Competition Policy and
Competition Law
23 April 2008
Adolph Leung
Senior Economist
Commerce and Economic Development Bureau
Objective of Competition Policy/Law
Hong Kong
 To enhance economic efficiency and free flow of
trade, thereby also benefiting consumer welfare
Other places
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Economic efficiency
Consumer welfare
SME
Export promotion
Increasing shift towards economic efficiency
and consumer welfare
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Competition Law
 Deal with market power
 Prohibit conduct that substantially lessen
competition
 Anti-competitive agreement (Sherman Act
section 1 and EC Treaty article 81)
 Monopolisation/Abuse of a dominant position
(Sherman Act section 2 and EC Treaty article
82)
 Merger regulation
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Purpose or Effect Test
 Facts specific
 Involve detailed economic analysis
 Similar form of conduct may constitute
infringement in some cases and noninfringement in others
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Exemption
 Improve production or distribution
 Promote technical or economic progress
 Not indispensible
 Do not eliminate competition
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Hard Core Conduct
 Almost always have anti-competitive harm
and rarely have redeeming economic
benefit
 Presumed to have the purpose of
substantially lessening competition
 Price-fixing, bid-rigging, output quota,
market allocation
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Market Definition
(Product and Geographic)
 Demand-side substitution
 Supply-side substitution
 “Small but Significant and Nontransitory
Increase in Price” (SSNIP) test
 Effect of globalisation
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Market power
 The power to raise prices consistently and
profitably above competitive levels
 Market shares and market concentration
(concentration ratios and HHI)
 Barriers to entry
 Barriers to expansion
 Buyer power
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Paradox
 Uniform price
 Price transparency
 Lowest price guarantee
 Quality regulation
 Safeguards against misleading information
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Hong Kong’s Competition Regime
 COMPAG
 Sector-specific legislation
 CPRC’s recommendation
 Consultation
 Cross-sector competition law
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Overseas cases
 Price-fixing of replica football kit in UK
 Eight airlines and fare dissemination
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system in US
Accreditation of law schools in US
Bread market in Australia
Sales of sustained release morphine in UK
Broadcast Music, Inc v. Columbia
Broadcasting System
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Thank you
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