Transcript FAIR TRADE POLICY

THE IMPACT OF FAIR TRADE
PRACTICES POLICY ON
PROFESSIONAL SERVICES
LEE SWEE SENG
LLB, LLM, MBA
Advocates & Solicitors | Notary
Public | Trade Marks Agent | Patent
Agent | Industrial Designs Agent |
Certified Mediator
Fair Trade Practices Policy
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Introduction
Objective
Scope
Prohibition
Organization Structure for Enforcement
Authority
INTRODUCTION
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The Ministry of Domestic Trade and Consumer
Affairs (MDTCA) has prepared a draft policy
paper as well as a draft law on fair
trade/competition in Malaysia.

The mandate or the formulation of a fair trade or
competition policy and law is found in paragraph
16.32 (Chapter 16: Distributive Trade) of the
Eight Malaysia Plan (RMK-8)
* Source: Official Website of Ministry of Domestic Trade and Consumer Affairs,
http://www.kpdnhep.gov.my
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The Plan states the need for the policy and law to
prevent anti-competitive behavior such as;
collusions
cartel price fixing
market allocation and abuse of market power
whereby a fair trade/competition will, amongst others,
prevent firms from protecting or expanding their
market shares by means other than greater efficiency
in producing what consumers want.
* Source: Official Website of Ministry of Domestic Trade and Consumer Affairs,
http://www.kpdnhep.gov.my
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The Fair Trade Practices Bill is expected to be tabled in
Parliament by early next year (2009). Feedback was being
sought from industry members, non-governmental
organisations and government agencies.
The proposed Act has to be consistent with the aspirations
outlined in the Asean Community blueprint, in which
member countries will have its own Anti-Competitive Act by
2015.
So far there are no laws to counter monopolistic trade
activities in Malaysia. Actions can only be taken if the act is
contravene the Trade Descriptions Act 1972 and
Consumer Protection Act 1999.
*Source: http://thestar.com.my/news/story.asp?file=/2008/8/20/parliament/22124136&sec=parliament
Current Position in Malaysia

At present, there are only 2 sectors that have competition laws and
regulations:
1)
Communication and Multimedia
Competition regulation for the communications and multimedia
sector is enshrined in the Communications and Multimedia Act
1998 (Act 588) (“CMA”). The relevant provisions that explicate the
general competition practices are:
i.
Section 133 – prohibits anti-competitive conduct that will
substantially lessen competition in the communications and
multimedia sector.
ii.
Section 139 – provides for the Malaysian Communications and
Multimedia Commission (“MCMC”) to direct a licensee who is in
a dominant position to cease the anti-competitive conduct,
which has resulted in substantially lessening competition.
•
* Source: Official Website of Ministry of Domestic Trade and Consumer Affairs,
http://www.kpdnhep.gov.my
iii.
2)
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Section 140 – provides the Commission with authority
to authorise conduct which has effect of substantially
lessening competition.
Energy Sector
under the Energy Commission Act 2001 (“ECA”), one
of the functions of the Energy Commission is to
“promote and safeguard competition and fair and
efficient market conduct or, in the absence of a
competitive market, to prevent the misuse of monopoly
or market power in respect of the generation,
production, transmission, distribution and supply of
electricity and the supply of gas through pipeline”.
* Source: Official Website of Ministry of Domestic Trade and Consumer Affairs,
http://www.kpdnhep.gov.my

1)
2)
3)
4)
In the past, Malaysia has implemented four (4) main
trade policies:
Social-economic aspects concerning exports-oriented
industries that promoted foreign direct investment;
A policy called “National Economic Policy (“NEP”)” to
eradicate poverty and to provide wealth redistribution;
A trade policy that places high import duties on
imported products; and
A privatization policy.
* Source: Official Website of Ministry of Domestic Trade and Consumer Affairs,
http://www.kpdnhep.gov.my

