This week, the Australian Parliament launched an Inquiry into
why computer software and hardware may cost more in Australia than
some believe it does in the U.K. or U.S. The risk is that the
Inquiry could lead to a reintroduction of an economically damaging
prohibition against price discrimination. This is also of
concern internationally because, in the past, peculiar Australian
legislative initiatives have subsequently been adopted in European
countries and then the US.
Below we also provide background to the software and hardware
pricing issue and information about Legal Professional Privilege
and Parliamentary Privilege in connection with such Inquiries.
Background
The current controversy over software and hardware pricing in
Australia started when the Productivity Commission (a
quasi-judicial independent commission that undertakes economic
research and policy) observed that Australian computer product
prices appeared to be higher than in other developed,
English-speaking countries. The Commission could not identify any
satisfactory explanation, such as the need to tailor products to
local needs, the costs of complying with differential or consumer
protection laws, or exchange rate movements.
Parliamentarians involved have made statements that suggest they
have already concluded that there are is a relevant problematic
price differences, even before the inquiry has commenced its fact
finding task. The debate further has suggested that this
"price discrimination" may require a legislative
remedy.
Australia law previously prohibited price discrimination, but the
rule was repealed in 1995. Economists generally agree that
price discrimination should not itself be of concern unless there
is an anticompetitive effect. It is actually beneficial to
permit price discrimination, especially for firms with high fixed
infrastructure costs or to compensate for investment in innovations
and upgrades. Price discrimination enables such firms to
recoup more of the costs of such investments from customers that
benefit most from them.
The main reason for the law's repeal was that, unlike the U.S.
and European equivalent prohibitions against price discrimination,
in Australia price differences for equivalent transactions were
illegal regardless of whether there was an anticompetitive effect.
At the time the prohibition was removed, the Government noted that
truly anticompetitive price discrimination was already prohibited
by the general prohibition against misuse of market power.
Since that time, concerns over alleged differential pricing of
copyrighted material have been a thorny issue, both within the
country and between the Australian Government and its trading
partners. Concerns over international price differences for
recorded music and software resulted in parallel importation of
these items being permitted. There has been strong local
opposition to these sorts of initiatives by Australian artists and
creators and, in some cases, other countries have viewed these
initiatives as significantly undermining the rigor of intellectual
property protection, and the U.S. placed Australia on its
Intellectual Property Watch-list for a time.
This Inquiry's terms of reference include a consideration of
how to remedy the perceived problem of higher Australian
prices. A particularly concerning aspect of this
Parliamentary Inquiry is that the current controversy persists even
in circumstances where parallel importation, at least for software,
is already possible. Instead, the language used by the
Parliamentarians in establishing this inquiry specifically invokes
the statutory language of the old Australian prohibition against
price discrimination. Hopefully the rigors of the Parliamentary
Inquiry process will ensure that precipitous response is not
adopted.
Legal protections for information provided to Parliamentary Inquiries
Businesses that are requested to respond to the Parliamentary
Inquiry may seek advice on the possibility that information they
provide may be disclosed. Clients are often familiar with the
general concept of legal professional privilege and how the details
of such protections can vary between jurisdictions. Less well
known is the concept of Parliamentary Privilege and how these two
privileges interact.
The public policy reason for affording legal professional privilege
protection is that it enables clients to seek full and frank advice
on how to best comply with the law without the fear that such
advice will become discoverable in a court proceeding. The
protection also applies to documents prepared in contemplation of
litigation. A key condition is that the client keeps the
advice confidential.
Parliamentary Inquiries' powers vary among countries and even
between individual committees, but usually they have the power to
'cut through' the protection afforded by legal professional
privilege and compel the production of privileged material.
In most cases, Parliament recognizes the importance of the policy
purpose behind legal professional privilege and the power to compel
production is not exercised. Further, the courts will usually
accept that legal professional privilege is not waived when
confidentiality was lost when a client complies with a compulsory
production process.
A completely separate privilege exists in relation to Parliamentary
Inquiries. To ensure that information is provided to
Parliament, and that Parliamentary debates can occur without fear
of reprisals, information submitted to a Parliamentary Inquiry is
generally protected by Parliamentary Privilege. This means
that a person is immune from legal action in respect of lodging the
submission or any statements contained in it. If a submission is
authorized for publication, its distribution also is immune from
legal action.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
