Austraila isn’t happy with some product prices and seems to be looking for a first of its kind court imposed price reduction.
You’re in business. A potential customer comes to you and asks how much you charge for you ABC product. You charge $2 for your ABC product, while most of your competitors charge only $1. What might that potential customer say to you next:
A) Say, “I think that’s fair, but I’m going to check around and see if I can get it at a lower price”
B) Say, “I think that’s too much. I’m going to go buy my ABC products elsewhere”
C) Say, “You’re charging twice as much as your competitors, I’m taking you to court.”
Well, if you’re doing business in Australia and your either Microsoft, Apple or Adobe, the answer just became C.
Monday, the three companies have been summonsed to stand before Australia’s parliament on March 22, 2013 to basically give their reasons for what Australia considers high prices for their products.
The investigation into the companies and their pricing has come about as a result of a push by Labor backbencher Ed Husic, who says that the three are “ripping off” customers in Australia.
Husic also said that this is more than likely the first time ever that such companies have been questioned by a government court on such matters but he feels that they really need to “explain why they price their products so much higher in Australia compared to the United States”
So far, Microsoft, Adobe and Apple have declined to appear before the parliament committee setup to investigate the matter, but if they don’t show up, all three can be held in contempt of Parliament which holds the possible penalties of monetary fines.
Australia is complaining that although their currency is stronger than the dollar, the three tech companies are charging far more for their devices (and software) in Australia than they are in America Example:
Apple 16GB iPad – in the U.S. For $500, in Australia for $540
Companies such as Microsoft and Apple have been reported as saying that it’s due to various Australian conditions such as high operating costs, higher labor rates and import costs are all calculated into the higher product prices.
The reality of the matter seems to be much deeper than just high product costs, especially since the companies have already seemed to provide justifiable reasons. It seems as though this Australian backlash is stemming from some other happening in the country though. Last week Husic pointed to the fact that in 2011 Apple made $6 billion in revenue in Australia, but only paid a mere $40 million in tax (that’s less than 1%).