Other Legislations
- There are some legislation that have direct or indirect
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control over the economic sectors, i.e:
Companies Act 1965 (“CA”)
Control Supplies Act 1983 (“CSA”)
Trade Descriptions Act 1972 (“TDA”)
Direct Sales Act 1993 (“DSA”)
Hire Purchase Act 1967 (“HPA”)
Consumer Protection Act 1999 (“CPA”)
Food Act 1983 (“FA”)
Money Lenders Act 1951 (“MLA”)
Control of Paddy and Rice Act 1974 (“CPRA”)
Electricity Act 1949 (“EA”)
* Source: http://www.kpdnhep.gov.my
OBJECTIVE
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1)
2)
3)
Malaysia’s fair trade practices law will soon be tabled in
Parliament and enacted as legislation. The Fair Trade
Practices Policy (FTPP) approved on 20 October 2005, will
seek to achieve 8 policy goals:
Promote and protect competition in the market;
Create dynamic and competitive entrepreneurs;
Provide fair and competitive market opportunities for
business.
* Source: Official Website of Ministry of Domestic Trade and Consumer Affairs,
http://www.kpdnhep.gov.my
4)
5)
6)
7)
8)
Prohibit anti-competitive practices including those
originating from outside the Malaysian territory and
affecting the domestic territory;
Prohibit unfair trade practices in the economy;
Promote right of SME to participate in the market
place;
Promote consumer welfare; and
Encourage socio-economic growth, generate
efficiency and equity.
* Source: Official Website of Ministry of Domestic Trade and Consumer Affairs,
http://www.kpdnhep.gov.my
SCOPE OF FAIR TRADE
PRACTICES POLICY (FTPP)
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The FTPP will not cover:Sovereign function of the Government; and
All actions and measures attributable to the state that seeks
to encourage socio-economic growth and to generate
efficiency and equity.
The scope of FTPP will apply to competition matters
throughout the economy. However, existing technical
regulations and supervisions for their respective sectors will
remain under the purview of relevant institutions.
* Source: Official Website of Ministry of Domestic Trade and Consumer Affairs,
http://www.kpdnhep.gov.my
PROHIBITIONS
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The proposed FTPP will prohibit the following
conducts:Monopolization;
Hard-core cartels;
Anti-competitive practices which do not yield
benefits to consumers; and
Unfair trade practices.
* Source: Official Website of Ministry of Domestic Trade and Consumer Affairs,
http://www.kpdnhep.gov.my
MONOPOLISATION
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Existence of legitimate/legal domestic monopolies are
inevitable and acceptable for business organizations in
the process of development and can maximize benefits
from globalization.
Example of monopoly that could be allowed under the
FTPP are legal monopolies or monopolies earned
through superiority or invention and which are usually
associated with intellectual property rights.
However, monopolistic conduct which are referred to as
monopolization, such as predatory pricing, exclusive
dealings, excessive pricing and tied selling can lead to
inefficiencies and raise costs to the economy and the
society.
* Source: Official Website of Ministry of Domestic Trade and Consumer Affairs,
http://www.kpdnhep.gov.my
ILLICIT CARTEL
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In a market characterized by few producers for
particular products and goods, firms might find it
profitable to collude to fix prices, allocate markets,
limit productions and engage in bid rigging in order
to maximize their profits.
The proposed FTPP will prohibit illicit cartels per
se. Nevertheless, export cartels, which seek to
expand Malaysia’s trade with its other trading
partners, would not fall under the scope of the
prohibition.
The exemption of export cartels is in line with
existing practice in both developed and developing
countries.
* Source: Official Website of Ministry of Domestic Trade and Consumer Affairs,
http://www.kpdnhep.gov.my
ANTI-COMPETITIVE PRACTICES
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Anti-competitive agreements which seek to restrain and
eliminate competition such as insisting on retail price
maintenance or when more than one party undertakes
agreements such as collusive tendering, restraints on
production or sale and others would be harmful to the
competition process and therefore should be prohibited.

