Why The Australian Government Won't Be Able To Force Overseas Sites To Take Your Credit Card

Australians are often blocked from purchasing cheaper software, music and movies from overseas because the sites selling those products won't accept an Australian credit card. One possible solution to that would be to make it illegal to block access to cheaper prices for Australians, ensuring we could access better-priced overseas alternatives. That sounds like a clever solution, but once again it's extremely unlikely to happen.

Picture by Joe Raedle/Getty Images

In my lengthy discussions of the current government IT pricing inquiry, I noted that one major problem with the whole affair is that there's no obvious way the inquiry can actually force companies to charge equitable prices. Luke at Gizmodo has been investigating the story, and he reports this intriguing development today:

We've been chatting to sources close to the inquiry, and they've told us that one option that is being considered is changes to Federal competition law that will make it illegal for vendors to block an Australian's access to cheaper international prices for software if it is purchased via an online distribution method.

That sounds appealing at first glance, but there are some very obvious issues that any kind of scheme that took this approach would need to address. It's fairly rare for sites selling software and music to block access to their stores altogether (that's how we know they charge different prices, after all). What they generally do is refuse to accept payments from overseas cards. While it's hard to judge a proposal without specifics, several immediate objections to trying to stop that spring to mind:

  • As described, this won't be any help at all with physical goods (phones, cameras, console games). That isn't a dealbreaker in itself -- competition is already fierce in many of those markets, and digital distribution is increasingly the main method of selling software, where many of the worst rorts occur. But changing the law so that one type of goods are forced to be cheaper while other options can charge what they like doesn't seem at all equitable and would certainly lead to protests from businesses. Why should we force Adobe and Microsoft to change their approach but leave IKEA untouched?
  • As I noted earlier this week, Australian law lets vendors accept (or refuse) whatever payment mechanism they like. It would require major amendments to make "accepting an Australian credit card" a legal requirement for a particular class of business -- and even if it did, that wouldn't apply to non-Australian companies.
  • For movies and music, regional copyright restrictions remain an annoying reality. Apple (for instance) can point out that it simply does not have the rights to sell some music in Australia through iTunes, and that it thus needs to maintain regional restrictions. That has the very unfortunate side effect of allowing it to set prices separately, but that issue can't be resolved simply by saying "you must offer the choice of access to other regional sites", because laws other than competition law are involved.

We don't have any findings from the inquiry yet, so it's entirely possible that this option will be "considered" then discarded, or refined in some way that a non-lawyer like me can't imagine. More broadly, I agree with a key point Luke makes in his article: the more widely discussed these rorts are, the more likely that companies will be shamed into charging more equitably. But I remain sceptical about enforced solutions. Nothing short of a legal mechanism to force companies to charge a specific price seems likely to really solve the problem, and that's simply impossible to imagine happening.

Beating The Australia Tax: Can The Government Do Anything To Stop It? [Gizmodo]


    Of course you cant force and overseas company to be subject to Australian legislation. Aust legislation only works on Aust Residence. Its like the US having FBI warnings on the front of DVD's. Ohhh Im shaking in my boots about the FBI. Who cares.

      I'm sure good old Kim Dotcom thought the FBI couldn't get him either.....

    First off, they need to stop allowing the copyright holder to set prices for online stores. This would actually create some competition.

    Secondly, they need to punish Australian distributors who engage in practices that restrict international competition. This obviously won't automatically make products available on international web sites, but it should prevent local distributors engaging in exclusive deals.

    Australia is fast becoming the land where *anything* required to reduce the cost of living or make our lives easier is "extremely unlikely to happen".

      "stop allowing the copyright holder to set prices" - aint never going to happen, so forget it.

    One possible solution is to force international companies who distribute their goods via a local branch in Australia to not charge 10% more than their US/UK/Canada/Japan branches. This would be enforceable (since you're imposing on their local branch), and solve most problems.

    There's really nothing physically stopping US companies from accepting Australian credit cards, it's just that they reject the AU billing address (which should be their right to do, though it sucks) or redirect to the Australian version of the store upon you entering an AU billing address (which I think was what the proposal was to make illegal)

      Even if you have a US or European billing address on your account, your card number identifies the issuing bank. I have had and continue to have problems with merchants in Europe who will not accept cards issued outside the EU, even if I am there in person and have a local billing address. It didn't matter whether I issued them Australian or US-issued cards.

    Incidentally one of the things they definitely could do is sign into law that working around or circumventing any form of regional lockout system for the purpose of compatibility or interoperability is considered free use and not a violation of the wonderful DRM anti-circumvention measures we got exported to us from the US.

      so your suggestion is if the product is not available at a price of say within 10% from the country of origin that however we obtain it, it's legal?

        No, my suggestion is that if you legitimately purchase a product you should be able to use it with locally-purchased hardware without breaking the law, which is what you do every time you eg break CSS encryption on a DVD to play something from another region, or install a modchip into an old games console.

    The last time I checked, Most aussie banks allow you to add an American billing address to your account!

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