• Tue
  • Oct 21, 2014
  • Updated: 1:14pm
CommentInsight & Opinion
LEADER

Claim on supermarket prices shows need for credible competition body

PUBLISHED : Wednesday, 01 January, 2014, 11:31pm
UPDATED : Wednesday, 01 January, 2014, 11:31pm
 

Competition and trade practices laws can seem remote from day-to-day life. But the Consumer Council has put Hong Kong's new competition law front and centre of the issue of the cost of living, with a claim that supermarket giants ParknShop and Wellcome are keeping prices artificially high by pressuring suppliers not to sell to smaller rivals who undercut them. In its latest study of the grocery market, the watchdog said the two chains had reached exclusive agreements with suppliers and facilitated a "recommended retail price" system. It said the new Competition Commission should investigate whether this was anti-competitive.

Both chains deny putting pressure on suppliers, with Wellcome saying it upholds free-market principles and ParknShop noting that more than 90 per cent of in-store promotions were initiated by suppliers. The two chains control nearly two-thirds of the grocery market. To be fair, two dominant chains in bigger markets than ours is not unusual. And consumers can benefit through efficiencies of supply chain management and economies of scale. However, the council cited a survey of 43 suppliers, all but two of which said they made price recommendations to retailers and 40 per cent of which said they had exclusive agreements with chains.

The council said that because it lacked investigative powers, it was unable to gather strong evidence. This highlights the importance of the new competition body, under a law that was 15 years in the making. Sadly, as a result of strong business lobbying, it has been watered down. However, the government has enhanced the credibility of the commission with the appointment as chairwoman of executive councillor Anna Wu Hung-yuk, who established a reputation for independence as equal opportunities commissioner. Fears of over-regulation are understandable in a free economy like Hong Kong's. More efforts are needed to assure businesses that legitimate trade activities will not be unreasonably curbed. Fair competition is for consumer protection and for small business to survive.

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caractacus
The supermarkets are only one example of HK's rigged cartelised and monopolistic domestic economy with the public being financially shafted for everything from retail prices to property.
The question all boils down to who rules Hong Kong; its totally unprincipled tycoons, of course.
singleline
The attention of the 'bulldogs' in the Legislative Council (and elsewhere) can be diverted from the government to those tycoons who compete in an unfair way here in Hong Kong, now that the importance of them to China seems to have diminished after the 1997 transition.
The penalty fees will become part of the government's revenue and can be redistributed to those Hong Kong people in need.
I don't think they will emigrate en masse, considering Hong Kong's relatively low tax rates.
If they do emigrate, they may sell some or all of their assets. Those assets can be bought by the Chinese firms which, hopefully, will compete in a more equitable way.
Will anti-trust law be widely practised in Hong Kong?
Does Hong Kong have enough talents to prastise the law?
Will our 'laissez-faire' government dare to change the status quo?
johnyuan
1. This editorial on supermarket operation in Hong Kong is long on words but short on research and late in time. The uncouth behavior of the two main supermarket chains and their related power over rental space were reported in this very newspaper even before the hangover. It is deadly wrong for the editorial that ‘To be fair, two dominant chains in bigger markets than ours is not unusual. And consumers can benefit through efficiencies of supply chain management and economies of scale.’
.
New York City of a population of 8 million plus, one can count more than ten national supermarket chains serving in the city. In Beijing, there are even open markets and wholesales readily available besides Wal-Mart, Carrefour and Vanguard -- the three more dominant ones.
.
The weakest point of all you have made – ‘However, the government has enhanced the credibility of the commission with the appointment as chairwoman of executive councillor Anna Wu Hung-yuk, who established a reputation for independence as equal opportunities commissioner. Fears of over-regulation are understandable in a free economy like Hong Kong's.’
johnyuan
2. If there is a law, the law shouldn’t be dependent on a commission and even less on who is the commissioner. And whose fears you are so afraid of over-regulation? Thus this editorial has rendered no value to consumers but contriving even in the knowledge that Hong Kong is not a free economy in many things.
.
I expect this editorial should have a follow up with an accurate and honest assessment the state of our food supply in Hong Kong. Failing that, this very editorial is highly a suspect and should be denounced by the public.
johnyuan
LKS withdrew from putting his ParkidnShop on bid most likely for unable to get a good bid to his liking. Bidders would offer their respective bid taking the exorbitant rent expanses they must pay which they have not much control over. It is the rent factor that kills the bidding.
.
I am proposing besides earlier the idea of home delivery of groceries from Shenzhen as way to circumvent monopoly and high rent, I will also suggest that Hong Kong should go back to street markets (wet market) to lower our food cost with a viable competition with ParknShop, Welcome and Vanguard..
.
Let us begin with the revitalization of the Central Market. It has been idling for years. Its excellent design remains very appropriate for being a market place.
.
So CY Leung, please consider these ideas.
 
 
 
 
 

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