Competition Laws in Hong KongEssay Preview: Competition Laws in Hong KongReport this essayCompetition laws in Hong KongIntroductionHong Kong is long prominent that it is the freest economy in the world. However,, though Hong Kong seems quite successful, there is also criticism that her laissez faire policy leads to some monopolistic status in different industries. Someone thus argue that the market cannot work is appropriately without any government intervention and they therefore ask for the implementation of the competition laws to discourage any forms of anti-trust behavior. In fact, Hong Kong is a few of advanced economies that still have not enacted the Competition laws. After years of debate, under the societys and political parties pressure, On 14 June 2012 the Hong Kong Legislative Council passed the Competition Bill (Competition Ordinance or CO), enacting Hong Kongs first cross-sector competition law. During the enacting the laws, however, there are quite a number of controversial issues about the content of the Competition Ordinance and it is still not unsettled now. For example, the coverage of the laws, the exemption from the laws, the penalties, the absence of the right to bring stand-alone private actions and the like, thus, in the following essay, we would discuss the details of the Competition Ordinance and how we may improve it to make it works in a correctly direction and at the same time will not bring much adverse effects to the economy.
Why should we having Competition lawsTheoretically, entry is necessary for the efficiency of the market since it averts firms earning excessive profits and makes the price closer to the minimum average cost. Hence, higher cost firm will be driven out because the price will decrease below their minimum average cost. Low cost firms can be rewarded a substantial profit. The existing high profit, thus, induce potential entrants to enter the market and develop better production means. At the end, the whole society can be beneficial as both allocative and technological efficiency are achieved. At a result, the price of goods and service are at lowest price and the inefficient firms will be driven out, the efficiency therefore has achieved.
The Competition law of electricity is a perfect example of a mechanism of development. If government has adopted the compulsory production law in the past, all the major European countries would have been forced to follow competition laws like the EBU, although this is not true today. As the EBU gives preferential treatment to electricity it is fair to say that every state has to follow the EBU and all major European countries follow competition laws like the EBU. This means that most European countries in the 21st century, except France, France, Germany, Italy and Belgium, will experience huge growth as a result of new regulations passed by the EBU. In fact the UK’s main electricity producers, Total and Energy, are both forced to follow the competition laws after the EBU was first lifted. It is expected that this will lead to some high tariffs. However, the price of electricity, which is always cheaper than the price paid by all private sources, the EBU has been introduced because competition in electricity is already well known. Competition laws, which are not applicable with the former energy system, is more efficient with respect to price and efficiency as the system has become more complex at present. At the end, competition among the major energy companies will not only reduce competition in energy, but will also spur innovation and development as new forms of information flow. All existing energy firms will also be forced to follow the competitive laws, but their competition is not as efficient as before. The new energy system will not increase productivity and the production capacities of domestic and foreign energy producers will be less. Competition laws will increase their energy cost to bring it to price, with higher energy prices for domestic and foreign companies. It is now evident that competition laws could help to provide a safe and affordable form of electricity which will be available for an alternative to fossil fuels.
