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BEST PRACTICE VOL 3 NO 2

The Myth of Competition Law The Antitrust Emperor’s Clothes Heritage: Crumbling Property Rights Universal Pensions in Hong Kong: The Case Against

A Public Policy Journal for Hong Kong


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BEST PRACTICE VOL 3 NO 2

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From the Editor

3 Contributors ON COMPETITION 4 The Myth of Competition Law

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The Lion Rock Institute argues that behind the curtains, there is no empirical proof that Competition Law can deliver a better environment.

The Antitrust Emperor’s Clothes George Bittlingmayer advocates basing policy on what we know.

19 Heritage: Crumbling Property Rights

Lazar Pravdic finds heritage conservation in a wreck, putting all stakeholders at risk.

ON POLICY 24 Universal Pensions in Hong Kong: The Case Against Jim Walker warns against following other nations’ mistakes.

ODDS AND ENDS 27 The Liberation of the Chinese Woman – and the Chinese Entrepreneur

Mark Tier explains how the free market freed women and entrepreneurs in Hong Kong.

31 Will the Competition Bill Help the Hong Kong Taxpayer?

Merle Hinrichs on what the Government has not wanted you to know about the Competition Bill currently being considered by the Legislative Council.

EDITOR Nicole Idanna Alpert

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DESIGN & PRODUCTION Anita Chong

Best Practice Advisory Board James A. Dorn, Alec Van Gelder, Philip Stevens, Tom Palmer, Reuven Brenner, Gary Shiu, Richard Wong, Francis Lui, Shih Wing Ching, Donald J. Boudreaux

COVER ARTIST Bay Leung Best Practice is published quarterly by The Lion Rock Institute to encourage discussion of policy and current issues. Topics and authors are selected to represent a multitude of different views, and those opinions expressed within Best Practice do not necessarily reflect the views of The Lion Rock Institute. The Lion Rock Institute welcomes reproduction of written material from Best Practice, but editor/author permission must first be sought. EDITORIAL OFFICE Room 1207 Kai Tak Commercial Building 317-319 Des Voeux Road Central, Hong Kong Submissions: Subscriptions: Fax:

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Editor’s Letter

T

he Competition Bill debate in Hong Kong may be heated but it’s not balanced. In this issue, Best Practice publishes views on competition policy that so far haven’t been widely represented – either for lack of courage or for lack of understanding. Our cover story features Lion Rock’s view – the biggest question still on the table is how the Bill can help the average taxpayer, resident, and consumer. The Bill with a de minimis approach should not be cozied up to – the omission of behavior proscribed in other jurisdictions or exclusion of SMEs doesn’t stop it from inflating – much like pro-competition law proponents vividly, but incorrectly, imagine business in a free market can transform into monopolies that resemble the Blob. It’s not enough

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to say a law won’t harm you – bad law undermines and erodes the legal system. In the section “On Competition,” we follow up with the infamous “The Antitrust Emperor’s Clothes,” by George Bittlingmayer which poses that we should base policy on what we know, not what politicians or special interests advise. Bittlingmayer wouldn’t have known just how fitting his title was until Hong Kong’s Competition Bill came into play, with the Government seeking to exempt its own statutory bodies, many of which are favoured government entities that compete directly with private market participants. Momentum 107, a group devoted to keeping Hong Kong’s budget balanced, demonstrated the concept well while protesting the exclusions pseudo-nude. It’s vexing that policies that are failures in other countries are now being considered, and worse, adopted in Hong Kong. Universal pension was politically popular until The Lion Rock Institute published ads last month in major Chinese newspapers pointing out the flaws. Jim Walker’s “Universal pensions in Hong Kong: The Case Against,” explains that historically the concept was never taken

seriously as government’s didn’t think they’d have to pay. Lion Rock wrote, “Commitments today, that are not financially sound, mock compassion by leading tomorrow’s retirees to rely on support that many people in other countries now realize will not be there when they need it.” With Hong Kong’s ageing population, we have a unique opportunity to create a sustainable system of provision for retirement. It would be a shame to instead scrap together failed Western policies that will wreak havoc. Not all is lost, says Mark Tier in “The Liberation of the Chinese Woman – and the Chinese Entrepreneur,” reminding us of Hong Kong’s knack for blessing people with opportunity. There’s never a better time to get entrepreneurial and appreciate all that is Hong Kong. This edition of Best Practice concludes my time with the publication – it’s been a pleasure. Nicole Idanna Alpert Editor, Best Practice Let us know what you are thinking. Letters and submissions can be sent to best.practice @lionrockinstitute.org


Contributors Mark Tier Mark Tier is formerly editor and publisher of the Hong Kong-based investment newsletter World Money Analyst. Mark Tier (http://www.marktier.com) is the author of the bestselling book, The Winning Investment Habits of Warren Buffett & George Soros and, with George Forrai, When God Speaks for Himself: The Words of God You’ll Never Hear in Church or Sunday School.

