Mark Williams, Nov 05, 2007
Hong Kong has a reputation for being a free and open economy. Historically, the government has maintained that the economic environment is business-friendly, with a small public sector and that competition is the bedrock of sustained growth. The rule of law provides security of property rights and the light-touch regulatory environment allows the invisible hand of competition to work effectively. Unfortunately, this characterization is not an accurate representation of competition conditions in the domestic, non-traded sector of the economy. The government monopoly of the supply of land has facilitated the development of dominant, family-owned conglomerates that extract monopoly rents in many business sectors. Private monopolies in gas and electricity supply, a duopoly in the supermarket sector, tight oligopolies in port services and oil supply, and numerous well-known cartels are prominent features of the local economy. The government now recognizes that the traditional laissez-faire policy needs reconsideration and has announced that a comprehensive competition law will be promulgated. This article outlines the development of competition policy in Hong Kong and examines whether the new ordinance will effectively resolve its entrenched competition problems.