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Competition Policy and Competition Law 23 April 2008

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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Competition Policy and Competition Law 23 April 2008

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  1. Competition Policy and Competition Law23 April 2008 Adolph Leung Senior Economist Commerce and Economic Development Bureau

  2. Objective of Competition Policy/Law Hong Kong • To enhance economic efficiency and free flow of trade, thereby also benefiting consumer welfare Other places • Economic efficiency • Consumer welfare • SME • Export promotion Increasing shift towards economic efficiency and consumer welfare

  3. 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

  4. Purpose or Effect Test • Facts specific • Involve detailed economic analysis • Similar form of conduct may constitute infringement in some cases and non-infringement in others

  5. Exemption • Improve production or distribution • Promote technical or economic progress • Not indispensible • Do not eliminate competition

  6. 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

  7. Market Definition (Product and Geographic) • Demand-side substitution • Supply-side substitution • “Small but Significant and Nontransitory Increase in Price” (SSNIP) test • Effect of globalisation

  8. Marketpower • 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

  9. Paradox • Uniform price • Price transparency • Lowest price guarantee • Quality regulation • Safeguards against misleading information

  10. Hong Kong’s Competition Regime • COMPAG • Sector-specific legislation • CPRC’s recommendation • Consultation • Cross-sector competition law

  11. Overseascases • Price-fixing of replica football kit in UK • Eight airlines and fare dissemination 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

  12. Thank you

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