Merle A. Hinrichs Merle A. Hinrichs is the Chairman and Chief Executive Officer of Global Sources, Ltd. in Hong Kong. Mr. Hinrichs graduated from the University of Nebraska and the Thunderbird School of Global Management. He is a founder and former chairman of the Society of Hong Kong Publishers and also an investment Promotion Ambassador with Invest Hong Kong.

George Bittlingmayer George Bittlingmayer’s work has focused on political uncertainty and its effect on financial markets and economic activity, notably during the early “trust-busting” era in the US, and during the antitrust case against Microsoft. Dr. Bittlingmayer served as an economist at the US Federal Trade Commission and is currently a professor of finance and economics at the University of Kansas.

Jim Walker Jim Walker is the founder and managing director of Asianomics Limited, an economic research and consultancy company. Prior to establishing Asianomics in December 2007, he was the chief economist at CLSA Asia-Pacific Markets. He was voted best regional economist by the Asiamoney Stockbrokers Poll between 1994 and 2004 as well as frequent number one rankings in the private Greenwich surveys of fund managers in Asia, Europe and America.

Lazar Pravdic Lazar Pravdic was born in Sydney a year after his family moved from Former Yugoslavia due to the civil war and social unrest. He is currently associated with Mannkal, SIFE and interned at The Lion Rock Institute in 2011. He is currently enrolled in a combined Commerce/ Economics degree at the University of Western Australia.

The Lion Rock Institute The Lion Rock Institute is a free market think tank in Hong Kong. It was established in 2004 and today works with Directors, research associates, fellows and scholars to provide better policies to the Hong Kong government. Learn more about Lion Rock at www.lionrockinstitute.org.

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ON COMPETITION

The Myth of Competition Law Phil Roeder

The Lion Rock Institute argues that behind the curtains, there is no empirical proof that Competition Law can deliver a better environment

The nine chairs of the Justices lined up in the Court Chamber.

R

onald Coase [1991 Nobel Prize in economics] said of competition law, “when the prices went up the judges said it was monopoly, when the prices went down, they said it was predatory pricing, and when they stayed the same they said it was tacit collusion.”1 William M. Landes in “The Fire of Truth: A Remembrance of Law and Economics at Chicago,” JLE (1981) p.193.

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Why Competition Law isn’t all that it seems Not one would disagree with the objectives that competition promotes a flexible, innovative, efficient economic structure, but there is no reason to believe that competition law can deliver these outcomes. Whether broad or limited, competition law faces the following challenges:

1 It is unclear whether competition laws have actually aided residents, businesses and consumers, but it is clearer that the laws can become sclerotic and politicized. The benefits to residents remain unclear while there are considerate risks and high costs. 2 The implementation of competition law in advanced economies are often cited as an ideal to be emulated,


ON COMPETITION

Steve Punter

but it should be noted that these same economies do not receive as high rankings in renown international indexes of economic freedom as Hong Kong, which does not have a widely-applied competition law. 3 The cost of doing business in Hong Kong has remained relatively low. However, the costs of compliance, with a broad and by its nature expansionary competition law, are very high. Competition laws must be studied by legal professionals and economists, and businesses will need to seek legal advice to ensure compliance, necessitating large cost increases. 4 Other jurisdictions such as the UK and the EU maintain their competition regimes at a cost of millions of dollars a year in their respective currencies. A more expansive competition law will inflate both the size of the Hong Kong Government, and costs to maintain the new policy regime. 5 The Competition Bill contains numerous broad and vaguely-

Can Judges second guess a market?

drafted provisions pertaining to economic terms, however these terms cannot be confined to strict definition as they describe innate, ever-changing and dynamic activity in open and free markets like Hong Kong. Vague laws dramatically increase uncertainty, litigation, bureaucratic power, and compliance costs because businesses do not know precisely what behavior is permitted until put on trial. 6 In Hong Kong, the biggest monopolist is the Government itself. A Competition Bill would have no effect, given that distortions in competition are created by the Government.

not exempt it. The Government is the designer of Hong Kong’s Competition Bill, yet at the same time, fears becoming one of its casualties. Coupled with this fickle position, the Government’s stance, that competition law will benefit Hong Kong residents, is very unconvincing.

