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Watchdog will allow Amazon to undercut Australian business

Australia’s competition watchdog has announced that it’ll allow Amazon to undercut Australian businesses with big discounts when it opens in the country.

Amazon won’t confirm when its local operations will open, but sharemarket analysts are convinced it will be in November after the retail giant started buying thousands of products from suppliers – which Amazon could then slash for the consumer by up to a third in the lead-up to Christmas.

Despite being seen by many retailers as a major commercial threat, Chairman for the Australian Competition and Consumer Commission, Rod Sims, said that Amazon was able to – by law – set prices low enough to win business without breaching competition laws.

Competition laws will allow retail giant Amazon to undercut local businesses (stock image)

‘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,’ Mr Sims told AFR Weekend.  

‘Eventually, if you get your business plan right, you will make that price point, that is in no way illegal.

‘Everyone is assuming that Amazon is going to be a screaming success and they will put everyone out of business. That may not happen.’

Amazon has been building a 24,000 square meter distribution warehouse in Melbourne, and has been advertising for jobs in both Melbourne and Sydney since August.

On November 13, Amazon’s country manager Rocco Braeuniger is holding a meeting in Sydney where he is expected to address more than 500 local suppliers.

Australian Small Business Minister Michael McCormack has said he will watch Amazon closely to ensure the company pays its fair share of tax.

Australia's first distribution centre site (pictured) in Dandenong, near Melbourne, Victoria

Australia’s first distribution centre site (pictured) in Dandenong, near Melbourne, Victoria

‘Amazon pays all the taxes we are required to pay in every country where we operate,’ an Amazon spokeswoman told Fairfax.

‘Perceived tax avoidance by large foreign companies is a big issue in Australia, and the government is now enforcing new measures known as the ‘Earned here, Taxed here’ corporate tax laws.’

Amazon is now twice as large as Walmart, which used to be the world’s biggest retailer. 

ACCC Chairman Rod Sims (pictured) said Amazon's low prices are in 'no way illegal'

ACCC Chairman Rod Sims (pictured) said Amazon’s low prices are in ‘no way illegal’