Motion Debate on "Fair competition law" (16 November 2005)

MR JAMES TIEN (in Cantonese): Madam President, actually in these few years the Legislative Council would have a motion debate on the topic of fair competition law almost every year. Views put forward by Members are in general like this: If a fair competition law is enacted in Hong Kong, prices will be cheaper because more people will be doing business. But will the enactment of a sweeping fair competition law certainly produce such a result?

All through these years both the Liberal Party and the business sector have reservations about this point of view. Does it mean that when there is a fair competition law, there will be five or six power companies in Hong Kong instead of just two? Even if there are five or six power companies and even if the situation is like the fuel market where there are five or six companies at present, there will not be any improvements. Then Members will demand that a fair competition law be enacted and they may ask how these five or six companies can be increased to a dozen or more. But will prices necessarily go down if there are a dozen companies in the market? Will consumers necessarily benefit? Mr LEE Wing-tat earlier cited the example of the supermarkets in Hong Kong and the example of Carrefour - a company from France which once came to Hong Kong. But will things be different if there is a fair competition law in Hong Kong?

Lane Crawford is a big department store and it belongs to the Kowloon Wharf Group. The store has leased huge premises in IFC and the owners of IFC are Sun Hung Kai and Henderson. The store has also leased huge premises in Pacific Place and it is a property of Swire Pacific. We cannot say that since the big developers own the shopping malls, they can do their business in these shopping malls and thus there is monopolization, hence overseas companies like the French company Carrefour are driven out of business because they have to rent their premises from these developers. As a mater of fact, the example of Lane Crawford cited by me has most of its outlets in premises leased from others, though of course, some of its outlets are situated in properties owned by its group, like those in Times Square and Harbour City. However, the premises in the places mentioned by me earlier are all leased.

The big business groups will also look at things from the perspectives of a property owner as well as a tenant. They will consider the fact that if the commercial premises are leased to another company, the profits so derived may be greater than if the premises are used by the group itself. Then it may as well lease out the premises. On the other hand, if the group thinks that leasing premises in some place may bring in more profits than using its premises to run businesses, then it will lease the premises concerned. Therefore, with respect to supermarkets, shopping malls or department stores leasing commercial premises, I do not think that all the problems will be solved when there is a fair competition law.

Some Members have talked about outsourcing, but I do not think that outsourcing has anything to do with fair competition legislation. Actually, the entire construction industry in Hong Kong is run on a subcontracting system under which some of the work procedures can be done by the company itself while some of the work procedures are contracted out. When a fair competition law is in place, will these work procedures be increased or will there be less subcontracting? Or will the prices charged for subcontracted work become less expensive? After all, the contracting out of work procedures is only an option in business operation. I think companies will know that if their scale of operation will permit, they can decide to undertake all the work procedures by themselves. If they know that their scale of operation is not so large and they cannot handle all the work procedures, then they can consider briefing out some of the less complicated ones such as cleansing and security work. Therefore, I do not think that once a sweeping fair competition law is in place, the desired result will be achieved.

Mr LEE Cheuk-yan has referred to the view expressed by the Liberal Party last week on the motion about minimum wage and standard working hours on behalf of SMEs. As SMEs employ a lot of people, the imposition of a minimum wage would drive SMEs out of business. In this motion debate on a fair competition law today, the Liberal Party is likewise speaking on behalf of SMEs. So please do not think that the Liberal Party is only representing the big business groups and that it is only concerned about the energy problem and nothing else. Having said that, we must note that a steady and reliable power supply is vital to the SMEs. The situation in California is an example which is known to everyone. The place has many power plants and competition is very keen and the result of vicious competition is so serious that very often power companies are incurring losses. When power companies are deep in the reds, they may even have to curtail the power supply. A blackout will have grave impact on both the SMEs and general public alike.

The Liberal Party is totally in favour of healthy competition. But if competition will deprive every businessman of the chance to make money and if they are forced to run their businesses at a loss, then competition will become vicious. This will certainly lead to a decline in service quality in some trades and industries. If this happens in the energy market, it will lead to an unreliable supply of electricity. There are many public transport operators overseas which have old and worn-out buses and trains. These are not acceptable to the passengers. Madam President, we think a balance must be struck in this.

While we should not allow the businesses to monopolize the market or even to reap excessive profits, we must also not make them run operate at a loss. If it is because of the existence of a fair competition law that businessmen are unable to make any money, then who will come here to make investments? Who will then buy the shares of public utilities? Actually, among members of the public, there are many who own these shares and they do want to make money.

Madam President, this topic has been debated here for so many years, but our convictions remain unchanged. Everyone wants to see fair competition in Hong Kong and so do we. Our only difference from them is that we have to ask these questions: Will a sweeping fair competition law result in more fair competition in Hong Kong or will it make competition any fairer? Or do we think that once there is a fair competition law, all these desirable results can be achieved?

All through these many years, the Government has always been standing aloof and it will only begin to do something when problems appear. There are many such examples and every year we will quote some of them, such as when a debate was held on the telecommunications industry. Now there is one recent addition to these examples. Last year, Mrs Selena CHOW of the Liberal Party moved a motion on gasoline, saying that prices of gasoline would rise very quickly but drop very slowly. We urged the Government to look into this situation. The Government agreed that it would take some follow-up actions.

In our opinion, Members should talk about what are the problems that exist in which industries and propose how we should tackle them. Of course, some people may say that if a law is enacted across the board, then it would completely refute some criticisms from the international community asking, for example, why there is no such law in Hong Kong when it is already passed in some other places. It is true that such laws are found in other places. Just now many Members have cited Singapore as an example. But there are many exemptions in the Singaporean law on fair competition and this applies to almost all those trades mentioned by Members earlier about which they are most concerned. It is true that there is a fair competition law in Singapore. But it extends a waiver to almost all the trades. This is like having a toothless tiger. I would think that as members of a legislature, what we should do is not just legislating simply for the sake of doing so but what we do should be for the common good of all. If only some laws without bite are enacted, then we should not lend our support to them.

Therefore, Madam President, we will stick to our position as before and we think that the Government should undertake some studies on the enactment of a fair competition law. Mr LEE Wing-tat has said that the general chamber of commerce will support a government study on this. However, supporting the study does not necessarily mean that we will support the law, nor does it mean that Members' views are correct. As such, the matter should best be left until there are findings out of such a study. We do not think there is any need for changes to the status quo. Thank you, Madam President.