However, anti-competitive agreements will be examined on a
case-by-case basis (rule of reason approach) and if the
conduct or the agreement entails benefits to consumers which
outweigh the cost of the anti-competitive effect, the anticompetitive agreement will be authorized.
* Source: Official Website of Ministry of Domestic Trade and Consumer Affairs,
http://www.kpdnhep.gov.my
UNFAIR TRADE PRACTICES
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FTPP will prohibit unfair trade practices, which substantially
lessen competition, or create unfair competition condition
between competitors or harm consumer interests.
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It will therefore address unfair practices including misleading
advertisements, unfair dealing between small and large
economic operator, false promotions, claims, statements,
promotions and sales tactics.
* Source: Official Website of Ministry of Domestic Trade and Consumer Affairs,
http://www.kpdnhep.gov.my
ORGANIZATION STRUCTURE
FOR ENFORCEMENT AUTHORITY
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To implement the FTPP, a framework for an enforcement
system will be set up as follows:Fair Trade Practices Commission (FTPC) comprising of
Commissioners who are representatives of the various
ministries, sector regulators, business and consumer
representatives and trade unions. The Commission will be
serviced by an administrative body.
Fair Trade Practices Appeals Tribunals to review decisions
taken by the competition commission if referred to it by
parties; and
Appeals Procedure to the High Court
* Source: Official Website of Ministry of Domestic Trade and Consumer Affairs,
http://www.kpdnhep.gov.my
HOW IS SCALE FEES UNDER
SOLICITOR’S REMUNERATION ORDER
(SRO) COMPATIBLE WITH FAIR TRADE
POLICY?
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Professional fees are intellectual and creative products, and
not commodities. Therefore, the primary purpose of scale
fees is to set a benchmark to establish a reasonable level
of remuneration, commensurate with the provision of
professional service of an acceptable and recognized
standard.
* Source: http://www.malaysianbar.org.my/solicitors_remuneration_enforcement
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In a ‘free market’ situation it is often too tempting
for the consumers requiring professional services
to seek out the cheapest, sidelining the issue of
quality of service, in particular when such quality
is not immediately or easily discernible.
This ‘shopping around’ or ‘marketing for cheaper
fees’ will lead to an unhealthy widespread
undercutting of professional fees.
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When fees are uneconomic and do not commensurate
with the level of the services that ought to be provided,
it is not uncommon for the quality of professional
services rendered to be compromised.
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Hence, scale fees will not only benefit but will also
protect the consumers, since with the scale fees
professionals will then have to compete with one
another on the quality of professional services, and
not on pricing.
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Scale fees have been an accepted and common
method of charging for professional services in
Malaysia. It prevents both overcharging and
undercutting, and protects consumers by promoting
high quality professional services.

Effective and stringent measures must be taken by the
various professional bodies and boards to enforce their
respective scale fees against their members in order to
ensure and preserve high standards of the professional
services rendered to the public.
* Sources: http://www.malaysianbar.org.my/solicitors_remuneration_enforcement
UNITED KINGDOM
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In 1973, the UK Government enacted the Fair Trading
Act 1973 that focused on public interest.
In 1980, the Competition Act was enacted focusing on
competitive effects in the conduct of individual firms
and industries, which law enforcement machinery was
still inadequate.
The Competition Act enacted in 1998 became effective
in 2000 with the law on restrictive agreements and of
dominant position conforming to the prohibition
approach of the European Union (“EU”)
* Sources: http://www.cljlaw.com/membersentry/articlesdisplayformat.asp?A_2006_01
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Competition in market for goods and services is essential for
economic efficiency. The Director General of Fair Trading
(DGFT) considers that the principles of competition policy
and law should be applied to the business and market
activities of all professions as they apply to other business
activities.
However, important exclusions remain in place for
professional rules. Nonetheless, Government policy is to
increase competition and some of the professions have
themselves, in this period, embarked on reforms designed
to foster competition in their various business activities.
Freedom to advertise and to set prices competitively is
widely accepted in the professions in the UK.
* Source: http//www.oecd.orgdataoecd3541920231.pdf
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(1)
(2)
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The Competition Act 1998 administered by Office of Fair
Trading (“OFT”) introduces two (2) prohibitions:
(“Chapter 1”) of agreements (whether written or not) which
prevent, restrict or distort competition and which may effect
trade within the UK
(“Chapter 2”) of conduct of undertakings which amounts to an
abuse of a dominant position and which may effect trade
within the UK.
In the meantime, the Office of Fair Trading (OFT) will
continue to act to influence improvements to the competitive
structure of the professional services sector under the
DGFT’s existing competition powers under the Fair Trading
Act 1973, and using the advisory role given to it in relation to
lawyers under the Courts and Legal Services Act 1990, and
its territorial equivalents.
* Source: http//www.oecd.orgdataoecd3541920231.pdf
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The Competition Act 1998 (Chapter 1) deals with
restrictive practices engaged by companies operating
within the UK that distort, restrict or prevent competition.
These are primarily in the form of horizontal agreements
(agreements to collude between firms on the same level of
the supply chain such as retailers or wholesalers). These
agreements could be to limit output, collusively share
information, fix prices, tender collectively and share
markets out. Office of Fair Trading (OFT) is responsible for
prosecuting such firms who engage in these activities.
Exemptions from prohibition are available if the firm can
demonstrate that these practices are in the interest of the
consumer through increasing market efficiencies or
advancing technical progress.
* Source: httpen.wikipedia.orgwikiCompetition_Act_1998
The Chapter 1 prohibition will apply in principle to the
rules and decisions of professional bodies in the
same way as it does to those of other associations of
undertakings, subject however to certain important
exclusions.
o The exclusion from the Chapter 1 prohibition only
applies in relation to professional services which
are designated. A list of designated professions is in
Schedule 4 of the Competition Act 1998. There are
18 categories.
 A professional body is capable of being an
association of undertakings within the meaning of
the Chapter I prohibition. As such, the rules and
decisions of professional bodies are subject to the
application of the Chapter I prohibition.

