Lifting the parallel bars

The parallel importation of software into the Australian market for commercial purposes will be legalised within months after the Democrats supported the Copyright Amendment (Parallel Importation) Bill in the Senate.

The Bill will go back to the House of Representatives in May before being rubberstamped by the Governor General.

The legislation is being championed by Minister for Communications, Information Technology and the Arts, Senator Richard Alston, as a way of reducing prices for consumers and small businesses.

It will not be greeted with enthusiasm by Australian distributors, who see parallel importation as a threat to their existing and longstanding business models as well as paving the way for an increased influx of pirate copies that will undermine market share.

The Australian Competition and Consumer Commission (ACCC) has been advocating the legalisation of parallel importing since a 1993 Price Surveillance Authority report claimed software prices were artificially high in the local market.

The ACCC claimed price surveys conducted as recently as January showed popular business software prices were 13 per cent higher than those advertised on US Web sites.

But John Donovan, managing director of Pacific operations for security software vendor Symantec and a director of the Business Software Association of Australia (BSAA), predicted parallel importing would be bad news for the industry and a false dawn for software purchasers.

“One major impact it [parallel importing] won’t have is a reduction in [software] prices," he said. "It didn’t work in New Zealand three or four years ago.

“The ACCC has created an unrealistic expectation that software is overpriced in Australia when, in truth, most companies now have local market representation. Margins have shrunk a lot during the past decade, as have software prices.”

The Bill has also been criticised by Labor. Shadow IT Minister, Senator Kate Lundy, labelled it “an ineffectual solution for a non-existent problem”.

Senator Lundy cited BSAA research claiming Australian software prices were 22 per cent lower than those in the UK, “slightly less” than in New Zealand and “only marginally more” than the US.

“This big bogeyman of higher software prices in Australia is nothing more than a fantasy to which the coalition has subscribed,” Senator Lundy said.

Manacomm’s managing director, Ian Mackay, said the Internet had already been a “big leveller” of international pricing policies. However, he still envisaged some difficulties being created by parallel importing.

“If the price is not being gouged the local distributor won’t have a problem unless it has spent a lot of money promoting a product and [another company] imports and sells on the back of that," Mackay said. "That would be unfair.”

He said distributors would also face the dilemma of whether to provide telephone support, despite having nothing to do with sale process, because failure to do so could damage the reputation of a product.

“This is a significant difference to the music industry [parallel importation of CDs]. It has no warranty support except for that dealing with faulty CDs,” Mackay said.

President and CEO of Indigo Pacific, Hugh Millikin, said parallel importing would put additional pressure on support infrastructure. Indigo Pacific would not offer support to software users buying from elsewhere unless they were prepared to pay for it by the hour.

“It won’t affect us too much because we play at the corporate end but I wouldn’t want to be a boutique distributor in the PC games market right now. They’re going to be doing it tough,” Millikin said.

For a complete analysis on parallel importing and other channel issues, see this week's issue of ARN.

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