Consumer sovereignty in the framework of social justice, economic equality and environmental balance, within and across borders

Kid gloves for competition law

May 27, 2014

Competition Commission chairwoman Anna Wu Hung-yuk says the competition law will be leniently enforced initially when it comes into effect next year.

Wu said the commission will approach firms for their views and will consult with the Legislative Council, companies and the public.

She said she fully understood a fear shared by small and medium-sized companies of breaking the law unknowingly because they are unfamiliar with it.

“If it is not a serious breach of conduct, we will be lenient,” Wu said.

“We will ask the companies to show us how they intend to stop the breach.”

She said the commission is drafting guidelines on the law.

Hong Kong Small and Medium Enterprises General Association vice chairman Albert Lau said it is common for members to attend gatherings regularly and share information about the industry.

Lau said it would be unfair if such gatherings were seen as occasions for price fixing.

He said the identities of firms should be kept secret if they report to the authorities about the anti-competitive actions by large corporations.

Lau said the commission should take big companies to task for hurting small and medium companies through repeated price cuts.

“We always wanted to tackle the `big tigers’ first as they seriously affect the market, but there will be difficulties in obtaining evidence,” Wu said.

She said whistle-blowers will be the commission’s main source of information.

“In the European Union, about 80 to 90 percent of the price collusion cases handled were through information supplied by whistle-blowers,” Wu said.

“The identities of whistle-blowers will be confidential.”

The proposed guidelines cite how the law may be contravened or handled.

First, if the anti-competitive conduct is not serious, only cases involving turnover of HK$200 million and over will be tackled.

Second, a case will be considered if the concerned parties have reached an agreement to prevent or restrict competition. Third, a case will be considered not to have contravened the law only if it incurs broader economic efficiencies for the community.

A case will be suspected of breaching the law if it meets the three criteria.

“We hope that the guidelines will be implemented in the first half of next year,” she said.

The ordinance tackles two types of anti- competitive behavior – price fixing and market sharing and the abuse of market power.

(By Kelly Ip)