When it enters the Australian market, Amazon will be able to roll out prices that undercut its rivals – and many of those prices could be at money-losing levels.
According to a Reuters news report, chairman of the Australian Competition and Consumer Commission, Rod Sims, told Fairfax Media that Amazon was legally allowed to set its prices low enough to beat out competitors without running afoul of any 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,” Sims said. “Eventually, if you get your business plan right, you will make that price point, that is in no way illegal.”
Amazon hasn’t specified when it will launch its business in Australia, although Reuters noted the eCommerce giant is building a warehouse in Melbourne, in Southern Australia. Rocco Braeuniger, the country manager at Amazon, is slated to hold a meeting in Sydney, during which he is expected to talk with more than 500 Australian suppliers.
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