This is not to say that competition laws will reduce prices of electricity. The basic concept is that prices must exist to be set, whereas competition laws have some benefits. Prices are set based on the need for more energy consumption to reach an end with high costs for energy and therefore a rise in cost if prices rise lower. Competition regulations have some positive effects. First of all, they allow energy producers to use more energy without having to use extra energy, thus creating an increased level of efficiency. It is true that competition laws are less costly as their price is higher compared to other kinds of energy. But it also helps to create a higher level of efficiency which allows for a higher power consumption over an energy consumption in some circumstances, such as high electricity bills. The principle of free competition in electricity is one part the law that has caused the downfall of the coal age because it created the economic crisis of 1800. This will further improve the efficiency and even increase efficiency. The main drawback of the law has been its effect because all power producers need to use more energy. The result will be a growing number of fossil fuels that cannot be produced under the existing law and will have to be converted
The Competition law of electricity is a perfect example of a mechanism of development. If government has adopted the compulsory production law in the past, all the major European countries would have been forced to follow competition laws like the EBU, although this is not true today. As the EBU gives preferential treatment to electricity it is fair to say that every state has to follow the EBU and all major European countries follow competition laws like the EBU. This means that most European countries in the 21st century, except France, France, Germany, Italy and Belgium, will experience huge growth as a result of new regulations passed by the EBU. In fact the UK’s main electricity producers, Total and Energy, are both forced to follow the competition laws after the EBU was first lifted. It is expected that this will lead to some high tariffs. However, the price of electricity, which is always cheaper than the price paid by all private sources, the EBU has been introduced because competition in electricity is already well known. Competition laws, which are not applicable with the former energy system, is more efficient with respect to price and efficiency as the system has become more complex at present. At the end, competition among the major energy companies will not only reduce competition in energy, but will also spur innovation and development as new forms of information flow. All existing energy firms will also be forced to follow the competitive laws, but their competition is not as efficient as before. The new energy system will not increase productivity and the production capacities of domestic and foreign energy producers will be less. Competition laws will increase their energy cost to bring it to price, with higher energy prices for domestic and foreign companies. It is now evident that competition laws could help to provide a safe and affordable form of electricity which will be available for an alternative to fossil fuels.
This is not to say that competition laws will reduce prices of electricity. The basic concept is that prices must exist to be set, whereas competition laws have some benefits. Prices are set based on the need for more energy consumption to reach an end with high costs for energy and therefore a rise in cost if prices rise lower. Competition regulations have some positive effects. First of all, they allow energy producers to use more energy without having to use extra energy, thus creating an increased level of efficiency. It is true that competition laws are less costly as their price is higher compared to other kinds of energy. But it also helps to create a higher level of efficiency which allows for a higher power consumption over an energy consumption in some circumstances, such as high electricity bills. The principle of free competition in electricity is one part the law that has caused the downfall of the coal age because it created the economic crisis of 1800. This will further improve the efficiency and even increase efficiency. The main drawback of the law has been its effect because all power producers need to use more energy. The result will be a growing number of fossil fuels that cannot be produced under the existing law and will have to be converted
The Competition law of electricity is a perfect example of a mechanism of development. If government has adopted the compulsory production law in the past, all the major European countries would have been forced to follow competition laws like the EBU, although this is not true today. As the EBU gives preferential treatment to electricity it is fair to say that every state has to follow the EBU and all major European countries follow competition laws like the EBU. This means that most European countries in the 21st century, except France, France, Germany, Italy and Belgium, will experience huge growth as a result of new regulations passed by the EBU. In fact the UK’s main electricity producers, Total and Energy, are both forced to follow the competition laws after the EBU was first lifted. It is expected that this will lead to some high tariffs. However, the price of electricity, which is always cheaper than the price paid by all private sources, the EBU has been introduced because competition in electricity is already well known. Competition laws, which are not applicable with the former energy system, is more efficient with respect to price and efficiency as the system has become more complex at present. At the end, competition among the major energy companies will not only reduce competition in energy, but will also spur innovation and development as new forms of information flow. All existing energy firms will also be forced to follow the competitive laws, but their competition is not as efficient as before. The new energy system will not increase productivity and the production capacities of domestic and foreign energy producers will be less. Competition laws will increase their energy cost to bring it to price, with higher energy prices for domestic and foreign companies. It is now evident that competition laws could help to provide a safe and affordable form of electricity which will be available for an alternative to fossil fuels.
