Calls for more exemptions in competition law

PUBLISHED : Wednesday, 11 April, 2012, 12:00am
UPDATED : Wednesday, 11 April, 2012, 12:00am


A new front emerged yesterday in the battle over the competition bill, with pro-business and pan-democratic lawmakers wrangling over just how much market share a company can command before it exercises 'a substantial degree of market power'.

The long-awaited bill to curb anti-competitive practices and provide a level corporate playing field in the city has already been subject to multiple amendments since being introduced to the Legislative Council in October. Last week the government proposed raising the turnover threshold from HK$11 million a year to HK$40 million.

Companies with turnover below the threshold would be exempt from regulations governing the abuse of 'substantial market power', known as the 'second conduct rule'.

Pro-business lawmakers also want a second threshold, covering the share of a market a firm enjoys, to be raised from the 25 per cent level proposed by the government last week. Companies whose share of a market does not reach that level would be exempt from regulation.

The government had hoped the concessions it made last week would be sufficient for the bill to pass by July without further amendment. Legco's term ends in July and if the bill does not pass by then, a new bill will need introducing in the next term that starts in October.

'Can you increase this 25 per cent floor to 35 per cent to enhance protection for small businesses? We just want to curb the monopolies anyway,' asked insurance lawmaker Chan Kin-por during a Legco bills committee meeting yesterday.

A higher market-share threshold would exempt even more firms from the law. The government's proposal to raise the turnover threshold to HK$40 million would exclude 95 per cent of small and medium-sized enterprises (up from 86 per cent under an HK$11 million threshold).

Jeffrey Lam Kin-fung, the Legco representative of the Hong Kong General Chamber of Commerce, echoed Chan, citing a 'strong voice from the business sector demanding the 25 per cent figure be increased'.

In joint deals where more than one company infringes regulations on 'non-serious' practices - such as restrictions on advertising - outlined in the bill's 'first conduct rule', they would be exempt if their combined turnover is less than HK$200 million, doubled from the original HK$100 million. There are no exemptions for any companies for 'serious' offences such as price-fixing and bid-rigging.

Civic Party lawmaker Ronny Tong Ka-wah, a pan-democratic supporter of the bill, said further changes would risk making the measure ineffective.

'The various concessions made have already reduced the bill's power to protect consumers, who are also important stakeholders of the bill,' said Tong. 'I have to reconsider if this bill can still be supported. A bill with no teeth is worse than none at all.'

Deputy secretary for commerce and economic development Linda Lai Wai-ming said the government would not increase the market-share threshold further.


The government first published its long-awaited Competition Bill on July 2, 2010