Hong Kong competition law unlikely to be as far-reaching as Mexico's, official says
Stricter competition laws in Mexico have forced the world's richest man to break up his telecoms empire. But Hong Kong is not likely to see dramatic splitting of tycoons' companies once similar regulations kick in next year.
Stricter competition laws in Mexico have forced the man who was once the world's richest to break up his telecoms empire. But Hong Kong is not likely to see the dramatic splitting of tycoons' companies once similar regulations kick in next year, according to the former head of Mexico's competition watchdog.
In Hong Kong, there is Li Ka-shing, whose business empire reaches every facet of life. Mexico has Carlos Slim - once the top and now the world's third-richest man on the list.
His interests extend from telecommunications to financial and retail services.
Drastic changes in the market did not happen in one day - it took years of advocacy by the Mexican Federal Competition Commission after competition laws were implemented in the country two decades ago.
"The first recommendation we made in telecoms was in 2005," said Eduardo Perez Motta, former chairman of the commission, during a visit to Hong Kong this month.
This year, America Movil was forced to cut interconnection rates it charges competitors when consumers make calls to numbers operated by other telecoms firms. The move would lower phone charges, generating US$6 billion of savings for consumers, Perez Motta estimated.
While Slim's mega-company is to shrink, Hongkongers cannot expect local competition laws - to be implemented next year - to break up established giants.
Such an occurrence would be highly unusual. In the 120 years since antitrust laws had been in force in the United States, authorities had only ordered the break-up of four monopolies, including AT&T and American Tobacco, Perez Motta recalled.
"Being big in the market is not necessarily bad," he said. "What the competition law tries to do is to stop anti-competitive conduct. To be big is one condition, but not the only condition" for violation of laws.
Instead of actively seeking the break-up of existing giants, Mexico embarked on a series of reforms to encourage competition across sectors including telecoms, financial services, energy, transport and media.
Two more free-to-air television stations will be added to the existing two, bringing fresh players to compete with Televisa - South America's biggest source of , or soap operas.
This strikes a chord in Hong Kong, where the government has agreed in principle to give out two new free-TV licences. The difference, however, is its rejection of the application by HKTV in a bid to prevent excessive competition harming the market.
Perez Motta said competition was beneficial in any market.
"My personal impression is that competition allows companies to fight among themselves. Some would lose in the process. In Mexico, an airline went out of business," he said.
"I don't think that the [television] market is different from any other market."
