A list of frequently asked questions has been posted online to enhance small and medium enterprises' understanding of the proposed introduction of a competition law, the Economic Development & Labour Bureau says.

To ensure Hong Kong's competition policy keeps pace with the times, the bureau released on November 6 a public discussion document and began a three-month consultation on the policy's way forward.

A number of forums have been held over the past few months. The consultation ends February 5.

Enter markets freely

The bureau is keeping an open mind as to the need for new regulations in this area and welcomes public views on the document.

A competition law could make it difficult for big companies to impose artificial entry barriers to the various markets, thereby helping SMEs enter the markets and trade more freely.

On some SMEs' concerns they might inadvertently infringe the competition law, the bureau said this is unlikely to happen as, owing to the scale of their operations, SMEs lack market power, and their actions will unlikely have the effect of significantly preventing, restricting or distorting competition.

The bureau reiterated the competition law should not be a "toothless tiger". The regulatory body could have appropriate power to investigate possible anti-competitive conduct and sanction enterprises and individuals who infringe the law. It could also send a clear signal as to the standards of business conduct that are acceptable in Hong Kong.

Scheme of control

Regarding concerns about competition within some public service sectors, for example, electricity supply and bus services, the bureau pointed out Hong Kong's domestic market is relatively small.

Some sectors, characterised by significant economies of scale, may only have enough room for a few big companies to operate efficiently. From the angle of production efficiency, these "natural monopolies" may be the most efficient economic arrangements.

Nonetheless, without any regulatory mechanism, these "natural monopolies" could set their prices at too high a level or set outputs at too low a level, which would in turn harm consumers' interests and overall economic benefits.

Therefore, even after the introduction of a competition law, the regulation of profits, scale of operations and other performance indicators would come under the schemes of control for these industries.