China Daily reports that ‘a prominent supermarket chain’, pressured the sole distributor of a food brand to force a small retailer to raise the price of its noodles. Could it be that the Beijing-financed paper is unaware that Hong Kong has freedom of the press and you are allowed to name names provided you word them in a libel-sensitive manner? The Standard, by contrast, part of the tycoon-owned and tycoon-worshipping Sing Tao Group, spells it out. The small retailer was one Josh Man of low-income Shamshuipo, who says he was approached by the Nissin Foods agent, who told him that ParknShop had complained and he should hike the price from HK$3 a pack back to three-for-HK$10.
On reading this report this morning, I looked around the street to see how many people had fainted in shock upon learning that the subsidiary of Li Ka-shing’s Hutchison conglomerate – one of the two big supermarket chains in town – has been thus accused. The number of passers-by swooning in amazement totaled a big fat zero.
We know that cartels exist in Hong Kong because the place is small, half a dozen family-controlled conglomerates run a big chunk of the domestic economy, and – crucially – there is no law against it. As Adam Smith famously pointed out, no businessman with a duty to maximize returns to shareholders will refrain from colluding with peers on pricing or stamping out small competitors if legally allowed to do so.
(He also noted a type of hypocrisy that rings a bell in Hong Kong over 200 years later: “Our merchants and master manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”)
I have never paid much attention to the Competition Bill wending its way through the Legislative Council. Like sewerage systems or Wi-Fi networks, laws are necessary, but tedious to look at and understand, so we pay someone else to do it. A summary written by lawyers capable of plain English looks promising; the bill seems to ban cartels. However, the thing is being gutted in the legislature, apparently by small companies – like Josh Man’s perhaps – who are afraid of frivolous lawsuits. But wait: why would Josh Man do that? And since when have people like Josh Man had that sort of clout in the Legislative Council?
The Consumer Council says the government’s concessions to business lobbies hurt consumers and small enterprises. The Lion Rock Institute delights in opposing the whole idea of a competition law on the classic ideological grounds that it doesn’t work in theory and therefore can’t and mustn’t in practice. Still, their notion that a competition law could open the door to ambulance-chasing scumbags who sue anything for a quick buck is bolstered a bit by an intriguing article in Asian Lawyer in which an American bemoans the fact that no litigator in Hong Kong earns US$1 million a year and that the Big Lychee is “not the most receptive place for innovative legal theories and claims that are pushing the envelope.”
Meanwhile, the city’s mega-tycoons are silent and apparently unperturbed by the competition bill that is deformed and limping through the Legislative Council, destined not to push any envelopes. Blissful, almost. Even ParknShop PR officer Athena Lee, who denies everything.