There's the proof. I asked them to explain more as I was confused by that claim and they directed me to the AMCA website and refused to back up the claim. Can anyone else shed light if this is true or not?
I know personally in the role I am in, if I'm going to quote consumer law and someone questions me on it, I'm prepared to prove it to back up my claim.
Yeah technically it is. Not illegal to beat it, but if every provider just agrees on what 'the price' is, as a whole it's going to be anti-consumer and anti-competitive and prices will be higher.
For competition to work people have to go to the provider with the lower price, thus encouraging the price to be lower as a whole. If everyone just gets the same price as the first company no matter who lowers it, there's no incentive to lower prices because choices will always be made on factors outside of price.
It's a bit of a BS excuse, but one bound by reality, unfortunately.
I know one group of GPs who were all technically independent contractors working out of the same premises, the ACCC refused to let them charge the same prices as each other as this was price fixing. Each of them had to have different prices for a consultation!
It's only price fixing if both companies are colluding to keep the same price, price matching another company has no collusion, so that argument falls flat. If a competitor offers a better deal, and you match it, you arent contacting them to change that price to match your own, it is a totally different ballgame.
The problem is that while you don't perceive it to be collusion, it in effect is on aggregate. Lowering your price is supposed to give you a competitive advantage, if your competitors always match it, there's no reason for you to lower the price in the first place.
So what tends to happen in absence of this sort of law is that once both companies work out that the other will match them on lower prices, neither lowers prices.
@[Deactivated]: Intent is very important, and collusion must be proven, just price matching does not meet that criteria. I can see your point though.
It's only price fixing if both companies are colluding to keep the same price, price matching another company has no collusion
It's unfortunately not as black and white as that. You can easily collude by way of price-matching, even if there's no direct communication between sellers - for example Company A sets $100 as the price, Company B which had a price of $105, price-matches down to $100. Company A then raises its price to $110 (for whatever reason, cost increases, higher demand, etc), and Company B, seeing this, also raises their price to $110. Company A sees this, and so increases the price further to $125, expecting Company B to again also 'match' their price.
And bam, something that, competitively should be sold for maybe $110, is now selling for $125.
In this specific case, it's only a problem in markets with a small number of sellers because that's when this can really happen. With more players, e.g. Officeworks, JB Hifi, TheGoodGuys, Harvey Norman, etc, it becomes far less likely and possible for this kind of unspoken collusion to take place without actual direct communications.
Worst excuse ever
I suspect this is a correct principle which has been misunderstood and misapplied.
Price matching is not anti-competitive and not again consumer law per se.
However, monopolistic actions and anti-competitive actions which are designed to put smaller players out of the market are.
I think that is perhaps where the confusion comes from.
Or perhaps they were just spouting BS.
It's an excuse, but it's not totally a BS excuse - especially with only a few players in the market, effectively working together to set prices (which is what this would be) is technically collusion.
Nobody minds collusion if the price is cheaper for the consumer :)
Other telcos might - e.g. if Optus and Telstra both colluded to provide prices cheaper than TPG/Voda could afford to, that'd be pro-consumer, but anti-competitive.
Again, I don't think the ACCC would prosecute it if this came about only because of price-matching (as opposed to direct collusion), but it'd technically fit the bill.
(also, didn't neg your comment because for all practical intents and purposes in the present case, I agree with it).
The problem is that it looks like in one specific instance it's better for the consumer, but in aggregate it's not.
If Telstra always matched Optus's prices, then Optus wouldn't lower their prices because there would be no competitive advantage in them doing so. Essentially the price would be fixed and at a higher price. The ACCC isn't looking at what's better for one consumer, they're looking for what's better for consumers as a whole.
I guess officeworks is breaking the law and even advertise it everywhere
They're doing a price beat, which isn't the same thing.
How so? Do elaborate
If you have two companies who know that their competitor will match their price if they lower it, it removes the incentive to lower the price. (Because you can both sell for $20 or both sell for $15.). If one company is beating another it provides an incentive to have a lower price because you don't need to beat if you have the lower price already, and if you have a competitive price already your competitor is hurt by having to beat it.
Basically, price beats are competitive, price matches are anti-competitive. Even though it doesn't seem much difference for that 'one' sale that 'one' customer is involved in, the difference in effect to companies behaviour is huge.
Pretty BS excuse but not completely baseless. It could open them up to ACCC charges of collusion. Differs from Officeworks/etc price-matching because there are far fewer players in the telco market making it an oligopoly and so much more susceptible to these charges. Collusion being multiple players in a market working together to set prices - which, well, price-matching technically is.
Price-matching and price-beating is the essence of competition, and something the ACCC would very much encourage.
Price-fixing and collusion are illegal.
For example, if Optus and Telstra got together and said, "Let's agree to never offer any plans below $90, okay?" then that is illegal.
