Antitrust bill given two final changes

PUBLISHED : Friday, 06 April, 2012, 12:00am
UPDATED : Friday, 06 April, 2012, 12:00am

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The government has made two key changes to its competition bill, hoping to remove the final political hurdles to its passage in the legislature by July.

The long-awaited law aims to curb anti-competitive behaviour and provide a level playing field for companies. It distinguishes between 'non-serious' practices - such as restrictions on advertising - and serious misconduct such as price-fixing and bid-rigging.

Yesterday's concessions lifted two key thresholds, in an effort to prevent harming small and medium-sized businesses caught in non-serious offences. It raised the turnover threshold from HK$11 million to HK$40 million: companies with less than HK$40 million in annual turnover will be exempt from rules on the abuse of 'substantial market power', which comes under the heading of non-serious offences.

It also raised a second threshold - when more than one company is involved - on their combined turnover from HK$100 million to HK$200 million. There are no exemptions for serious offences.

Yesterday's changes marked the second concession to the draft bill originally tabled to the Legislative Council in July 2010. The government made six concessions to the business lobby in October of last year, responding to complaints that the bill's terms were too severe and would harm small businesses.

Those concessions drew criticism from supporters of the original draft - particularly pan-democratic lawmakers - who said they had weakened the bill.

Both groups responded in a more moderate way to yesterday's proposals, conceding the need to get the bill passed by July. If not, the legislative process would have to be restarted under a new administration.

Jimmy Ng Wing-ka, vice-president of the Chinese Manufacturers' Association, said the chamber had not yet studied the new figures, conceding it would be unrealistic to demand much higher thresholds.

'We welcome the government's attitude in responding to businesses' concerns,' said Ng. 'But we have to further study the effects of the two new arrangements in protecting small firms. After all, a factory reaching the maximum HK$40 million in annual turnover can earn only HK$1.2 million - a 3 per cent profit margin is considered very good for many industries.'

Some business lobbies, such as the Federation of Hong Kong Industries, had sought a turnover threshold of HK$500 million. The HK$40 million figure was based on the average turnover of SMEs recorded by the Census and Statistics Department from 2006 to 2010, excluding companies with five or fewer employees. The original HK$11 million threshold came from the average turnover of all SMEs from 2005 to 2009.

Democratic Party vice-chairwoman Emily Lau Wai-hing said there was public support for passing the bill despite the concessions.

Thomas Cheng Kin-hon, chairman of the Consumer Council's working group on the bill, said the 'most important goal is to pass the law, for which the city has been waiting for years'.

 

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