Amazon allowed to undercut Australian retailer pricing with huge discounts

amazon box — Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City, January 29, 2016. Reuters/Mike Segar

Amazon is tipped to officially begin its business in Australia by the end of November. The giant retailer will reportedly be allowed to undercut local businesses with loss-making prices. It is expected that Amazon will open for business in Australia later this month to coincide with the Black Friday and Cyber Monday shopping frenzy.

Australian Competition and Consumer Commission Chairman Rod Sims confirmed through Fairfax Media that Amazon can set prices low enough. In doing so, it would not breach 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,” Reuters quotes Sims as saying. He added that if a business eventually plans correctly and make that price point, it is in no way illegal.

Australian Small Business Minister Michael McCormack said he will ensure Amazon pays its fair share of tax. An Amazon spokeswoman maintained that the company pays all taxes in every country where it operates.

In Australia, perceived tax avoidance by huge foreign companies is a big issue. The government enforces new measures, which is the “Earned here, Taxed here” corporate tax laws.

Welcome, Amazonians

First photos of the Dandenong South site show a sign outside the Australian warehouse for Amazon that reads "Welcome Amazonians. It's still day one! Are you ready to make a difference?" It was placed down at the entrance where workers would walk in from the car park. The slogan has been regularly used by Amazon over more than 20 years.

The US company has been building a distribution warehouse in the southern city of Melbourne. Amazon country manager Rocco Braeuniger will reportedly hold a meeting in Sydney and is expected to address more than 500 local suppliers.

Amazon confirmed in April that it was opening an Australian arm. Along with its confirmation, it aims to bring several jobs in Australia and much economic activity to the country.

The company expressed excitement to bring thousands of new jobs here along with millions of dollars in additional investment. It also promised to empower small Australian businesses through Amazon Marketplace. Amazon said it would focus on things it believes customers value most: low prices, vast selection and fast delivery.