rip-off Britain (19/07/1999)
Volvo recently admitted that some of its dealers had illegally worked to keep new car prices artificially high in the UK. Volkswagen has been penalised for similar crimes elsewhere in Europe. There's evidence that other manufacturers may be guilty of similar naughtiness. For example, a new Rover is around 30 percent more expensive in England than it is in Holland. Not a left-hooker, either; a right-hand drive model with all the correct paper-work, trim and specification, no hidden extras, VAT paid. A friend of mine bought one last year with no fuss at all, as he was entitled to under Article 85 of the Treaty of Rome. The Dutch Rover dealer - unlike those of other manufacturers, particularly the Japanese - was helpful and, after a three month wait, he was the happy owner of a shiny new S-reg Rover 200 at a ridiculously low price. Or rather, at a very sensible price. One has to wonder how a car shipped from the UK to Holland can be so much cheaper than one sold just a few miles from the factory. To add insult to injury, the UK taxpayer is giving money to BMW, Rover's owner, as an incentive to keep the Longbridge plant open. Buy British? Um, no thanks.
It appears increasingly likely that the UK public is being ripped off when it comes to motoring, especially when you take the extravagant fuel taxes and new 'Big Brother' speed cameras into account. No surprise there. But surely all's far more fair in the computer market, isn't it? Obviously not, or this would be a very short column. Let's start with the difference in prices between the UK and America. Think of the people who decide on such matters. For the sake of poetry, we'll call them Bob and Bill. One can picture the opulent office, towering high above the city, in which their decision was made. Soft music lilts through concealed speakers, our two heroes relax in comfortable, expensive chairs, while 'helpers' mop their occasionally fevered brows and drop grapes into their awaiting mouths.
"So, Bob, what shall we charge your countrymen for our hardware? Current exchange rate is... (taps at a gold-plated keyboard) 1.63". Bob thinks for a while and says "Ooh, pound for dollar?", to which Bill replies "Yup, sounds good to me."
And so it came to pass. Buy a computer here for £699 and you'll get roughly the same spec in the USA for $699. The price difference for software can be even greater. Yet there's no obvious practical reason for this discrepancy. But how can this be? What about the free market model and all that? In industries with intense competition, prices tend to come down to a level based on development plus manufacturing plus packaging plus distribution plus marketing costs plus a small profit percentage. But prices for some computer items, and software in particular, are not calculated this way. Instead, they are based on what the market will support. In other words "How much will people pay for this?". In the UK, the answer is often "More than anyone else in the world".
Occasionally, the price-makers get it wrong. It's obvious when prices are too high, because up pops a black market. As we've seen recently, when you raise taxes on tobacco, a healthy (or rather, wheezingly unhealthy) black market in duty-unpaid cigarettes flourishes. A similar thing happens with software. Would you rather pay £45 for an original game or £5 for a pirated copy of the same game? Unless you're honesty incarnate, and you believe that the companies concerned deserve to make higher profits, the answer is pretty obvious.
In the light of all this, what are we to make of the news that Virgin Megastore, HMV, Woolworths and Dixons have been accused of colluding to raise the prices of computer games by as much as 50 percent overnight (The Express, 17th July)? First, if it's true, the Homer Simpson award must go to the executives in all four companies who decided it would be a good idea to introduce the price changes all at once. Nice one, people. That fat bonus has to be looking a bit unlikely now, I'd have thought.
But second, remember that moaning quietly about such matters solves nothing, whether it's cars or computers involved. In this case, and in any other case of possible price-fixing, consumer power is a very effective weapon. If a particular accusation of wrong-doing turns out to be true, complain with your wallets and purses. Write to your MP and the company concerned to express your outrage (easy enough via e-mail). Boycott the company's products. If your children - or you yourself - want a new game or other piece of software desperately from a company whose tactics you deplore, get together with other like-minded people, buy one copy and share it, licence permitting. Look further afield for cheaper products, in places like supermarkets and off-the-page discount stores. Or even abroad, via the Internet, if you're feeling adventurous.
But whatever you do, don't be tempted by piracy. Leave that to the professionals.
