THE Government has rejected a Consumer Council call for a watchdog for the supermarket industry over fears of potential collusion between the two biggest chains, Wellcome and Park'N Shop. The Trade and Industry Branch yesterday said there was no evidence to suggest competition was lacking in the supermarket industry, and it would wait for a comprehensive report from the council before considering the need for any new market regulatory measures. But Consumer Council chairman Professor Edward Chen Kwan-yiu said he was disappointed the Government appeared to have ignored the council's warning about the growth of market dominance. Wellcome and Park'N Shop have a 70 per cent market share among the 170 supermarket operators. The Government had to change its way of thinking if Hong Kong was to retain a true free market economy, Professor Chen said. 'It is so deep-rooted here,' he said. 'Free market economy means hands-off, and any hands-on means you are disturbing the free market economy,' he said. 'In other countries they realise that if something's wrong, they have to do something to bring it back to the free market economy. But that is not the mentality in Hong Kong, from the very top down to the man in the street.' Professor Chen said this attitude was fine 10 years ago when Hong Kong was an export-oriented economy, but, since then, the service industry had carved out a far greater slice of the pie. 'A lot of things are domestically produced, domestically consumed, which makes it easier for monopolistic power to grow,' he said. Professor Chen said the Government had a different interpretation of what constituted competition to that of the council. While it was true that there was competition within the industry, he said, it was limited to very few players. This, the professor said, created an unstable environment and gave the big operators a huge incentive to work together to increase their market share. He said the two chains could work together to squeeze suppliers to get the best prices, or by agreeing that one chain should carry a particular product, while the other did not. This would make it difficult for consumers to check if they were paying reasonable prices. The council's supermarket report, published in November, is just one in a series of reports on competition within different industry sectors. A final, comprehensive report on supermarkets and other industries including banking, telecommunications, gas and driving schools will be released by the end of the year. The Government rejected the council's recommendation that a body be established to handle consumers' complaints. 'We doubt whether, and how, such a complaint-handling body would work to the benefit of the consumers,' the Government's response said. 'Any arbitrary decision made by this body might interfere with the freedom of contract and create commercial uncertainty.' Neither Wellcome nor Park'N Shop were available for comment last night.