Abstract
The paper describes the current competition policy framework in Hong Kong: how it came into existence, what business practices are prohibited, and how the enforcement system works. Recent cases in the telecommunications industry are used to illustrate the sectoral approach, a unique feature of Hong Kong's competition policy. We argue that a sectoral approach faces two fundamental drawbacks. First, due to having different "rules of the game'' for different sectors, the allocation of resources may be distorted in the long run. Second, since the relevant regulatory agencies perform dual roles both as competition policy enforcer and as traditional regulator of natural monopolies, the impartiality of their competition decisions may not be credibly conveyed to the public. We also address other specific problems associated with the sectoral approach, such as the exclusion of structural issues, narrow coverage of sectors, and the lack of public enforcement. We conclude that an overall competition law can better promote competition and economic efficiency in Hong Kong.
| Original language | English |
|---|---|
| Pages (from-to) | 145-166 |
| Number of pages | 22 |
| Journal | Review of Industrial Organization |
| Volume | 21 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 1 Sept 2002 |
Bibliographical note
The first author served as the Chairman of the Hong Kong Consumer Council during 1991– 1997. The paper was presented at the Workshop on The Treatment of Market Power in East Asian Economies, Taipei, June 2001, organized by the PECC Trade Policy Forum. We thank David Round and other participants at the workshop for their comments and suggestions. Comments by Leonard Cheng on an early draft of the paper are also appreciated.Paper presented at the Workshop on Treament of Market Power in East Asian Economies, Jun, 2001, Taipei, Taiwan.
Funding
The second author also thanks the Hong Kong CPEC for financial support.
Keywords
- Competition policy
- Laissez faire
- Sectoral approach