When the price is not right: technology price gouging in ... · When the price is not right:...

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

https://theconversation.edu.au/when-the-price-is-not-right-technology-price-gouging-in-australia-10582[26/11/2012 11:34:05 AM]

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When the price is not right:technology price gougingin Australia

23 November 2012, 2.57pm AEST

AUTHOR

DISCLOSURE STATEMENT

Dr Matthew Rimmer is an AustralianResearch Council Future Fellow, working onIntellectual Property and Climate Change. Heis an associate professor at the ANU Collegeof Law, an associate director of the AustralianCentre for Intellectual Property in Agriculture(ACIPA), and a member of the ANU ClimateChange Institute. Dr Matthew Rimmerreceives funding as an Australian ResearchCouncil Future Fellow working on "IntellectualProperty and Climate Change: InventingClean Technologies" and a chief investigatorin an Australian Research Council DiscoveryProject, “Promoting Plant Innovation inAustralia”.

The Conversation provides independentanalysis and commentary from academicsand researchers.

We are funded by CSIRO, Melbourne,Monash, RMIT, UTS, UWA, Canberra, CDU,Deakin, Flinders, Griffith, La Trobe, Murdoch,QUT, Swinburne, UniSA, UTAS, UWS andVU.

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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

TAGS

Apple, Competition,Copyright, Amazon

RELATED ARTICLES

When it comes to IT products, Australian consumers pay more than their American counterparts.AAP

Matthew RimmerARC Future Fellow andAssociate Professor inIntellectual Property at AustralianNational University

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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

Ed Husic MP discusses the IT pricing inquiry on The Drum

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.”

8 November 2012Creation and copyright law:the case of 3D printing

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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

Cory Doctorow discusses E-Book Pricing at Bloomsbury’s London Office

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

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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

Ruth Okediji interviews Chris Friend of the World Blind Union (WBU)

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.

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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

Rod Sims of the ACCC on consumers, competition, and regulatory issues

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

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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.”

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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

The Trans-Pacific Partnership

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.

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Given that the TPP negotiations are being conducted in secret, I struggle tounderstand how we can meaningfully say that our interests can be taken intoaccount, or even comment on the question.

George MichaelsonPerson (logged in via email @pobox.com)

3 days ago

It is very interesting to note that in the late 90s some commodity goods like RAM(Computer memory), and hard drives were cheaper, and some Australians wereposting these goods to their American friends. I believe this had more to do with supply and demand in local markets ratherthan any specific marketing policy. The prices offered on iTunes Australia $1.29 cf $0.99 for the US iTunes storeused to be fair when the exchange rate was applied. It appears to me that theexchange rates have changed…

Karl SchaffarczykLaw Student (Law Student at University of Canberra)

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Try from your own au IP to play the featured video athttp://www.youtube.com/user/ThePresetsVEVO.

The Presets are Australian, but this company Vevo who publishes their video for'Ghosts' chooses not to make this Australian content available to Australians. It'savailable for Americans.

CH SoamesCytogeneticist (logged in via email @hotmail.com)

2 days ago

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Australian consumers get gouged on most imported things, not just technology.When our country's GDP was 13th highest in the world, its GDP on a puchasingparity basis was only 18th highest. This can be circumvented by purchasingdirect from overseas but technology is being used to thwart this as well (geo-discrimination). I don't think the government can do anything if an overseassupplier chooses to do this.

Chris O'NeillTelecommunications Engineer (logged in via [email protected])

2 days ago

Personally I only buy from e-outlets if I can be sure the e-outlet is not ripping offthe Artist involved. If the only place I can buy thier Art is itunes or Amazon theyobviously don't care about being ripped off - so why should I?

Doug RankinPlasterer (logged in via email @gmail.com)

2 days ago

Crying poor and trying to alter our legal rights to "protect" their intellectualproperty on one hand and gouging anyone they can on the other. Why should Icare about there rights anymore than they care about mine. I would argue thatmy right to information without being ripped off balances there claim of deprivingthem of profit. Until they can pull there heads out off there a@@'s and provide everyone withfair pricing I'll take there share of the profit and keep on downloading as Iplease.

Paul FirthStudent (logged in via email @gmail.com)

about 14 hours ago

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