New competition law can't work without land reform

Some time next year, if everything goes to plan, the Legislative Council will pass Hong Kong's new competition law. For the first time ever, destructive practices like price-fixing, bid-rigging and predatory pricing will be banned across all sectors of the economy.

In theory the new law should be a shot in the arm for business activity, encouraging enterprise, inspiring innovation and enlarging choice just when Hong Kong needs it most.

That's the theory. In reality the new law is unlikely to make a blind bit of difference to Hong Kong's anti-competitive business environment, leaving the cartels that dominate our economy and collude to jack up prices and shut out newcomers largely untouched.

The problem is that the new law specifically excludes the city's biggest monopolist: the government, which owns, controls and parcels out the entire supply of the scarcest commodity - land.

According to Hans Mahncke, assistant professor of law at the City University of Hong Kong, 'there is a strong but rarely analysed argument that land ownership and property development are the true source of Hong Kong's competition problems'.

In an article in the latest edition of Hong Kong Lawyer, the journal of the Law Society of Hong Kong, Mr Mahncke contends that the new competition law will be meaningless without a complete overhaul of the city's land system.