Consumers in dark about DVD imports: ACCC

21 December 2000

The Australian Competition and Consumer Commission today advised consumers to exercise caution when purchasing a DVD video player because of the restrictions that limit their ability to play imported DVDs.

These restrictions are artificially imposed by a group of multinational film entertainment companies and are not caused by the existing differences in television display formats such as PAL, NTSC and SECAM.

"The ACCC is concerned that many purchasers of DVD players and films are still in the dark about their inability to play imported DVDs on DVD players purchased in Australia", ACCC Chairman, Professor Allan Fels, said today.

"The ACCC is currently investigating whether Australian consumers are paying higher prices for DVDs because of the ability of copyright owners, such as film companies, to prevent competition by restricting imports from countries where the same (authorised) video titles are sold more cheaply.

"The ACCC is aware that manufacturers of DVD players around the world are required by the DVD Copy Control Association in California, USA to incorporate the Regional Playback Control system. The RPC system effectively divides the world into six regions for the purposes of DVD distribution, and employs digital encryption to prevent a DVD produced for one region from being played on a DVD player manufactured for another region.

"The United States and Canada currently comprise Region 1; Region 2 is Europe, South Africa and Japan; Region 3 is South East Asia; Region 4 is Australia, New Zealand, the Pacific, Latin and South America; Region 5 is Africa, Russian Federation and Eastern Europe; Region 6 is China. It is clear that there is no geographic logic to these regional divisions.

"What this means, in practical terms, for Australian consumers is that only DVDs purchased in Australia can be effectively played on a DVD player purchased in Australia", Professor Fels said. "If consumers choose to purchase a DVD player overseas, they may not be able to play DVDs purchased in Australia on their machine. Similarly, a DVD player purchased in Australia will generally not be able to play DVDs purchased overseas, unless the disc is purchased in another region four country such as New Zealand.

"While the Copyright Act 1968 prevents Australian retailers and wholesalers from importing DVD movies for resale or other commercial purposes, consumers are lawfully entitled to buy DVD movies from overseas for personal use.

"It is when this option is pursued that the limitations enforced by the RPC system become apparent. Private importation of DVDs, either via the Internet or from purchases acquired during international travel, has been an attractive option for Australian consumers, as it is widely accepted that discs produced overseas, particularly in the US, provide significantly greater consumer choice in terms of the range of movie titles available on DVD and the additional features displayed by those titles.

"There will likely be a large number of disappointed consumers who, because of the RPC system, cannot make use of their overseas purchases".

Consumers should be aware that the RPC system differs from NTSC and PAL television display formats which previously gave rise to discrepancies between United States and Australian television technical standards, and thus made parallel importation of videos impractical. Unlike the NTSC and PAL formats, the RPC system is an artificial barrier that limits competition from imported DVDs.

The ACCC is currently considering the contention that the RPC system enables copyright owners to charge higher prices in some regions than in others. The RPC system may be used to prevent cheap imports in countries where there exists limited domestic competition, thereby enabling the movie studios to charge Australian consumers higher prices. Such a situation existed with music CDs prior to the repeal of parallel import restrictions in July 1998.

Release number: 
MR 364/00
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Ms Lin Enright - (02) 6243 1108