Marcus Pollard

Inside Out | As Hong Kong re-emerges as a global business hub, it needs a more robust competition policy

The city’s competition watchdog performs a vital role in enforcing the law and preventing anticompetitive behaviour by firms, but it is critically understaffed and its remit does not extend to the public sector

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The Competition Commission said it sought information and surveyed workers from more than 30 wholesalers at the Aberdeen Wholesale Fish Market while investigating possible cartel behaviour among wholesalers last November. Photo: Handout

Marcus Pollard

Published: 12:45pm, 9 Jul 2023Updated: 12:35pm, 10 Jul 2023

Corrected [6:41pm, 9 Jul, 2023]

[6:41pm, 9 Jul, 2023]
The financial penalties imposed on businesses since 2015 amounted to around HK$29 million, as the HK150 million fine relating to a 2022 plea bargain has yet to be sanctioned by the Competition Tribunal. This has been added for clarification.

As dawn rose over Aberdeen on a warm summer morning, bystanders at the wholesale fish market were surprised by the arrival of officials brandishing a search warrant. “Operation White Whale” last month by the Competition Commission saw a search for evidence of cartel conduct by fish wholesalers.

This latest high-profile action shows the determination of the regulator to be on the side of the consumer. But what does the Competition Commission’s report card look like, and what is holding back the full force of the law?

Compared to its law-enforcement peers, the Competition Commission is critically understaffed. This inevitably imposes a natural limit on the intensity and scale of investigations. The government does provide a healthy litigation war chest, but there is a need for greater resources and retaining of staff dedicated to daily enforcement.

One comment that is often heard is that the modestly sized agency has focused on low-hanging fruit. It is frequently said that the law is meant to protect businesses from monopolists who are thought to be lurking in the shadows. However, of the 56 companies prosecuted by the Competition Commission to date, more than half are small and medium-sized enterprises.

Meanwhile, the fears of big business over the costs of compliance or being targeted by a rampant regulator have not materialised. The largest fine by far, HK$150 million (US$19 million), was in a plea bargain deal last year related to alleged air-conditioning cartels, but is awaiting sanctioning by the Competition Tribubal.

The Competition Commission office in Wong Chuk Hang. Photo: Handout

The commission has rightly prioritised cartels in its enforcement activities as these are widely known to be the most harmful form of anticompetitive conduct. But cartel-busters overseas rely heavily on leniency programmes where immunity is offered to those who are willing to self-report and turn on their fellow price-fixers.