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Competition Law
Care and time needed for competition law
2009/03/06
Mr Alex Fong
SCMP (6 March 2009)
The government's announcement last week to delay the competition bill is the right move. It will give officials time to focus on the important and substantial technical, legal and policy matters that have to be addressed as soon as possible.
Clarity is needed. The operations of businesses and markets are complex. This is the first time many businesses in Hong Kong will be operating under the provisions of a fair-competition law, and getting it right needs to be a priority.
Businesses need to know what will be permitted and what will not. Some previously accepted activities will be prohibited, but we must avoid sudden changes in legal circumstances that would not be immediately apparent to ordinary businesspeople unfamiliar with the law's complex technical language. A grace period is needed.
At the same time, Hong Kong's famous minimalist approach to regulation should be preserved when introducing the law. Similarly, care and time must be taken in developing an enforcement mechanism, and appropriate and effective penalties.
Hong Kongneeds to continue attracting international investment and to maintain its international reputation as a business-friendly destination. Therefore, a clear explanation of what the competition law means for business is needed.
A set of written statutory guidelines will help provide certainty. They should be made available for public consultation before being finalised. The business community wants to ensure it can continue to operate freely and without undue worry about red tape. The document would allow companies to assess the effects of their conduct on the market, and to know how to comply with the law.
Officials seem to believe that anti-competitive conduct should be prohibited by law and drafted in general terms. However, competition laws in other places, which have been vaguely written, have had to be interpreted by the courts over many years.
Importantly, another legal issue is emerging in Hong Kong. Recent judgments concerning the power of tribunals to determine legal liability could mean that courts need to hear competition cases. The government is proposing that cases be decided by the competition commission and its appeal authority, the competition tribunal. Any major change in the enforcement structure should be discussed with stakeholders and the public.
In line with our minimalist approach, the law should be introduced gradually. Hong Kong needs a law that focuses on discouraging specific types of anti-competitive activities that adversely and unfairly affect economic efficiency or free trade. As this is the start of Hong Kong's experience with regulating competition, specific activities such as market-sharing and price-fixing should be spelled out in great detail, and prohibited.
Companies and employees should be given as much flexibility as possible to cope with the new law. They require transparency and certainty, not the dampening effect of ill-defined or vague legislation.