Small businesses say competition bill lacks clarity

PUBLISHED : Wednesday, 22 December, 2010, 12:00am
UPDATED : Wednesday, 22 December, 2010, 12:00am

Small and medium-sized businesses say the government's draft competition law lacks detail and needs more clarity before they will back it, according to the city's leading business chamber.

Among the areas they want more details on are what constitutes price-fixing and abuse of market power.

The Hong Kong General Chamber of Commerce said the government's draft proposal was far from ideal and would place an unnecessary burden on small and medium-sized enterprises. These firms account for more than 98 per cent of the city's companies and employ nearly half of the working population.

Addressing such details could be key to the bill gaining support in the Legislative Council. In an attempt to get their concerns across, the chamber joined forces with other business organisations and stepped up communications with the government.

'We definitely support a good competition bill,' chamber chairman Anthony Wu Ting-yuk said. 'But the current draft is very different from our submission to the government. It lacks certainty.'

The bill is being scrutinised by lawmakers on the bills committee and is due to be tabled before the end of the legislative term in May 2012.

It will tackle two main types of anti-competitive behaviour. The first covers practices including price-fixing and market-sharing. The second, abuses of market power such as predatory behaviour by competitors.

But Wu said ambiguities abounded when defining what a contravention was. 'If two restaurants are both charging HK$2 extra for iced drinks, is it price-fixing?

'An unclear bill means companies are forced to seek legal advice. These legal and compliance costs can be a heavy burden for small and medium-sized businesses.'

That was the key message sent to the administration during the chamber's meeting with Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan last week, Wu said.

Three other organisations, including the Chinese Manufacturers' Association of Hong Kong, also attended the meeting. In a joint submission, the four called for the bill to be clarified.

Bureau undersecretary Greg So Kam-leung promised to give sample guidelines next January, but Wu said the government should provide clearer definitions of key terms to ease business sector concerns.

'There should also be representatives from the business sector in the competition commission,' he said, referring to the body that will be set up after the bill is passed by Legco. The commission will set binding guidelines and investigate anti-competitive behaviour.

There will also be a competition tribunal with jurisdiction to hear and determine applications filed by the commission.

Jeffrey Lam Kin-fung, the chamber's Legco representative, said the administration should provide more examples from foreign countries to serve as models.

While the current draft is generally based on the European Union's competition bill, Lam said: 'Hong Kong has its unique economic structure and business culture. We should refer to examples from both large and small countries. Europe is a vast continent, while we are a small place.'