Outside In | Hong Kong’s Competition Commission shaping up as a paper tiger with paper teeth

For the better part of 15 years, Hong Kong has debated whether or how we should join the rest of the world’s major economies by adopting a competition law. Now at last, after what has seemed like a lifetime, we have one. But instead of being pleased, I’m anxious.

It is of course not politically correct to question the virtue of a competition law. Monopolies, price fixing, cartels and the like are all bad things. But if I remember correctly, there were always clauses in various Hong Kong ordinances that enabled the government to tackle these transgressions. The “schemes of control” created to prevent abuse in areas of natural monopoly – like electricity or ports – seemed to work well, despite being politically unfashionable. And small city economies like Hong Kong or Singapore have always raised problems for competition policy wonks.

My anxieties were aroused from the outset of the debate, because the original decision to explore a competition law was above all else due to fierce pressure from the International Monetary Fund and the World Bank to “fall into line”. Singapore did so a decade ago with a marvelously cynical piece of legislation that carved out from Competition Authority oversight all of the government-linked organisations – which of course accounted for the great majority of the economy. To its credit, the Hong Kong government has not been as cynical. Instead – as usual – it has procrastinated.

To remind myself of why I am so anxious, I had to go back to articles I wrote in the middle of 2009, with a wide range of still-unresolved issues flooding back. The proposal to take a cross-sector approach – and to draw in the existing regulator of competition in telecommunications and broadcasting – was sensible. So too was the commitment to making the commission independent, with powers to demand investigation.

But the call for minimal exemptions was ignored: lots of government-linked organisations and statutory bodies have won exemption for not very good reasons. I still puzzle over why such bodies should be exempted. If the Electrical and Mechanical Services Department or Architectural Services Department competes against private sector companies to provide services, then why should they be above the law? If with the help of significant government support and a demonstrable market dominance the Trade Development Council is able to “outcompete” suppliers of exhibition services, then why should it not be subject to competition law just like a private sector contractor? If the MTR was found to be abusing the market dominance intrinsic to its rail monopoly – say, in colluding on tenders for services at MTR stations – then why should it too be above the law? No-one is saying that any of these government agencies or organisations has done anything wrong, but that is beside the point. If there are good reasons for keeping the government’s agencies above the law, then the government has never made a convincing case.