• Wed
  • Oct 22, 2014
  • Updated: 10:45am

Unfair to exclude statutory bodies from Hong Kong's competition law

PUBLISHED : Friday, 20 January, 2012, 12:00am
UPDATED : Friday, 20 January, 2012, 12:00am
 

The Heritage Foundation has repeatedly rated Hong Kong as the world's freest economy.

However, doubts are now being raised about that title with the possible introduction of a competition law that excludes statutory bodies. This would clearly signal increased government intervention in the market, which would in turn adversely affect the criteria and considerations used in the foundation's index, such as on trade freedom and government monopolies.

No one will argue against a level playing field, but a competition law that excludes more than 500 statutory bodies, some of which conduct economic activities in direct competition with private businesses, does not ensure such fairness.

Take the Housing Authority as an example. It is the biggest property developer in Hong Kong, providing housing to more than two million people. In the exhibition industry, the Trade Development Council has a significant market share in the trade show sector.

William Kovacic, the former commissioner of the US Federal Trade Commission and an antitrust expert, said last year at a University of Hong Kong seminar that statutory bodies should not be excluded and, according to experience in other jurisdictions, once the right of exclusion is given out, it would be very difficult to take it back.

Recently some small and medium-sized enterprises expressed concerns that if statutory bodies like the TDC are subject to the competition law, then the SMEs will suffer because the TDC may no longer be able to continue offering lower exhibition fees or providing effective services to them. This is a misconception.

A key benefit of competition law is that it would create strong incentives for all market players (including statutory bodies) to improve their competitiveness through lower prices, better quality and wider choices of services.

Moreover, the competition bill already has an exclusion for services of general economic interest, which ensures that statutory bodies will not be prevented from carrying out their statutory missions, without the need for a blanket exclusion of such bodies. There is nothing that would prevent the government from granting subsidies directly to SME exhibitors.

Competition and fairness go hand in hand. There is no reason why we should champion a competition law that is unfair.

It could be detrimental to the city's hard-earned reputation that no one would like to see.

Ada Wong, Sha Tin

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