Unfair competition
The Consumer Council's report on supermarkets is a reminder to everyone in Hong Kong that we live in a society where consumers do not have the benefit of legislation to protect their interests. Whereas prices in other sectors have been falling over the past few years, the report says, supermarket prices have been rising.
Why doesn't Hong Kong, like other developed societies, have legislation to ensure fair competition and prevent the emergence of monopolies? Because in Hong Kong, the government believes in something called 'self-regulation'. That is to say, consumers are at the mercy of those in a near-monopolistic situation to curb their natural inclination to maximise profits. Needless to say, this does not work very well.
It is sobering to realise that Canada, for example, has had legislation to ensure competition since the late 19th century. And yet Hong Kong, which prides itself on being part of the developed world, has no plans to enact such laws even in the 21st century.
While Canada was the pioneer in this area, other developed economies followed suit decades ago - except Hong Kong.
In this region, the developed economies of Japan, South Korea and Taiwan have legislation to ensure a level playing field to protect consumers. Developing countries, such as Indonesia, Thailand and the Philippines, boast such legislation. Vietnam has announced it is working on competition laws. Even the island-nation of Fiji is ahead of Hong Kong in this respect, with legislation on consumer protection and competition. Does Hong Kong really want to be in the company of countries like North Korea, which has no legislation and has indicated no interest in moving in that direction?
The Hong Kong government, which likes to boast that we have been designated the world's freest economy, prides itself on not interfering in the economy. This is not a philosophy, just inaction. And, through inaction, the government is, in effect, interfering by allowing industry to distort the market.
Ironically, Hong Kong businesses operating in foreign countries are protected by competition laws in those countries. But when foreign companies come to Hong Kong, we offer them no such protection.
And the legislature is helpless. Legislator Fred Li Wah-ming attempted two years ago to introduce competition legislation by submitting a private member's bill. However, he discovered that the Basic Law does not allow such bills if they relate to public expenditure or government policy. No legislator can attempt to change government policy without the consent of the chief executive. And Tung Chee-hwa is not about to give his consent for government policy to be changed.
The business community's attitude is apparently changing. Christopher Cheng, former chairman of the Hong Kong General Chamber of Commerce, wrote last May that it had been approached by two major oil companies 'which both feared being discriminated against in the allocation of new petrol stations'. He concluded that 'a competition law makes sense' and that Hong Kong's lack of a comprehensive approach 'badly needs to be addressed'.
The World Trade Organisation, too, has raised questions about Hong Kong's competition policy. While the city's trade and economic policies were praised, its competition policy was regarded as inadequate.
Hong Kong is fortunate to have the Consumer Council. But it is not enough. It needs a competition authority, buttressed by pro-competition legislation. It is anomalous for Hong Kong to continue to be named, year after year, as the world's freest economy when there is no legislation to ensure free competition.
Frank Ching is a Hong Kong-based journalist and commentator
