Forward. Shows how easily duped Australians are.
    Hypocrites and a pox on both their houses. I’ll dish out my pox on them in the next election. hopefully many more will too.

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