Update on Aussie price-gouging inquiry

An update on this post from almost a year ago about price gouging in Australia (and New Zealand) by tech companies.

Adobe appears to have bowed to public pressure and cut the price of some of its products – a day after being summonsed to the parliamentary commission investigating the rorts. Adobe had earlier refused to attend voluntarily, which seems a rather strange strategy when you know the result will be a parliamentary summons. Whether the timing of the cuts will help the company in the inquiry or be construed as an admission of guilt remains to be seen, but the timing suggests an attempt to stave off some criticism.

It seems that the price cuts apply to New Zealand customers too, which is only sensible given the proximity of the markets and the fact that New Zealand authorities have signaled they are watching the Australian inquiry with interest.

There is no doubt that New Zealand (and Australian) consumers have been paying far more for identical software delivered via the internet. Australians have seen prices for some digital products stay well above pricing for US customers even as the AUD  exceeded parity with the greenback. It is getting technically harder for companies to enforce regional pricing differentials, and also harder to justify to consumers.

Ironically, when I had to buy Adobe Acrobat last year I was able to pay far less than the online price by buying it (from all places) at Warehouse Stationery. It was the first time in probably 10 years that I had bought software in a box, and will probably (hopefully) be the last! The boxed version was exactly the same software as offered via Adobe’s online store, but much cheaper, even with GST added.

I reiterate that companies should be free to set whatever prices they want (subject to competition laws), but it is good that they can be held accountable by public pressure, competition, and light-handed oversight such as the Australian parliamentary inquiry, which in this case at least has already prompted a voluntary response.

NZ watching Aussie price-gouging probe

Submissions have closed on the Australian inquiry into IT price gouging. Stuff reports that New Zealand officials are keeping watch:

New Zealand officials are watching with interest an Australian investigation into whether technology companies are gouging consumers with the price they charge for software and online content…

Similar complaints of over-charging were levelled at information technology companies by consumer groups in New Zealand last year and New Zealand Communications and Information Technology Minister Amy Adams told Fairfax NZ earlier this month that she would be watching the Australian review with “considerable interest”. Adams said she would expect the Commerce Commission to step in if it emerged there were issues here that could be attributed to anti-competitive practices.

This strongly suggests that New Zealand will follow Australia’s lead. Anecdotally, there is little difference between IT pricing in New Zealand and Australia, and if the ACCC takes enforcement action in Australia, the same grounds probably exist to do so here.

It is worth reminding that a prosecution will only follow if there is anti-competitive behaviour alleged. There is no law against “price-gouging” itself, and nor should there be save for special circumstances, however if the price-gouging is a result of (say) price fixing, legal concerns can arise.