The Consumer Council is disappointed that the relevant provisions on stand-alone private right of action have been taken out of the Competition Bill. It also stresses that no further concessions should be made or else the effectiveness of the future law would be greatly diminished.
Private Litigation
Mr. Thomas Cheng, Chairman of the Council's Working Group on the Competition Bill pointed out that the elimination of stand-alone private action would reduce the right of consumers and SMEs to protect their own interests when faced with anti-competitive behaviour.
There were concerns among SMEs that large companies, which have more resources, could file vexatious lawsuits to harass smaller competitors. The experiences of other jurisdictions do not substantiate such a worry. More often than not, large companies are the defendants in private competition litigation.
The Government is therefore urged to re-introduce stand-alone private action as soon as possible after the business community acquires sufficient experience with the new competition regime.
Competition Commission
With the elimination of stand-alone private action, consumers in the future must rely on the future Competition Commission to handle or investigate their complaints about anti-competitive behaviour.
The Council believes that it is critical for the future Competition Commission, being the sole channel for redress of consumer grievances against anti-competitive behaviour, to be sufficiently funded.
The Council believes that the current level of funding envisioned by the government is unlikely to be sufficient as it was set under the assumption of stand-alone private action being available. There is an urgent need to revisit this issue to ensure that the future Commission is adequately funded to be the sole enforcer of competition law in Hong Kong.
The Council is also concerned whether the composition of the future Commission could effectively represent the interests of consumers and would prioritize tackling of anti-competitive behaviour with wide impact on consumers.
The Council urges the government to appoint individuals with expertise in competition law and a commitment to represent consumer interests to the future Commission.
Merger Rule
The Council recommends that the Government re-consider its decision to exclude merger activities as defined in Schedule 7 to the Bill from the application of the first and the second conduct rules.
Mr. Cheng has pointed out that the local market is replete with oligopolies and corporations with market dominance. It would be unfair to consumers to eschew a cross-sector sector merger review regime without offering an alternative means of protection against exploitation of consumers resulting from excessive market concentration. For instance, the necessary condition of the general exclusion from the first conduct rule must allow the consumers to have a fair share of benefit.
Pecuniary Penalty
As the other jurisdictions with competition law might follow up on cases ruled as anti-competition by the courts in Hong Kong, the Council believed the proposed amendment of lowering the pecuniary cap to 10% of the local turnover for each year of infringement, up to maximum of three year would still serve the purpose of deterring anti-competition conduct.
The Council, however, was worried that a lowered cap might not be adequate in deterring repeated violation.
To conclude, the Council feels that the current amendments, e.g. the elimination of stand-alone right of private action, the introduction of the warning notice, the removal of the possibility of fines under the infringement notice, the de minimis arrangements etc, have more than adequately addressed the longstanding concerns of the business sector, in particular those of the SMEs. The Council hence reiterates that no further concessions should be made lest the future law is rendered grossly ineffective. It hopes that the Bill will be enacted soon to protect consumers in Hong Kong.