Competition bill penalty 'too harsh'

PUBLISHED : Wednesday, 26 January, 2011, 12:00am
UPDATED : Wednesday, 26 January, 2011, 12:00am

Opponents of the forthcoming competition bill say the proposed penalty is too steep.

The business-sector lawmakers say a penalty of up to 10 per cent of global turnover for companies violating the proposed bill - which aims to provide a level playing field for companies in Hong Kong - is too severe.

Firms can be charged 10 per cent of their annual turnover for every year they breach the law.

The government says it is a necessary deterrent, given the lack of criminal sanction in the draft bill, which has just entered its clause-by-clause scrutiny stage in the Legislative Council.

The bill tackles two major anti-competitive practices. The first is practices such as price-fixing and market-sharing. The second pinpoints abuse of market power.

Economic Synergy lawmaker Jeffrey Lam Kin-fung said the proposed penalty was unreasonable.

'The government says we have to model our bill on different foreign examples, but neither the competition law of the European Union nor the United Kingdom apply a penalty for every single year that a contravention occurs,' Lam said. 'So we are copying the harshest part of the other laws to make up our own bill.'

According to a policy paper issued by the government, the laws in the EU, Britain and a few other countries impose a maximum penalty of 10 per cent of turnover in the preceding business year. Singapore, widely seen as Hong Kong's economic rival, imposes a maximum of 10 per cent of turnover of local business, for at most three years.

Undersecretary for Commerce and Economic Development Greg So Kam-leung said the penalty was a cap and a necessary deterrent. 'There is criminal sanction power in other major jurisdictions such as the UK, so we need a greater penalty ceiling to deter unlawful cartel behaviour,' he said.

Polytechnic University law professor Mark Williams said that if anti-competitive behaviour had lasted for years, it had done the equivalent number of years of harm to the economy and so a corresponding penalty was needed.