Many Hong Kong businesses 'unprepared' for new competition laws, says antitrust lawyer
Signs that old habits may die hard with legislation set to target cartel-type practices
Some Hong Kong businesses are still not ready for a competition law which will come into force on December 14, an antitrust lawyer from one of the city's largest legal firms said on Tuesday.
The new Competition Ordinance will prohibit unfair business practices such as price fixing, output restrictions, market sharing and bid rigging.
Firms could face fines up to 10 per cent of their turnover for each year in which a breach occurred while their directors could be disqualified for up to five years.
"Some businesses are well prepared; they have changed practices, they have changed provisions in their agreements, they have compliance officers appointed," said John Hickin, a partner of Mayer Brown JSM. "At the other end of the spectrum, there are some businesses engaged in clearly cartel-type activities that have done nothing.
"Some of the practices and behaviours have been entrenched over a very long time. For 20 or 30 years, people have been behaving in a certain way and it's difficult to change that overnight."
Under new regulations, the Competition Commission, led by former Consumer Council chairwoman Anna Wu Hung-yuk, is tasked with investigation and prosecution of anti-competition conduct. A tribunal is set up separately to adjudicate cases.
According to Hickin, business sectors identified as vulnerable to breaching the new law are supermarkets, petrol stations and building maintenance.
Danny Lau Tat-pong, honorary chairman of the Hong Kong Small and Medium Enterprises Association, with more than 1,400 members, said he believed a vast majority of small businesses had not paid too much attention to the law although it may very likely apply to them.
"Many [proprietors] do not think what they are doing crosses the line," said restaurateur Lau.
"Restaurant owners often come together to discuss prices of their food ... some canned food is sold through only three distributors. Have those distributors talked to each other about not lowering the price of the cans by too much so to ensure a profit margin? Of course they have."
