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PlayStation2 Flap Costing Sony Big Bucks

Trade: Designation of new console as a game player and not a computer means each unit is hit with $9 duty when imported for sale in European Union.

November 23, 2000|From Associated Press

BRUSSELS — Is Sony's new PlayStation2 a video game player or a computer? It's more than just a marketing question: The answer is costing the Japanese electronics maker millions in import taxes.

The hot new consoles hit shelves across Europe on Friday, after setting off a scramble among early Christmas shoppers in the United States last month.

Equipped with a 128-bit microprocessor, a DVD player and the ability to connect to the Internet, Sony believes the new units have evolved enough from the first PlayStations to qualify as a computer.

But the customs office in Britain, where Sony Computer Entertainment Europe is based, rejected that argument and put the PlayStation2 in the same video game category as the originals.

That means each unit is subject to a duty of 2.2%, or about $9, when imported for sale in the European Union. Products classified as digital processing units, or computers, don't carry an import tax.

Sony spokeswoman Liz Ashford said Wednesday that the company is appealing the decision in London by asking for a departmental review. If that fails, the company may file suit.

EU spokesman Jonathan Todd said the EU established rules for "computers used basically for games" this year when confronted with Sony rival Sega's similarly souped-up Dreamcast console.

The PlayStation2 decision "is in line with the commission's classification rules," he said, adding that Sony is free to challenge the ruling in court.

In the meantime, Ashford said, Sony is absorbing the cost of the tariffs rather than passing it on to European consumers, who already pay a hefty premium over U.S. gamers.

The same PlayStation2 that retails for $299 in the United States is priced at $425 in Britain, $385 in France and $375 in Germany.

Sony is still facing supply shortages that made PlayStation2 scarce at its U.S. debut, but Ashford said the company has not changed its forecast of selling 3 million units in Europe by the end of the company's fiscal year in March.

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