Amazon can legally undercut Aussie firms: regulator

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Amazon can charge lower prices than its competitors even if it loses money when it enters the Australian market, the country's competition regulator has said.

Amazon has declined to comment on when its Australian operations will begin though the market expects a November launch to coincide with Black Friday.

Australian Competition and Consumer Commission Chairman Rod Sims told Fairfax Media that Amazon was able under law to set prices low enough to win business without breaching competition laws.

"In terms of misuse of market power, if you open a store in a new town and you set a common price point, you are going to lose money initially if you don’t have scale," he said.

"Eventually, if you get your business plan right, you will make that price point, that is in no way illegal."

Amazon has been building a distribution warehouse in the southern city of Melbourne.

Australian Competition and Consumer Commission (ACCC) chairman Rod Sims. /Reuters Photo

Its country manager Rocco Braeuniger is due to hold a meeting in Sydney where he is expected to address more than 500 local suppliers.

Australian Small Business Minister Michael McCormack has said he will watch Amazon closely to ensure it pays its fair share of tax.

"Amazon pays all the taxes we are required to pay in every country where we operate," an Amazon spokeswoman told Fairfax.

Perceived tax avoidance by large foreign companies is a big issue in Australia, and the government is now enforcing new measures known as the "Earned here, Taxed here" corporate tax laws.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell said her organization has not seen a copy of the contract under which Amazon will allow small businesses to operate in its marketplace.

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Source(s): Reuters