Centre for Public Policy Studies 5 7 Lingnan University Hong Kong No . 127 ( 11 / 02 ) CPPS Competition Policy under Laissez - faireism : Market Power and Its Treatment in Hong Kong Professor Edward

The paper describes the current competition policy framework in Hong Kong: how it came into existence, what business practices are prohibited, and how the enforcement system works. Recent cases in the telecommunications industry are used to illustrate the sectoral approach, the unique feature of Hong Kong’s competition policy. The paper argues that a sectoral approach faces two fundamental drawbacks. First, due to having different “rules of the game” for different sectors, the allocation of resources may be distorted in the long run. Second, since the relevant regulatory agencies perform dual roles both as competition policy enforcer and as traditional regulator of natural monopolies, the impartiality of their competition decisions may not be credibly conveyed to the general public. We also address other specific problems associated with the current sectoral approach, such as the exclusion of structural issues, narrow coverage of sectors, and the lack of public enforcement. An overall competition law can better promote competition and economic efficiency in Hong Kong. JEL Classifications: K21, L40