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Competition Law

Chamber Submissions

2005/06/30

Report of the Chamber Competition Policy Expert Group

Executive Summary

1. Recently, there have been a number of criticisms of Hong Kong's competition policy. It is important to understand the problems in the right perspective.
- Overall, Hong Kong is a small city economy. Market concentration is naturally higher in such economies in order to provide users with economies of scale. This may produce market sectors with a small number of players. This is not necessarily anti-competitive.
- Consumer protection should be an important, but not the only, objective of competition policy. The regulatory regime should be multi-dimensional and not just focus on price-based competition alone.
- In addressing competition issues, the market should first be defined. Globalisation and our close relationship to the Mainland have made it increasingly difficult to understand the market as being confined just to within the territory of Hong Kong.
- Competition policy is not the only way to enhance competition in the market. The latter can be improved through other policies such as liberalization of market access, corporatisation and privatization.

2. We have reviewed the current sectoral approach in competition regulation and have concluded that the status quo is not satisfactory in addressing the range of problems – whether real or perceived – related to competition. We have considered the following options to improve on the status quo:
- advocacy and publicity
- strengthening the role of COMPAG and the Consumer Council
- reinforcing current laws and regulations relating to competition
- a general competition law

3. We have examined the case for a general competition law, and have concluded that it is not a panacea to the competition problems to be addressed. If there were to be a general competition law, it should be a minimalist law with a simple enforcement structure. While we do not rule it out for the long term, the case for a general competition law is not yet compelling.

4. Treating competition policy as a process of public policy development, we advocate a solution based on a mixture of advocacy, institutional reinforcement and regulatory changes, i.e. a package of competition-enhancing measures.

5. Our solution package consists of five recommendations, with Recommendation 2 – strengthening of COMPAG – as the anchor.
(1) A publicity and advocacy campaign
(2) Structural reform for COMPAG: balanced composition with autonomous secretariat directly under the Financial Secretary
(3) Strengthening the Consumer Council
(4) Immediate legislative change, e.g. law against bid-rigging
(5) Study on other competition-related laws

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