Summonses have been issued for a public hearing in Canberra on 22 March 2013.
The Committee is looking at the impacts of prices charged to Australian consumers for IT products – Australian consumers often pay much higher prices for hardware and software than people in other countries. The Committee has been examining claims made by organisations such as CHOICE, and the Australian Communications Consumer Action Network.
Apple had already made a written submission to the committee regarding its pricing policies; however, did not agree to appear before the committee.
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To Whom It May Concern:
Apple submits the following comments in response to the “Inquiry into IT Pricing”. These comments are for Government use only and we respectfully request that they remain confidential.
Apple strives to set equivalent pricing for our products around the world at the time of product introduction. When setting pricing on the Apple Online Store and at Apple Retail Stores, Apple considers differences among regions in product cost, freight, local sales taxes, levies, import duties, competitive price points, and local laws regarding advertised prices. It is at the discretion of our reseller community to set their pricing.
The pricing of music, movies and TV shows on iTunes is determined by various factors. Prices are heavily influenced by the wholesale price set by the labels & studios, royalties payable for the use of musical compositions and the incorporation of local taxes. Local market price comparisons demonstrate that iTunes prices for the same product sold in the local market are competitive.
App Store prices are based on a matrix of international retail prices with local taxes included. Unlike for music, TV and movie content, Apple acts as an agent for the app developer and sells the app at a price point selected by the developer.
Foreign currency is an important variable in how product prices are compared between countries. It is not uncommon for macroeconomic factors to cause foreign currencies to fluctuate dramatically during a product's life cycle. Over the period of time a particular Apple product is in the market, it may appear to be either priced higher or lower in a local market when compared to the price in the United States or elsewhere.
Currency is not the only factor which changes during a product life cycle. Product costs, local levies, or duties may change as well. The company's typical practice in such circumstances is to keep local prices the same, whether unfavorable or unfavorable to the company, until replacement products are introduced. This is less disruptive for local customers and local business channels than if Apple were to reprice products up and down on an unpredictable basis in response to all such fluctuations.
Director, Government Affairs