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Guidelines on Competition Law Need Careful Consideration

After being scrutinized for almost two years and undergoing over 200 amendments, the Competition Law was finally passed by the Legislative Council on June 14.  The Hong Kong General Chamber of Commerce has long considered that the law is far from desirable.  As a result, the establishment of the upcoming Competition Commission and formulation of the guidelines will require very careful consideration.

Hong Kong’s success stems from our free market economy, entrepreneurial spirit, good infrastructure, proper regulatory control, diligence and flexibility. I believe that proper regulatory control means we should only regulate where necessary, and that the Government should not regulate for the sake of regulating.

When businesses are burdened by unnecessary regulations, our competitiveness will suffer, because entrepreneurs’ innovative spirit will be damped as they would rather maintain the status quo, rather than risk falling foul of the law.

The Chamber has always supported the introduction of a good competition law, but the recently passed law requires a lot of clarification. For example, in the Bill, “hardcore anti-competitive conduct” is defined as any conduct “having an intent or effect of preventing, restricting or distorting competition.”  The Chamber feels the scope and coverage of such a definition is far too broad, and that the existing provisions in the legislation will impose unnecessary constraints on normal economic activities. We believe hardcore anti-competitive conduct should be restricted only to conduct that substantially lessens competition.

The Government has tried to ease concerns by saying that where commercial arrangements produce efficiency that outweighs any harm to competition, such conduct would be permitted. However, the present provisions of the law fail to clarify if economic efficiency will provide grounds for exclusion from competition regulation.  The law should explicitly require both regulators and the court to take economic efficiency, an important factor in the competition process, into consideration when implementing the law.

With the enactment of the legislation, the Government should seek and adopt market views on the constitution of the Competition Commission and formulation of the guidelines.  The Chamber is not only willing to help, but we will also organize seminars and workshops for members to gain better understanding of the law to help them from inadvertently being caught out.

The Competition Law is a very complex issue. Therefore, the Government needs to provide more assistance to help businesses understand the law and also raise awareness among the business community and the public.

Posted on 2012/06/26