* Source: http//www.oecd.orgdataoecd3541920231.pdf
The following rules and guidance issued by the Law
Society (UK) were identified as potentially restrictive of
competition:
1)
Fee guidance for non-contentious work such as
probate and conveyancing. The guidance is indirectly
based on the Solicitors’ (Non-Contentious Business)
Order 1994.
2)
Prohibition on advertising fees by making
comparisons with fees of another solicitor.
3)
Prohibition on seeking business by telephone from
potential clients (‘cold-calling’).
4)
Prohibition on making or receiving payment for
referring a client to a solicitor.

* Source: http//www.oft.gov.ukshared_oftreportsprofessional_bodiesoft385.pdf
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The Law Society has been active in addressing the
issues raised. The Law Society has abolished the
prohibition on comparative fee advertising and also
removed the prohibition on ‘cold calling’ to business. The
prohibition remains in respect of non-business clients.
The Law Society argues that the restriction is necessary
to protect consumers and highlights the area of personal
injury litigation as one in which, in the absence of the
prohibition, public detriment might result. OFT accept this
point.
The Council will consider proposals later this year (2002)
to amend the prohibition on payment of referral fees. The
restriction hampers the development of new forms of
marketing that could bring clients and professionals
together.
* Source: httpwww.oft.gov.ukshared_oftreportsprofessional_bodiesoft385.pdf
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The Law Society has indicated that it is willing to withdraw
the fee guidance currently issued in relation to probate
and conveyancing work.

While only some of the restrictions have been removed,
amended or justified, OFT consider that for the time
being, the most effective way to achieve the aims is to
encourage the Law Society to proceed with its
programmes of reform and to review progress regularly to
ensure that the Law Society is proceeding in a timely and
appropriate manner. So long as self-deregulation is
proceeding effectively, public action is not immediately
necessary.
* Source: httpwww.oft.gov.ukshared_oftreportsprofessional_bodiesoft385.pdf

Chapter II deals with the abuse of a dominant position by
a firm who uses practices such as predatory pricing,
excessive prices, refusal to supply, vertical restraints and
price discrimination to maximise profit, gain competitive
advantage or otherwise restrict competition.

In investigating alleged breaches of chapter II a two stage
process is involved.
Firstly it must be identified if the firm actually possesses
a dominant market position.
Generally if a firm is found to have a market share in
excess of 40% then it is considered a threat to
competition.
There are no exemptions to chapter II as by its very
definition as "abuse" of a market position, one must be
guilty of wrongdoing for the chapter to apply.
1)
2)
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* Source: httpen.wikipedia.orgwikiCompetition_Act_1998
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1)
2)
3)
Under the Fair Trading Act 1973, there are 3
approaches laid down:
Achieving the desirability of maintaining and promoting
competition;
The interest of consumers and users with respect to
price and quality of a product would create a healthy
competition; and
Promoting production efficiency and innovation.
* Sources: http://www.cljlaw.com/membersentry/articlesdisplayformat.asp?A_2006_01

The Office of Fair Trading under the purview of the
Director General of Fair Trading stated that their goal
was to make markets work well for consumers. Markets
work well when there is vigorous competition between
fair dealing businesses.

