Despite the full implementation of the Competition Ordinance on Monday and, with it, the banning of price fixing, it appears that the situation whereby goods are sold at identical prices in different shops across Hong Kong, has not improved. The Competition Commission chairperson, Anna Wu Hung-yuk, pointed out that just because goods in different shops were sold at the same prices did not necessarily mean that there was a violation of regulations, and that the key was whether there was evidence of collusion.
The Competition Ordinance came into effect on Monday, over three years after it was passed in the Legislative Council. The law forbids anti-competitive behaviour, such as price fixing, sharing market information, bid rigging or restricting output, Ming Pao has reported.
Chairman of the Hong Kong Federation of Retail and Wholesale, Shum Chu-wah, said that prior to the law, when suppliers provided goods to retailers, they often set a “minimum retail price” which retailers were forced to abide by. Shum said that he believed this was to prevent retailers from lowering prices too much, “which could crash the market”.
On the eve of the Ordinance taking effect, many chain stores selling electronic appliances slashed their prices and held sales; however, the prices for many of the most popular items were still the same across different shops. A spokesperson from electronic appliance chain Fortress told Oriental Daily that they will respect the competition law and monitor their daily operations to ensure the company abides by the regulations.
Under the new regulations, trade associations which issue charts with suggested pricing could be in breach of regulations on price collusion. In the local gold market, the price of gold has long been determined by the Hong Kong Jewellers’ & Goldsmiths’ Association Ltd. and the Kowloon Pearls, Precious Stones, Jade, Gold and Silver Ornament Merchants Association, which lists the jewellery gold price every day. That price is then followed by goldsmiths in Hong Kong.
As of Monday, most goldsmiths were still selling gold in accordance with the pricing stated on the two associations’ websites, Apple Daily found. The two associations have applied for exemptions with the Competition Commission.
Driving Instructors Merchants Associations Chairman Ng Kin-wah said that the suggested pricing for driving lessons – currently HK$250 an hour – was not binding, and was there to give learners an idea of the market rate. However, he said that if such conduct was against the law, the association will no longer put out the information in future.
The Land Transportation Alliance made a complaint to the Competition Commission on Monday, asking for an investigation into the oil companies’ operating models, as the prices of gasoline and diesel were often exactly the same across different companies. The union suspects that there are forces controlling the market.
The trend was also seen in the market for sports shoes. Apple Daily reporters found that Nike Air Force 1 07 shoes were on sale in different shops across Causeway Bay and Mong Kok at the same price, and there was a similar situation with shoes from the Adidas and New Balance brands.
‘Evidence of collusion’
Anna Wu Hung-yuk said that the Competition Commission has received over 500 complaints and inquiries about the law. Whistleblowers would be crucial in exposing instances of anti-competitive behaviour, she added.
As for exemptions, the Commission will look into whether these would improve economic efficiency or be beneficial to the consumer in other ways.
Chief Executive: The Commission worked tirelessly
On Tuesday, Chief Executive Leung Chun-ying noted that the Competition Ordinance had come into effect, and that the law was enacted to protect consumers.
Leung also said that Commission chairperson Anna Wu and Consumer Council Chief Executive Gilly Wong have been working tirelessly to publicise the contents of the ordinance through the media. He said that they hoped consumers would not suffer through paying higher prices than necessary due to price fixing or collusion, and expressed his wish that businesses would abide by the law.
“After the law has been in effect for a period of time, we will look at how well it has worked, to see whether there is a need to review and update it,” Leung said.