Competition laws will allow Amazon to undercut Aussie local businesses

Online shopping giant Amazon, tipped to begin trading in Australian from the end of November, will be able to undercut local businesses with loss making prices under current competition laws.

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Australian Competition and Consumer Commission Chairman Rod Sims told Fairfax Media that (AMZN.O) 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 declined to comment on when its Australian operations will begin.

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

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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