Smaller online stores in Australia are complaining of bullying tactics adopted by retailers, according to online giant eBay which submitted an inquiry with the Productivity Commission (PC).

eBay claimed that the large retailers placed pressure on distributors and wholesalers not to sell and deliver some items to online establishments in a bid to eliminate competition. The charges led eBay to support a probe by the Australian Competition and Consumer Commission to look deeper into the restrictive distribution practices.

The PC, in turn, is investigating complaints from traditional retailers of competition coming from major online traders such as Amazon and eBay.

:"eBay is also aware of situations where local distributors and sellers have had pressure applied by prominent Australian retailers to cease selling products on online sites such as eBay.com.au, in competition to the retailer's own channels," eBay Managing Director for Australia and New Zealand Deborah Sharkey wrote in the submission.

Ms Sharkey did not identify the local retailers engaged in bullying behaviour.

"The highly concentrated Australian retail environment means such behaviour can create considerable pressure on distributors and sellers, who have limited other retail distribution channels locally," Ms Sharkey added.

A draft report released in August by the PC called for regulatory reforms in the Australian retail industry for it to be more competitive in the global market. Among the reforms proposed by the commission to respond to changing consumer preferences are those covering planning and zoning laws and retail trading hour limits.

"Intensified retail competition is a boon for consumers, but it is challenging for a retail industry which, overall, has lower levels of productivity when compared internationally and, in many cases, faces higher costs. However government's role is not to shield the industry from competition but to remove constrains which restrict the industry in responding to this heightened level of competition," PC Commissioner Philip Weickhardt said in a statement.

Mr Weickhardt stressed that the current exemption from government sales tax and duty for imports valued less than $1,000 is only a minor contributing factor to online offshore purchases made by Australian shoppers. Although such kinds of consumers are growing fast, they account for only a small segment of total retail sales in the country.