Hong Kong Monopoly?

Hong Kong Magazine (1/28/2011)

Does Hong Kong have a competition problem? The hotly debated competition law, which the Legislative Council is currently examining, would set up a commission and a tribunal to limit conduct that prevents competition. The Lion Rock Institute, where I work, strives to educate the public on policy ramifications, including those from the competition law.

Reality bears out the public’s perception: in many markets, the state of competition is poor; however, before agreeing on a treatment, it’s important to first understand the cause. The biggest monopolist, arguably naturally so, is the government itself. The government—including statutory bodies that compete with private entities (Trade Development Council, MTR Corporation, Urban Renewal Authority)—is the single largest inhibitor to competition. Many complaints submitted to the Competition Policy Advisory Group, in fact, target the government.

The Competition Bill would have no effect, given that distortions in competition are created by the government. Instead, the law can only bring about increased administrative costs, mostly in legal fees. These would be borne by consumers. The real remedy is to further check government operations in a market. If the government really wants to legislate against anti-competitive conduct, it must first regulate its own policies.

Nicole Alpert