31 May, 2016
The Liberal Art University in Hong Kong
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Insights

From serving as Member of the Telecommunications (Competition Provisions) Appeal Board to serving as Member of the Administrative Appeals Board, Prof Lin Ping from the Department of Economics can be regarded as an expert on legal issues regarding market competition. Recently, he was appointed to the Panel of Economic Consultants of the Hong Kong Competition Commission. During a conversation with Prof Lin, he shared his research interests in competition laws as well as the development of competition policy research at Lingnan.

Why are you interested in competition laws? How long have you been researching on this topic?

I became interested in competition policy in mid 1990s right before I joined Lingnan. My initial interest stemmed partly from the realisation – and now firm belief – during my doctoral study in the United States, that market competition is arguably the only mechanism available that can lead to efficient allocation of resources in society and maximum consumer welfare. This recognition came about against my background of growing up, studying and working in Mainland China, where an attempted central planning system failed after 30 years of government trial, following 60 years of the same experience in the former Soviet Union.

Coincidence or not, upon arriving at Lingnan in 1997, I found out that competition policy was also an interest and focus at our university under the academic leadership of President Edward K Y Chen who chaired the Hong Kong Consumer Council and led the pioneering competition policy study in Hong Kong. During the public consultation period on competition policy, I obtained a research grant under the RGC Public Policy Research Scheme on competition policy, together with Prof Chen. In the resulting policy report, Fair Competition under Laissez-Faireism: Policy Options for Hong Kong (2008), we submitted ten concrete recommendations on introducing an economy-wide competition in Hong Kong, ranging from coverage of the law, treatment of small and medium sized enterprise, safe-harbour, penalty design, and leniency programme, most of which matched the subsequent developments within the 2012 Competition Ordinance.

In what ways has Lingnan built up an international reputation in competition policy research?

Lingnan University has long enjoyed international reputation in the area of competition policy research. President Leonard K Cheng, Chair Professor in Economics, has advised the HKSAR Government on drafting Hong Kong’s competition law and is now a member of the Competition Commission. Several other colleagues at the Department of Economics are also very active in researching competition policy and regulation, having published academic articles and policy reports for the governments in Hong Kong and Mainland China, as well as the Asian Development Bank. We have also organised conferences in the past which attracted top competition scholars from overseas. Competition policy research at Lingnan will continue to play an important role in promoting competition research and competition culture in Hong Kong, as well as transferring this knowledge to society. I am very proud to be part of the team.

The Competition Ordinance was enacted in December 2015. What is the significance of this legislation? How will it contribute to Hong Kong’s economic development, and its status as an international economic hub?

Implementing the Ordinance is expected to bring about real changes to Hong Kong’s economy and society, as now anti-competitive business practices such as cartel agreements and abuse of market dominance – once described as means of free competition by some during the period of laissez-faireism – are no longer allowed. Anti-competitive practice such as cartel agreements where competing companies collude in setting prices and sales – including bidding rings – or to divide the market, at the expense of consumers and social welfare, causes exclusionary and detrimental effects. Competition laws aim at controlling such abusive conduct. To cite one example: according to a study by two economists Clarke and Evenett in 2003, the harms caused by the international vitamins cartel to Hong Kong consumers was about USD178.84 million during its operation from 1989-1999. Without competition laws, we may not be able to uncover these abusive conduct.

What are the major challenges of implementing competition laws in Hong Kong? Are you confident about the effectiveness of the Competition Ordinance?

At the beginning there was a strong misconception among some in Hong Kong that introducing competition law meant government intervention in the market place. Through public consultations and other forms of policy debates, Hong Kong society has reached a consensus that free competition does not equal to fair competition and, to the contrary, may even allow large enterprises to abuse their market power.

I am confident that the implementation of the Competition Ordinance will lead to effective detection of existing cartels, while deterring the formation of new ones, and punish and deter other types of anti-competitive behavior. The Competition Ordinance will soon demonstrate its effects in promoting market competition and innovation in Hong Kong.