Response to Dan Ryan: "Competition Law Will Benefit Hong Kong "

In a letter to the WSJ dated July 20, 2010, Andrew Simpson and Marc Waha responded to Dan Ryan's article "Competition Law and (Dis)order" with the following claims:

• Dan Ryan exaggerates the "vagueness and arbitrariness" of Hong Kong's proposed competition law; most businesses can pinpoint the distinction between when they are competing and when they are collaborating or exerting their market power.
• In more than 100 countries with competition law, businesses have not been led to seek clearance from competition authorities for everything they do; this is a fairly small portion of a competition authority's operations, in general.
• Competition law will not radically change Hong Kong's free market tradition, but rather it will better protect it from those who seek to extract profits in ways that subvert competition.

Regardless of what particular views one may have on the economic arguments, it is impossible to accept the Competition Bill as its drafted. The legislation gives authorities wide-ranging powers, is more vague and broad, with less checks and balances than many international cases.There are many points to pick, but the bottom line is that this law is disastrous for the integrity of Hong Kong's legal system.

Hong Kong's Populist Turn: Milton Friedman Wouldn't Approve

The Wall Street Journal, July 20, 2010

The WSJ has published an editorial criticizing the establishment of the minimum wage law in Hong Kong, echoing the sentiments that Lion Rock has propounded for the past months. The article delineates the following:

• The competition policy proposal and the minimum wage law are part of a broader pattern that flies in the face of the Hong Kong free market traditions; this is evidence of the imminent shift toward a more bureaucratic state and politicized economy.
• Tsang's calculations in these matters are a result of "misguided populism," according to the WSJ; he seems to think that these laws are a way to assuage the dissent of a "small but noisy" group of people.
• The article warns that the government has thus far been fortunate enough to be able to fund the many subsidy programs it engages with - youth internships, for example - despite its relatively low tax rates for households and businesses. However, low taxes "aren't inevitable," according to the WSJ, and expansion of labor legislation could drastically change the situation as it stands.
• Milton Friedman is quoted as writing: "At the end of World War II, Hong Kong was a dirt-poor island with a per-capita income about one-quarter that of Britain's. By 1997, when sovereignty was transferred to China, its per-capita income was roughly equal to that of the departing colonial power, even though Britain had experienced sizable growth over the same period. That was a striking demonstration of the productivity of freedom, of what people can do when they are left free to pursue their own interests."

Competition Law and (Dis)order

Dan Ryan, Director LRI (Wall Street Journal, 15 July 2010)
Hong Kong's antitrust bill threatens the rule of law that makes the territory so attractive to business.

One of Hong Kong's greatest commercial strengths is the rule of law. Both global and local businesses operate right on the doorstep of China with all the traditional common-law protections found in America or Britain. The territory has the additional advantage of not having suffered in the same way from the massive growth of the regulatory state that has affected other "developed" jurisdictions over the years. Yet a new bill presented to the territory's legislature by the government yesterday would undermine Hong Kong's advantage, ironically enough in the name of defending "competition."

Read the full article at http://online.wsj.com/article/SB10001424052748704518904575365963723383280.html

How to Make Hong Kong Uncompetitive

How to Make Hong Kong Uncompetitive

Mr. Ryan is a director at the Lion Rock Institute, (The Wall Street Journal , 2008-4-2)

A series of record-breaking fines in American and European competition cases is focusing attention and concern again on the power and purpose of competition regulators themselves – just ask Microsoft. So the Hong Kong government's ongoing attempt to create such a regulator of its own is puzzling, to say the least. Unlike most jurisdictions around the world, Hong Kong does not have a general competition law regulator. (The sole exception is a limited – and unnecessary – regime governing the telecommunications and broadcasting industries.) Yet somehow without such a regulator Hong Kong is consistently rated the freest and most competitive economy on the planet. How can this be? Hong Kong's current "competition regulator" is its economic freedom and open market. The government keeps tariffs low and, with a few well-known and limited exceptions like the horse racing monopoly, it has maintained few government-imposed barriers to entry. This doesn't mean that certain companies haven't been able to dominate particular industries. But their ability to exploit that dominance to consumers' detriment is constrained by the constant threat that new competitors could pop up to challenge them...
To read more, visit http://online.wsj.com/article/SB120708273137381351.html