When markets work well, good business flourish.
* Sources: http://www.cljlaw.com/membersentry/articlesdisplayformat.asp?A_2006_01
AUSTRALIA
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In October 1992, an Independent Committee of Inquiry was
established by the Prime Minister following agreement by all
Australian governments on the need for a national
competition policy.
In August 1993 the Independent Committee of Inquiry
reported to the heads of Australian Governments (‘the
Hilmer Report’).
In its submission to the Hilmer Inquiry, the then Trade
Practices Commission, argued strongly in favors of
universal application of Australia’s competition law – the
Trade Practices Act 1974 (TPA), and therefore application
of the competitive conduct rules of the TPA to the business
activities of the professions.
* Source: http//www.oecd.orgdataoecd3541920231.pdf
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In February 1994, the Council of Australian Governments
(‘COAG’) meeting in Hobart agreed to enact legislation to
achieve the universal application of competition laws to all
business throughout Australia as recommended in the
Hilmer Report.
In particular, the aim was to apply the competition laws to
unincorporated business and government businesses,
including all of the professions.
Since then, the Commonwealth, State and Territory
Parliments have passed laws to apply Part IV of the Trade
Practices Act 1974 and the State equivalent – the
Competition Code, to achieve universal application of the
competition laws to everyone in business in Australia.
These changes came into effect on 21 July 1996.
* Source: http//www.oecd.orgdataoecd3541920231.pdf
Policy of The Trade Practices
Act 1974 (TPA)
The overall policy of the TPA can be shown by looking at
3 different aspects of the TPA.
(1) The first is:
• Part IV - headed "Restrictive Trade Practices".
- The policy underpinning that Part of the Act is to
promote competition.
(2) The second aspect is:
• Part IVA - headed "Unconscionable Conduct"; and
• Part V - headed "Consumer Protection".
- The policy underpinning those two parts of the Act
is to ensure competition is fair.
*Source: http//www.accc.gov.aucontentitem.phtmlitemId
(3) The third aspect is:
•
•
Part VII - headed "Authorisations and Notifications in
respect of restrictive trade practices"; and
Part IX - headed "Review by Tribunal of determinations of
Commission”.
- The policy underpinning those two parts is to allow the
ACCC to authorise some forms of anti - competitive conduct
which would otherwise breach the competitive conduct rules
(ie breach Part IV of the Act). If the ACCC (Australian
Consumer and Competition Commission) authorises the anti
- competitive conduct it gets immunity from Court action. The
related policy reflected by Parliament through Part IX of the
TPA is to provide a mechanism for people affected by a
Commission determination to seek independent review of
that determination from the Australian Competition Tribunal.
*Source: http//www.accc.gov.aucontentitem.phtmlitemId
APPLICATION OF THE TPA TO THE
PROFESSIONS
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5)
The result of the competition policy reforms is that all
business activities of the professions are now covered by
the restrictive trade practices provisions (Part IV) of the
TPA, which prohibits:
Anti-competitive agreements and exclusionary
provisions, including primary and secondary boycotts and
price-fixing;
Misuse of market power;
Exclusive dealing;
Resale price maintainance; and
Mergers which would have the effect, or likely effect, of
substantiality lessening competition in a substantial
market
* Source: http//www.oecd.orgdataoecd3541920231.pdf
Authorisation.
•
The ACCC also has a relevant adjudication function.
Recognizing that, in some instances, anti-competitive
practice do deliver offset public benefits which can
outweigh the anti-competitive detriments, the TPA
empowers the ACCC to authorize some forms of anticompetitive conduct ( with the exception of the
misuse of market power) that would otherwise be at
risk of contravening Part IV of the TPA. If the ACCC
authorizes such conduct, it is immune from legal
action by the ACCC or by private parties.
* Source: http//www.oecd.orgdataoecd3541920231.pdf
PROFESSIONAL CONDUCT OF CONCERN.
•
•
The ACCC has identified several forms of regulation of
professional markets that are likely to inhibit competition and
therefore raise concerns under the TPA. These form of
regulation impact competition in two ways: through their effects
on the structure of the relevant professional market; and on the
market conduct of professional practitioners.
Structural regulations of professional markets include those
which:
•
Regulate entry into the market (including the imposition of
educational and competency standards, licensing and
certification requirements, and restrictions on entry by foreign
professionals and para-professionals);
•
Define the field of activity reserved for licensed or certified
professional practitioners;
* Source: http//www.oecd.orgdataoecd3541920231.pdf
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Separate the market functionally into discrete professional
activities (including those performed by accredited specialist
such as insolvency practitioners, barristers and medical
specialist); and
Impose restrictions on the ownership and organization of
professional practices.
Conduct regulations include those which:
•
Limit the fees professionals may charge, or require the
application of fee scales, for particular professional
activities;
•
Prohibit certain kinds of advertising, promotion or solicitation
of business by professional practitioners; and
•
Specify professional and ethical standards to be observed
by, and disciplinary procedures to apply to, professional
practitioners.
* Source: http//www.oecd.orgdataoecd3541920231.pdf
SINGAPORE
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In February 2003, the Economic Review Committee noted
that while Singapore have rules against anti-competitive
activities in specific sectors like energy and
telecommunications, there is no national competition law
that covers the other sectors.
The Committee thus recommended that a national
competition law be enacted to create a level playing field
for businesses big and small to compete on an equal
footing. This will make for a more conducive business
environment.
The Government accepted the Committee's
recommendation, as a national competition law will help to
reinforce a pro-enterprise and pro-competition policies,
enhance the efficiency of the markets, and strengthen the
economic competitiveness.
* Source: Official Website of Ministry of Trade and Industry Singapore,
http//www.app.mti.gov.sgdefault.aspid=570

