18 May 2012

Deals to constrain online bargains face scrutiny

11:11 pm on 18 May 2012

Australia's competition regulator has announced it will investigate clothing importers who are making deals with international online stores to inflate prices for domestic shoppers.

Australian Competition and Consumer Commission (ACCC) staff say some fashion importers and retailers are asking international websites to increase prices for Australian shoppers or restrict sales of particular brands.

Suppliers who reach such agreements could be breaching competition legislation, and potentially be liable to costs running into millions of dollars, ACCC chairman Rod Sims says.

"If people are found guilty of a breach of the competition provisions of the act, it very much depends on the size of the company and the level of detriment, but penalties can be in the millions of dollars," Mr Sims said.

Retailers resent offshore websites

Retailers say international websites have an unfair advantage as they pay less for overheads such as rent, and goods purchased overseas worth less than $A1000 are exempt from the 10% Goods and Services Tax (GST).

Some retailers have called for the GST threshold to be lowered, and the Federal Government has announced it will set up a taskforce, the Retail Council of Australia, to look at the situation.

But a spokeswoman for consumer advocacy group Choice, Ingrid Just, says the GST argument is a "red herring".

"Shoppers are hopping online to save far more than 10%," she said. "They're saving 20%, 30%, 40% when they're shopping online, so I think that the 10% GST issue is not really a robust argument to apply here."