Thoughts on competition law The quotes below, from history to the present, expose the ambiguity inherent in competition laws.

“For more than a century, American antitrust laws have been used as a protectionist tool to stifle competition. They have Without empirical proof of benefits always been used to protect from the law, the opportunity competitors from competition and compliance costs, along with and not to protect consumers, as the legal and defense costs, are the American public has been told.  unfair to impose on a public who The end result has been reduced is increasingly skeptical that such productivity and diminished a law can enhance their lives. The international competitiveness.  It discussion considering competition saddens me to see other countries should focus on dismantling such as Hong Kong imitating Government interference in the some of our most disastrous economy to improve competition– economic policies.” — Dr. Thomas DiLorenzo, Professor of Economics, Sellinger School of Business and Management, Loyola University Maryland USA “Given the openness of the Hong Kong economy, I am surprised that Hong Kong would be considering a competition law.” — Robert W. Crandall, Senior Fellow, Economic Studies, The Brookings Institution, USA

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ON COMPETITION

“My reaction to the current discussion about competition law in Hong Kong is that it appears to lack any empirical grounding. I don’t see any discussion of the efficiency costs of alleged anticompetitive behavior and I don’t see any estimates of the welfare gain that the proposed competition law will provide to consumers.” — Clifford Winston, Senior Fellow, Economic Studies, The Brookings Institution, USA

lose out due to a less competitive behind all human action, and the business environment, as stronger creativity it unleashes, cannot be businesses are discouraged captured in predictive models or from acquiring or driving out of in mathematical formulas. It is business the weaker ones. But even precisely this fact that precludes worse, the government’s new role of employing the methods of the deciding who is competing ‘fairly’ natural sciences to solve problems will expand the opportunities for of human action.” corruption and encourage the — Ludwig von Mises, Austrian private sector to seek advantages economist, historian, philosopher, through government action rather and influential author than their own efforts. Hong Kong has clearly benefited from “Why is there only one Monopolies government staying out of the and Mergers Commission?” “No monopoly can survive for long business realm, so it is a mystery — David Edward Sutch, Politician without government regulations to why it would want to throw away and Musician, United Kingdom protect it.” this competitive advantage now.” — Alan Reynolds, Senior Fellow, — Hugo Restall, The Wall Street “We are increasingly governed CATO Institute, USA Journal not by law or elected representatives but by an unelected, “Hong Kong gets top rankings for “The antitrust laws provide a unrepresentative, unaccountable economic freedom in part because vehicle for the antitrust community committee of lawyers applying no it does not have intrusive laws to carry on a useless, mischievous will but their own.” that cause market uncertainty activity portrayed as law — Robert Bork, Legal scholar and hinder economic dynamism. enforcement. . . . Although today’s and best-selling author, Served as Adopting a competition law antitrust community is alive and Solicitor General, Acting Attorney invariably will hurt Hong well, antitrust is atrophying. It is General, and judge for the US Kong’s economy and tarnish its becoming a relic, an anachronism, Court of Appeals for the District of global reputation. Lawyers and the irrelevant debris of past Columbia Circuit bureaucrats will benefit, but the political demagoguery. Education people of Hong Kong will enjoy in the antitrust facts of life could “The more corrupt the state, the less prosperity if the law is adopted.” accelerate the process.” more numerous the laws.” — Daniel J. Mitchell, Senior — Edwin S. Rockefeller, The — Tacitus, 56 - 120 A.D., Senator Fellow, CATO Institute, USA Antitrust Religion, Cato Institute, and historian of the Roman Empire USA “The proposed legislation in Hong “It will be of little avail to the people Kong government’s ‘Detailed “When buying and selling are that the laws are made by men of Proposals for a Competition controlled by legislation, the first their own choice if the laws be so Law’ would be disastrous for things to be bought and sold are voluminous that they cannot be business, government and the legislators.” read, or so incoherent that they consumer alike. It would have — P. J. O’Rourke, H. L. Mencken cannot be understood.” the opposite to the intended Research Fellow, Cato Institute, — James Madison, Fourth effect, because it would open USA President of the United States the door to lobbying by vested (1809–1817), A Founding Father of interests. The consumer would “The constant animating force the USA