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The objective of the competition law (Competition Act
2004) is to promote the efficient functioning of the markets
and hence enhance the competitiveness of economy. The
law seeks to prohibit anti-competitive activities that unduly
prevent, restrict or distort competition.
Instead of attempting to catch all forms of anti-competitive
activities, the principal focus will be on those that have an
appreciable adverse effect on competition in Singapore or
that do not have any net economic benefit.
In assessing whether an action is anti-competitive,
Singapore also give due consideration to whether it
promotes innovation, productivity or longer-term economic
efficiency. This approach will ensure that Singapore do not
inadvertently constrain innovative and enterprising
endeavors.
* Source: http//www.app.mti.gov.sgdefault.aspid=570

Competition Act 2004 apply to commercial and
economic activities carried on by private sector entities
in all sectors, regardless of whether the undertaking* is
owned by a foreign entity, a Singapore entity, the
Government or a statutory body.
However, as the intent of competition law is to regulate
the conduct of market players, it will not apply to the
Government, statutory bodies or any person acting on
their behalf.
[* undertaking means any person, being an individual, a
body corporate, an unincorporated body of persons or
any other entity, capable of carrying on commercial or
economic activities relating to goods or services.]

* Source: http//www.app.mti.gov.sgdefault.aspid=570


The Section 34 prohibition: This section prohibits
agreements, decisions and practices which prevent, restrict
or distort competition in Singapore. These include
agreements between competing firms to fix prices, reduce
the quantity of goods and services sold, or share markets.
The provision(s) of any agreement or any decision that
infringes this prohibition will be rendered void on or after the
date the section 34 prohibition comes into force to the
extent of the infringement.
However, Section 36 of the Competition Act empowers the
Minister to make an order, following the recommendation of
the Competition Commission, to exempt certain categories
of agreements from the section 34 prohibition. This is
provided that they improve production or distribution, or
promote technical or economic progress, without imposing
undue restrictions or substantially eliminating competition.
* Source: http//www.app.mti.gov.sgdefault.aspid=570

The section 47 prohibition: This section prohibits firms
from abusing market power in ways that are anticompetitive and which work against longer-term
economic efficiency, for example, predatory behaviour
towards competitors.

The section 54 prohibition: This section prohibits
mergers and acquisitions which substantially lessen
competition and have no offsetting efficiencies.
* Source: http//www.app.mti.gov.sgdefault.aspid=570

The Competition Commission of Singapore administers
and enforces the competition law. The Competition
Commission has the power to investigate and
adjudicate anti-competitive activities. The Competition
Commission is also empowered to impose sanctions,
such as requiring the offender to modify or terminate
the agreement or conduct, pay a financial penalty, and
carry out structural remedies. Structural remedies will
be calibrated based on the redress needed to stop the
anti-competitive activity in question.
* Source: http//www.app.mti.gov.sgdefault.aspid=570
HONG KONG
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

