In his policy address this year, the then chief executive, Tung Chee-hwa, denied that there was any collusion between government and business in Hong Kong. In the same speech, he also insisted that competition policy would remain unchanged, namely, no general law would be enacted to prohibit the abuse of a dominant role, collusive deals between producers, or potentially harmful mergers.
The time-worn mantra of minimal government interference in business and our status as the 'freest' economy would ensure that the benefits of the competitive process would continue to be enjoyed.
However, a chorus of criticism and public discontent relating to the energy sector, and the steady stream of competition failures, including open cartels in the noodle industry, the driving-school market, and the acknowledgement that bid rigging and price fixing were common practice in the construction industry, seem to have led to a change of heart.
In his budget speech, Financial Secretary Henry Tang Ying-yen announced that the government would establish a committee to review the much-criticised competition policy and the workings of the toothless Competition Advisory Group. Last week, the membership of the review committee was announced, and the review will take a year to complete.
Under existing policy, the government says that a general competition law to enforce a pro-competition policy would be heavy-handed interference with the free market.
In any event, a small open economy, such as ours, does not need such a sledgehammer to crack the very small and limited competition problem facing Hong Kong. Rather, our existing policy to exhort business to be competitive and, where failures can be proved, the application of limited, sector-specific rules, are adequate to maintain healthy competition.
Unfortunately, an increasing range of indicators seems to show that the policy is no longer tenable. Indeed, the World Trade Organisation secretariat has questioned the viability of the existing policy.