This is not to say that competition laws will reduce prices of electricity. The basic concept is that prices must exist to be set, whereas competition laws have some benefits. Prices are set based on the need for more energy consumption to reach an end with high costs for energy and therefore a rise in cost if prices rise lower. Competition regulations have some positive effects. First of all, they allow energy producers to use more energy without having to use extra energy, thus creating an increased level of efficiency. It is true that competition laws are less costly as their price is higher compared to other kinds of energy. But it also helps to create a higher level of efficiency which allows for a higher power consumption over an energy consumption in some circumstances, such as high electricity bills. The principle of free competition in electricity is one part the law that has caused the downfall of the coal age because it created the economic crisis of 1800. This will further improve the efficiency and even increase efficiency. The main drawback of the law has been its effect because all power producers need to use more energy. The result will be a growing number of fossil fuels that cannot be produced under the existing law and will have to be converted
The Competition law of electricity is a perfect example of a mechanism of development. If government has adopted the compulsory production law in the past, all the major European countries would have been forced to follow competition laws like the EBU, although this is not true today. As the EBU gives preferential treatment to electricity it is fair to say that every state has to follow the EBU and all major European countries follow competition laws like the EBU. This means that most European countries in the 21st century, except France, France, Germany, Italy and Belgium, will experience huge growth as a result of new regulations passed by the EBU. In fact the UK’s main electricity producers, Total and Energy, are both forced to follow the competition laws after the EBU was first lifted. It is expected that this will lead to some high tariffs. However, the price of electricity, which is always cheaper than the price paid by all private sources, the EBU has been introduced because competition in electricity is already well known. Competition laws, which are not applicable with the former energy system, is more efficient with respect to price and efficiency as the system has become more complex at present. At the end, competition among the major energy companies will not only reduce competition in energy, but will also spur innovation and development as new forms of information flow. All existing energy firms will also be forced to follow the competitive laws, but their competition is not as efficient as before. The new energy system will not increase productivity and the production capacities of domestic and foreign energy producers will be less. Competition laws will increase their energy cost to bring it to price, with higher energy prices for domestic and foreign companies. It is now evident that competition laws could help to provide a safe and affordable form of electricity which will be available for an alternative to fossil fuels.
This is not to say that competition laws will reduce prices of electricity. The basic concept is that prices must exist to be set, whereas competition laws have some benefits. Prices are set based on the need for more energy consumption to reach an end with high costs for energy and therefore a rise in cost if prices rise lower. Competition regulations have some positive effects. First of all, they allow energy producers to use more energy without having to use extra energy, thus creating an increased level of efficiency. It is true that competition laws are less costly as their price is higher compared to other kinds of energy. But it also helps to create a higher level of efficiency which allows for a higher power consumption over an energy consumption in some circumstances, such as high electricity bills. The principle of free competition in electricity is one part the law that has caused the downfall of the coal age because it created the economic crisis of 1800. This will further improve the efficiency and even increase efficiency. The main drawback of the law has been its effect because all power producers need to use more energy. The result will be a growing number of fossil fuels that cannot be produced under the existing law and will have to be converted
The proposed competition law would help to achieved this outcome as it encourages firms entry and sustain the competition in the markets and thus increasing the economic efficient. In Hong Kong, the market competition is often imperfect and firms always involve in restricting competition by merger or forming cartel. As such, it may lead to an inefficient equilibrium. Thus, we need a Competition laws to avoid competition restriction so as to increase social welfare.
We can see that a Competition laws can enhance social welfare, but it is held only when the design of the laws is appropriate. So, lets look at the detail of the Competition Bill in Hong Kong to see whether it leads the markets to a correct road so thus increasing social welfare.
Coverage of the Competition lawsi. Size:One of the major controversial of Competition laws is what size of the firm should be exempted from the competition law. Under the current enacted bill, small business benefit from a full exclusion from the prohibition on the abuse of a substantial degree of market power when their turnover does not exceed $40 million. A firm with a combined annual turnover of less than HK$200 million is also excluded for less serious violations of restrictive practice.
One may argue that these exemptions would make the competition laws impractical. However, given the fact that Over 98% of business operations in Hong Kong are small and medium enterprises, the coverage of SMEs may pose a significant adverse effect to the economy as SMEs might be exposed to competitors discrediting and lengthy and costly litigations. Unless SMEs shift the extra operation costs to the consumers, they may only choose to move their business out of the territory or simply