Competition bill in danger of losing

PUBLISHED : Monday, 20 February, 2012, 12:00am
UPDATED : Monday, 20 February, 2012, 12:00am


If evidence is needed to demonstrate the government's lack of political will to act for the benefit of the wider community, the fair competition bill now languishing in the Legislative Council is an example. First floated 16 years ago, the blueprint seeking to outlaw anti-competitive market behaviour faces growing resistance from the business lobby. If officials do not play tough and win approval by this summer, the bill may be abandoned indefinitely.

The latest obstacles arise from the government's plan to exempt most public bodies and possibly more small and medium-sized businesses. Officials argue that many statutory bodies provide essential public services. It plans to regulate only those engaging in substantial economic activities and direct market competition. The rest can be monitored by an existing advisory body. As a result, only six of the 581 statutory bodies will come under the new law.

This is a step in the wrong direction. Not only does it give the impression that the government is putting itself above the law, it may even lend support to critics questioning why a law is needed if the advisory mechanism can do the job. Some public bodies are arguably market competitors. The wide range of trade fairs organised by the Trade Development Council is a case in point. Exempting all but a few bodies may aggravate a distorted competitive landscape and turn the law into a tool that justifies unfair competition. It also risks giving the business sector another excuse to reject the bill.

Equally worrying is the consideration given to businesses' call to raise the turnover threshold from the proposed HK$11 million to HK$550 million. Although that would effectively exempt more small and medium-sized enterprises, the law would become meaningless if only a small fraction of the economy was to be covered.

An effective law needs to have a deterrent effect. Regrettably, the bill was already weakened after the government introduced six major concessions to appease business concerns last October. These include reduced penalties and a narrower scope for the proposed competition tribunal. There are already concerns that the bill has been de-fanged to the extent that offenders would have little to fear from flouting it. Officials must, therefore, resist watering down the bill further in return for business support.

That said, genuine concerns should be addressed. Fears of over-regulation are understandable in a free economy like Hong Kong's. More efforts are needed to assure businesses that legitimate business activities would not be unreasonably curbed.

Fair competition is for consumer protection and for small business to survive. The bill is a long overdue step to provide better safeguards on this front. The government should act in the public interest and show determination to put it into the statute book.