In May 2008, the Hong Kong Commerce and Economic
Development Bureau published a three-month public
consultation paper, entitled “Detailed Proposals for a
Competition Law” (“Consultation Paper”).
The consultation, the second on the subject, is set to end
on 5 August 2008, with the government then planning to
introduce a competition bill during the 2008-09 legislative
session.
The legislation is only likely to regulate anti-competitive
agreements and abuse of market position and may not
include merger control, but it will still make a big difference
to the jurisdiction -- as current rules only cover telecoms
and broadcasting.
* Source: http//www.law.comjsparticle.jspid=1202421427645&pos=ataglance

1.
2.
3.
The salient features of the proposed new ordinance
include the following:
It will focus on anti-competitive conduct such as
exclusionary agreements and abuse of dominance.
An independent Competition Commission will be
established to enforce the new ordinance and investigate
alleged violations.
A Competition Tribunal will be established to review the
Competition Commission’s decisions and adjudicate
private actions.
* Source: http//www.hellerehrman.comdocsenHong%20Kong%
4.
5.
6.
7.
8.
9.
Private parties will have a right to pursue both standalone actions and follow-on actions (following
government enforcement) - including representative
actions.
Both the Competition Commission and the Tribunal will
have the authority to issue financial penalties and fashion
other civil remedies.
Tribunal decisions may be appealed to the Hong Kong
courts on limited grounds.
A leniency program will be established to aid
enforcement.
The law will also include potentially expansive
exemptions and exclusions.
There remains a lack of clarity regarding the regulation of
mergers and acquisitions.
* Source: http//www.hellerehrman.comdocsenHong%20Kong%
PROHIBITED CONDUCT

1)
2)
•
Rather than itemize specific prohibitions, the
Consultation Paper proposes a general prohibition of:
agreements and concerted practices that have the
purpose or effect of substantially lessening competition;
and
abuse of substantial market power with the purpose or
effect of substantially lessening competition.
Although the Consultation Paper declines to identify “per
se” illegal agreements, it states that price-fixing, output
restriction, market allocation, bid-rigging and other
similar “hard core” agreements will almost always have
the effect of substantially lessening competition and will
likely be a violation of the new law.
* Source: http//www.hellerehrman.comdocsenHong%20Kong%
EXEMPTIONS AND EXCLUSIONS

1)
2)
3)
Under the proposed ordinance, the Competition
Commission may grant block exemptions for certain
categories of agreements, and may also create one-off
exemptions where the anticompetitive harms of an
agreement are outweighed by its economic benefits. The
Consultation Paper also proposes to exclude from
enforcement:
any party entrusted with the operation of public services of
general economic interests like public transport, water and
power supply, and postal services;
any conduct that the Chief Executive-in-Council believes
should be excluded because of public policy reasons; and
the Hong Kong government or statutory bodies.
* Source: http//www.hellerehrman.comdocsenHong%20Kong%
CONCLUSION


The Fair Trade Policy of many countries cover the
regulation of fees of professional bodies
In many countries, concerns have been raised
that professional regulation has the direct or
indirect effect of restricting competition in the
market for professional services, raising the price
and limiting variety and innovation in professional
services.

In addition, where a professional association is
delegated with certain regulatory powers, such as
the power to discipline its members, concerns have
arisen that professional associations may use
these powers as a tool to restrict entry, fix prices
and enforce anti-competitive co-operation between
its members.

One of the anti-competitive practices which may
give impact on the Fair Trade Practices Policy is
the application of fee scales in professionals
services. These facts can be observed from
various Policies or Acts that govern competition in
the market which classify the scale fees as a
potentially restrictive of competition.

Thus, the so-called restriction should be removed
and cannot be practised, or the relevant
professional bodies be at risk of contravening the
Fair Trade Policy/Competition Law.

The practice of fees fixing of professional
services by the professional bodies is prohibited
for reason that it will restrict the competition,
limiting the performance and expansion of the
professions

There are also other restrictions that concern the
professional services other than the application
of scale fees such as the licensing and
qualifications. However, in some countries, there
are some exemptions and exclusions provided
for the relevant professions for them to justify the
rules and regulations that they created. It has to
be for the interests and benefits of the
consumers and to ensure market efficiencies.
With a few exceptions, the competition law
applies to the professions.

As part of their enforcement activities, some
competition authorities have responsibility to
review and approve rules of professional
associations prior to implementation, giving
the competition authority the opportunity to
oppose any anti-competitive arrangements.