However, if Optus advertised, "Anything Telstra offers, we'll beat by $10." then that is a sign of healthy competition.
For example, if Optus and Telstra got together and said, "Let's agree to never offer any plans below $90, okay?" then that is illegal.
However, if Optus advertised, "Anything Telstra offers, we'll beat by $10." then that is a sign of healthy competition.
But this case isn't price-beating, but price-matching, which would technically be collusion. Not a genuine reason, because it's not one that the ACCC would be able to successfully prosecute (or that they'd choose to prosecute) but technically so.
As an example, imagine every telco had a policy of price-matching, not just down, but also up if no other companies are as cheap. You'd effectively have all the players at one price, arrived at indirectly but still anti-consumer.
Tesltra by far has the broadest coverage across the country
By price matching others they would be essentially kicking them out of the market
I can see the ACCC saying they cant price match
So as Prince K said, what about Officeworks? Are they kicking JBHIFI and others out of the market? Will the ACCC say Officerworks cant price match?
More players, less potential for abuse, wider latitude for this kind of behaviour before it falls afoul of anti-competition rules.
They're doing a price BEAT vs a price match. A price beat is the opposite of price fixing.
Price matching means you don't gain any advantage buying from them or not, so it's essentially all colluding on a minimum level of profit, whereas a price beat is a competition.
I wouldn't want them to match the offer, I'd want them to beat the offer.
PART XIB—THE TELECOMMUNICATIONS INDUSTRY: ANTI-COMPETITIVE CONDUCT AND RECORD-KEEPING RULES
http://www5.austlii.edu.au/au/legis/cth/consol_act/caca20102…
http://www5.austlii.edu.au/au/legis/cth/consol_act/caca20102…
http://www5.austlii.edu.au/au/legis/cth/consol_act/caca20102…
What section are you saying is being breached?
These was no violation. Telstra didn't provide OP with a service.
But you thought there would have been if they had matched the price? Or…?
I'm not sure that I understand what the issue is.
OP made reference to an Optus offer during dialogue with Telstra. Telstra declined to match or beat the Optus offer.
OP has options:
- Go with Telstra (at their price)
- Go with Optus (at their price)
Its pretty clear at what my question was. Is it against consumer law to match another providers price.
From what I remember from when I worked there. There was some old policies in place from when Telstra was government owned and moved over to private.
The way it was explained to me was something like. "We have the biggest network so if we matched the price of the opposition who would go there"?. Super anti-competitive. Telstra must price higher as to not lock out its competitors.
Telstra must price higher as to not lock out its competitors.
Probably not necessarily price higher, just price independently of other telcos.
I can't think of anything illegal. Probably an uninformed overseas grunt. More likely against Telstra policy.
Sounds like BS. But they are not under any obligation to match a competitors deal either and they don't have to justify that.
Speaking of collusion, I'd be surprised if we weren't witnessing tacit collusion in the setting of minimum mobile plan prices (i.e. > $9/month regardless of use). I know I've been saying this for years but it's obvious they would increase data inclusions before they would drop the minimum price for a few calls and SMSs a month (where the alternative to a flat monthly price is a "discounted" price of 12 cents/minute for a call and 12 cents for an SMS). Perhaps they have minimum costs per subscriber and the pricing is justified, but I prefer to be cynical.
As the older generation die off and mobile data becomes cheap and reliable enough for many to abandon their home internet connections I imagine there won't be enough people left to complain.
Here's my two cents worth, based on years in competition "sensitive" industry - and multiple training sessions in competition law in Australia and overseas:
In markets which are oligopolistic (small number of very big players, plus some smaller outfits), the ACCC would take a VERY dim view of a large operator who persistently price beats a smaller competitor - OR who engages persistently in a price war with another large competitor (can be seen as the two co-operating to kill off small rivals). In such a market, the large operator is only allowed to price MATCH an aggressive small competitor - never allowed to price beat (i.e. must not offer a lower price than the small competitor). Offering a lower price raises the suspicion you are trying to kill your competitor. So, price matching is acceptable at best (worst!). It is a perfectly valid response by large operator to aggressive smaller one. It is NOT forbidden by law.
I'm being slightly careless with my wording here - the ACCC has a HUGE amount of discretion and can be very forensic in the way it looks at individual circumstances in any market is chooses to review/investigate. But, the thrust of what I said above is generally correct, and would apply in the telecoms market which you are discussing.
It might be a cheaper cost than what they offer their wholesale partners per month for access to their whole network, in which case they can't offer it.
The salesperson would be right in that circumstance. However, I doubt it.
late to the game, i reckon Lovely was just Lazy to create a custom plan for you that matches
First i've ever heard of it, sounds like a bullshit excuse. Is it illegal to match another seller's price for an item ? I don't think so, so why would the same not apply to a service like a mobile phone plan.