Parallel Importing Discussion - Executive Summary
Parallel Importing and the Creative Industries
Competition and Enterprise Branch
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1. Parallel-importing bans restrict intra-brand competition by giving intellectual property right holders an exclusive importing right. Right holders thereby have a greater ability to determine whether their products will be released in New Zealand and, if so, at what time and (more importantly) at what price.
2. In the 1999 Speech from the Throne the Government said that parallel-importing bans for periods of up to two years would be introduced for new-release music recordings, motion picture titles, books, and software products. The Government's expectation in proposing parallel-importing restrictions was that giving the New Zealand subsidiaries of international producers and publishers a greater ability to guarantee profit margins on foreign titles they distribute in New Zealand would encourage them to make greater investments in local talent, and would also promote more of the fruits of that talent into off-shore markets.
3. In March and April 2000 the Ministry of Economic Development consulted with creative-industries stakeholders on the Government's proposal to introduce parallel-importing bans for creative-industries products. On the basis of that consultation, the Ministry reported to Government that there was insufficient evidence to suggest that parallel-importing bans on these products would achieve the Government's policy objective of encouraging more international investment in, and overseas promotion of, New Zealand creative talent.
4. The majority of the arguments made in submissions by advocates of the proposed parallel-importing bans related to concerns other than the Government's cultural industries development objective, which was the basis on which the Government undertook to review parallel importing for the creative industries. These included arguments that parallel-importing restrictions are required to combat piracy, to remove the possibility of New Zealand books being imported from other countries, and to prevent the rental of motion picture DVDs not officially released in New Zealand.
5. Consumer groups, libraries, educational institutions, and local Internet retailers expressed concerns about the adverse impacts of parallel-importing restrictions. They argued that the restrictions would result in increased prices, fewer titles available from local retailers, and (possibly) longer waiting times for new-release titles. These concerns are, to some degree, supported by contentions that the threat of parallel importing has resulted in New Zealand retail prices for books, music and software remaining steady despite a depreciating exchange rate. It also appears that the ability to parallel-import titles has contributed to the availability of a wider range of titles, earlier release dates, and improved service from distributors.
6. The implications of new technologies and changing consumer behaviour also need to be considered in determining the effectiveness of parallel-importing bans - both for achieving the Government's policy objective and for restraining parallel trade. The potential for greater use of Internet mail ordering, new formats for recording and storing creative works, and the development of electronic distribution of copyright goods are all relevant.
7. A key concern cited in many submissions related to the presence of pirated material in New Zealand. Piracy is a separate issue from parallel importing, and separate initiatives are underway to directly address these concerns. Strengthened anti-piracy and anti-counterfeiting measures are to be included in a new Trade Marks Bill that will be introduced to Parliament in 2001. The Government is also examining whether a reversal in the onus of proof in civil copyright-infringement proceedings will assist right holders in taking actions against suspected pirated material. In addition, publicity campaigns are planned to increase awareness about the theft of intellectual property in general, and about border-enforcement assistance offered by the New Zealand Customs Service.
8. Submissions are invited from creative-industries stakeholders and other interested groups and individuals on the proposed parallel-importing bans, the Ministry's comments on arguments made in support of the ban, the potential effects of parallel-importing restrictions, and the anti-piracy initiatives under development. The closing date for submissions is Friday 30 March 2001.