Fix is in on supermarket shelves, study suggests

PUBLISHED : Thursday, 12 April, 2012, 12:00am
UPDATED : Thursday, 12 April, 2012, 12:00am
 

Lawmakers have accused the two leading supermarket chains of colluding on prices, after a study found that the cost of products went up and down at the same time at both ParknShop and Wellcome.

The Federation of Trade Unions study found that the price of two of the eight products it monitored rose and fell at both supermarkets together and stayed at the same level for at least 14 days.

While one legal expert said the fact the prices were the same was not enough to prove collusion, a lawmaker said the study showed the urgency of passing the long-awaited competition bill.

'The [competition] law will offer a legal framework for investigation of price collusion,' labour sector legislator Pan Pey-chyou said yesterday. 'The court will make a fair judgment.'

The study monitored eight products - including toilet paper, rice, Coca-Cola, canned food and seasoning - from February to last month across five districts: Wong Tai Sin, Tsuen Wan, Sham Shui Po, Sai Wan and Ap Lei Chau.

It found the prices of seven items remained the same at both two supermarkets on at least five days of the 16-day sampling period.

Both supermarkets made cost adjustments on the same days on Amoy light soy sauce and Vita lemon tea. They lowered the price of the soy sauce to HK$10.50 from HK$12.50 on February 29 and raised it to the original level two days later.

As for the lemon tea, they raised its price to HK$14.90 from HK$14.50 on February 24 and restored it to the lower price a week later.

FTU lawmaker Wong Kwok-hing said the study pointed to price collusion, an activity prohibited under the proposed competition bill, which was being considered by the Legislative Council.

'They [the supermarkets] control the market through price collusion. It leaves consumers without a choice,' he said.

The government's policy of minimal intervention in the market no longer served the interests of shoppers, he said, as the two big supermarkets knocked out competitors and charged more for products than small grocery stores. Five out of the eight products examined in the study were more costly in supermarkets than in other shops.

But Thomas Cheng, an assistant law professor at the University of Hong Kong, said the study could be evidence of competition, rather than collusion.

'It is legal for supermarkets to send their staff to monitor the prices of a competitor and it constitutes competition between the two,' Cheng said.

Only if the two companies agreed a deal on prices or told each other when they were changing prices would their activities be in breach of the proposed law, he said.

A Consumer Council spokesman said evidence of communication between the two supermarkets would be needed to reach the conclusion that they were colluding,

Spokesmen for ParknShop and Wellcome rejected any suggestion of collusion. 'We cannot stop competitors checking our prices and making adjustments accordingly,' a ParknShop spokesman said. 'Doing price checks is a common practice.'

A Wellcome spokesman said the price changes were evidence of vigorous competition.

The competition bill would see a statutory commission created to investigate anti-competitive conduct and provide a level playing field.

16

years since the idea of a competition law was floated•Legco first tabled a proposal in July 2010

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