New Hong Kong Competition Law could break dominance of two chains

Like many people living in Hong Kong's big residential estates, Mrs Hui has access to only one chain supermarket in the shopping arcade downstairs from her North Point flat.

"Since it is the only supermarket down my flat, I just shop and go without any opportunity to compare prices or the quality of the goods," she said. "If I need to shop for fresh meat, I have to walk a few blocks to the wet market which is outside our residential complex. But in the wet market, I would have more choices of goods and be able to compare the prices and quality."

The dominance of a handful of chains comes as no surprise to anyone in Hong Kong, and the reasons aren't difficult to fathom. Taking Hui's estate as an example, it is well known that the supermarket chain is part of the conglomerate that developed the complex and which also owns the shopping arcade, giving it the power to select tenants.

It's part of a long-running situation that leaves even the strongest of international companies struggling to break into the market. The French supermarket giant Carrefour was run out of town after four years, unable to find the right locations and with suppliers threatening to cut off stocks unless it ended its discounting.

And it's a far cry from the cutthroat competition and bargains to be had in the United States, where Hui spends much of her time

"Both Safeway and Walmart are equally far from my home," Hui said of her residence in San Francisco. "Recently, another supermarket called Albertson has opened in the neighbourhood, so I can have an additional choice. What attracts me most are the special offers of different items made by the different supermarkets, that determine which one I will go for grocery shopping for the week."

Meanwhile in Hong Kong, the two dominant supermarket chains, ParknShop and Wellcome, were last year forced to deny accusations of collusion following a study by the Federation of Trade Unions, which accused them of shifting prices up and down in tandem at some of their stores.