The government's detailed proposals for a competition law are a major step forward to modernise Hong Kong's economic regulatory framework and bring the law into line with international best practice.
The decision to focus on consumer welfare and economic efficiency ensures that extraneous claims, which might otherwise pervert the functioning of the law to protect special interest groups, are avoided. This clarity of purpose is to be welcomed.
The proposals for the structure and powers of the competition commission and the tribunal to investigate, adjudicate and enforce the new law are excellent. Adequate powers to investigate breaches of the law are provided while safeguarding the rights of suspected infringers. The introduction of a leniency programme to encourage cartel participants to provide evidence of wrongdoing to the commission will assist in the detection of harmful anti-competitive agreements. The power to disqualify senior managers and directors of firms from participation in business may well be a more significant deterrent than power to impose financial penalties on firms.
Consumers, and small and medium-sized enterprises (SMEs), are well provided for. The right of consumers and SMEs to take private action to claim compensation either as an individual or as part of a group is an excellent method to diffuse SMEs' unjustified concerns about the abuse of the new law.
The government has also recognised the need to consider adopting a merger-control regime, but has not come to a conclusion on this matter. The lack of such a provision would be a significant deficiency in the legal structure and would not accord with international norms. Hopefully, after this round of public consultation, the government will accept the overwhelming case for such a provision.
A controversial issue is the proposed complete exemption of 'undertakings entrusted with the operation of services of a general economic interest'. It is unclear whether the government proposes to except all public utilities, irrespective of whether the undertaking is in public or private ownership. This must be clarified. Complete exemption of all these industries is neither necessary nor appropriate.