Hong Kong's competition watchdog 'at risk of vexatious complaints'

Business groups argue that watchdog's draft guidelines will increase the risk of 'vexatious' complaints when new law comes into force

PUBLISHED : Tuesday, 23 December, 2014, 3:27am
UPDATED : Wednesday, 26 October, 2016, 2:38pm

The new competition watchdog has been urged to set tighter rules for those filing complaints about unfair business practices amid concern about possible "vexatious" complaints.

The calls came from business leaders and professionals who responded to a consultation by the Competition Commission on its draft guidelines. The commission will investigate and pursue cases under the city's long-awaited competition law, which comes into full effect at the end of next year.

More than 50 submissions were made by individuals and groups. Much concern centred on a clause under which "any person who suspects that a competitor, supplier, customer or any other party has contravened, is contravening, or is about to contravene a competition rule may contact the commission to express their concerns and to make a complaint".

The commission will accept complaints and queries in any form, including "anonymously" and "through an intermediary".

In its submission, the Retail Management Association warns "there is a real potential for a huge number of unmeritorious and vexatious complaints".

The Hong Kong Competition Association, a concern group formed by professionals, including lawyers and researchers, also asked for clarification. The association says: "It is not clear on what legal basis the competition authorities should stipulate they 'encourage input from the public'. We recommend the competition authorities require a written trace of any complaint to ensure the respect of the due process principle."

However the Consumer Council, a key advocate of greater protection from collusion, welcomed the draft guidelines and the fact "the commission will encourage and welcome complaints about possible contraventions … and will not require complaints to meet specific formalities". It called on the commission to set a clear timeframe for people to hear the outcome of their complaints.

The Construction Industry Employees General Union said it should be exempt from the law. It said making a proposal on pay after consulting members was common practice and should not be considered "price-setting".

The Chinese Manufacturers' Association said a ban on "resale price maintenance" - the practice under which a supplier or distributor sets a minimum price for retailers - was unreasonable.

The commission considers such arrangements harmful to competition, but the association said: "Some businesses wish retailers to sell their products at fixed prices to protect the image of the brand. It will be a big blow to the sector if such practice is defined as anti-competitive."

Passed in 2012, the competition law tackles two types of anti-competitive behaviour: price fixing and market sharing; and abuse of market power.

The guidelines on interpretation, investigation procedures and the handling of complaints must be approved by lawmakers before the law takes effect. The commission will take cases to a Competition Tribunal, which will have the power to fine companies up to 10 per cent of turnover for three years, order damages and disqualify directors.