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ON COMPETITION

“We have here the problem of bigness. Its lesson should by now have been burned into our memory by Brandeis. The Curse of Bigness shows how size can become a menace--both industrial and social. It can be an industrial menace because it creates gross inequalities against existing or putative competitors. It can be a social menace...In final analysis, size in steel is the measure of the power of a handful of men over our economy...The philosophy of the Sherman Act is that it should not exist...Industrial power should be decentralized. It should be scattered into many hands so that the fortunes of the people will not be dependent on the whim or caprice, the political prejudices, the emotional stability of a few self-appointed men...That is the philosophy and the command of the Sherman Act. It is founded on a theory of hostility to the

concentration in private hands of power so great that only a government of the people should have it.” — Justice William O. Douglas, United States vs. Columbia Steel, Associate Justice of the US Supreme Court “No one will ever know what new products, processes, machines, and cost-saving mergers failed to come into existence, killed by the Sherman Act before they were born. No one can ever compute the price that all of us have paid for that Act which, by inducing less effective use of capital, has kept our standard of living lower than would otherwise have been possible.” — Alan Greenspan, Economist and Chairman of the Federal Reserve of the USA “The world of antitrust is reminiscent of Alice’s Wonderland:

everything seemingly is, yet apparently isn’t, simultaneously. It is a world in which competition is lauded as the basic axiom and guiding principle, yet ‘too much’ competition is condemned as ‘cutthroat.’ It is a world in which actions designed to limit competition are branded as criminal when taken by businessmen, yet praised as ‘enlightened’ when initiated by the government. It is a world in which the law is so vague that businessmen have no way of knowing whether specific actions will be declared illegal until they hear the judge’s verdict — after the fact.” — Alan Greenspan, Economist and Chairman of the Federal Reserve of the USA The Lion Rock Institute is a free market think tank in Hong Kong, www.lionrockinstitute.org.

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ON COMPETITION

The Antitrust Emperor’s Clothes George Bittlingmayer advocates basing policy on what we know

A

ntitrust policy is on a better footing today than it was 25 years ago, but it still shares some features with the story of the emperor’s new clothes. The tailors of antitrust policy tell us that the antitrust laws are the “Magna Carta of free enterprise,” that they pro­tect consumers against the conspiracies and depredations of business. Despite mistakes that we can ignore, the proponents say, the well-intentioned antitrust endeavor has improved U.S. economic performance by suppressing collusion and serving notice that firms may use only fair means to attain or protect a monopoly. The courts and the agencies did get a little out of hand in the 1960s and ’70s, but a bipartisan consensus has emerged that keeps monopolies in check, they say reassuringly. You do see, ask the tailors, that a broad variety of suspect but otherwise legal business behaviors can hurt consumers? More importantly, you do see that our antitrust laws have increased our standard of living? “Yes” is a tempting answer for a variety of reasons, none very good.

The fear of powerful, unseen forces and conspiracies runs through human history. In addition, losers and those who fear they may be losers prefer to put the blame on others rather than their own bad luck or bad planning. Finally, as

Stepped-up enforcement also occurs at the end of pro­tracted booms; in fact, it helps explain why booms end. 8

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we know from the story of the emperor’s new clothes, only the naïve or courageous are prepared to admit that they do not see what the experts claim as fact. The antitrust bar, law professors, antitrust officials, economic consultants, and firms anxious to see brick­bats thrown at their competitors maintain a steady drumbeat for their own versions of vigorous enforcement. Despite the drumbeat, the


ON COMPETITION

empirical case for antitrust remains weak. We know that polio vaccine effectively eradi­cated polio; we do not know that the antitrust laws have made us better off. Twenty years ago, George Stigler wrote: “There have been no persuasive studies of the effects of the Sherman and Clayton Acts throughout this century.” Little has changed. The antitrust experts may be having fun, but the clothes they have draped on the emperor are threadbare at best.

Magna Carta or politics as usual? One myth needs immediate debunking: Antitrust law was not a response to textbook monopoly. Rather, it was a response to dis­ruptive technologies and new forms of business that arrived thick and fast in the late nineteenth century. For example, centralized meatpackers put local slaughterhouses under competitive pres­sure after the invention of the refrigerated railcar. Similarly, Stan­dard Oil pioneered the use of tank cars to transport petroleum, putting pressure on refiners that shipped oil in barrels. Analogous stories played themselves out in dozens of industries. In a seem­ing paradox, firms in those industries often formed “trusts,” “pools,” and other cartel-like arrangements. Many of the classic “trust” industries also pioneered the modern corporate form. When Congress passed the Sherman Act in July of 1890, fear of disruption, low prices, and new, larg­er forms

of business organization were as much in the air as fear of high prices. Tellingly, Congress passed the McKinley Tariff (with a rate of almost 50 percent) only a few months earlier – the opposite of what one would expect from a champion of consumer welfare.

Sherman Act as inappli­cable to acquisitions via stock purchases. After Teddy Roosevelt attacked an unpopular railroad consolidation, it narrowly reversed itself in 1904. Similarly, the court created the per se rule against price fixing in the mid-1890s, but abandoned it just

The fear of powerful, unseen forces and conspiracies runs through human history. In addition, losers and those who fear they may be losers prefer to put the blame on others rather than their own bad luck or bad planning. A second myth also requires attention. The courts have not interpreted antitrust law – whatever its origins – selflessly and in a political vacuum. Rather, they respond to political pressure and, like all bureaucracies, protect their turf. For example, the Supreme Court originally viewed the

months before passage of the 1933 National Industrial Recovery Act, which encouraged indus­try-wide agreements. In 1950, Congress closed a loophole in merger law, but did so against back­ground rhetoric about a “rising tide of concentra­tion.” The courts listened and came down hard on mergers.

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ON COMPETITION

Halting business

Bay Leung

Antitrust enforcement is capa­ble of affecting economic activity, and it seems to respond to economic conditions. The most dra­matic example involves Teddy Roosevelt. His attack on Standard Oil and other large corpora­tions coincided with the Panic of 1907, and Roo­ sevelt’s critics, and indeed many of his friends, claimed that his attacks caused the panic. It was not a farfetched charge – a wildly popular presi­dent threatened to dismantle the country’s largest corporations and send top corporate officers to jail. In 1911, President William Howard Taft’s pur­suit of U.S. Steel also coincided with a recession and similar charges. In fact, Taft conceded that his policies “may make business halt.” In the late 1930s, the failure of the economy to come out of the Great Depression led the FDR administration to charge that the

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Both books took the then-controversial view that the antitrust laws should promote economic efficiency or consumer welfare, rather than protect small traders and wor­thy men besieged by more efficient organizations. Both books also employed a crisp intellectual approach. “bottlenecks of business” – large corporations and their allegedly anti-competitive practices – prevented recov­ery. The result was Thurman Arnold’s legendary antitrust cam­paign and the Temporary National Economic Condition (TNEC) hearings. Ironically, the attack coincided with the 1938 recession­withina-depression. Stepped-up enforcement also occurs at the end of pro­tracted booms; in fact, it helps explain why booms end. Exam­ples include Teddy Roosevelt’s trust busting after the late-1890s expansion and Hoover’s revival of antitrust in 1929 amid cries of “profitless prosperity” from declining sectors. Antitrust revivals also occurred at the end of the 1980s and again at the end of the 1990s. Economic pain, either from a stagnant business climate or from the dislocations and envy of a tumultuous boom, may generate stepped-up attacks on business, especially successful business. Disruptive antitrust cases may cause a decline in busi­ness spending. Finally, stepped-up

attacks on business may sim­ply be a collateral symptom of bad economic policies. None of those possibilities offers support for aggressive enforcement.

From win-buttons to mega-mergers The most conspicuous economic problem in the 1970s was inflation. It provoked a variety of nonmonetary policy responses, some harmful, some merely comic. The responses included wage and price controls under Richard Nixon, “Whip Inflation Now” win-buttons under Gerald Ford, and the “TaxBased Incomes Policy” that would have conferred tax rebates on corporations that held the line on wage increases under Jimmy Carter. Both Ford and Carter, clearly grasping at straws to deal with inflation, advocated aggressive antitrust enforcement. Antitrust officials Thomas Kauper and John Shenefield at the Department of Justice (DOJ), Michael Pertschuk at the Federal Trade Commission (FTC), and others invoked the fight against inflation to justify vigorous


ON COMPETITION

enforcement. The DOJ pursued two major monopolization cases, one filed in 1969 against IBM and one filed in 1974 to break up AT&T. The Justice Department also pursued “price-fixing” cases against manufacturers that tried to keep their products out of discount channels. Levi Strauss was one of the targets. The FTC, not to be outdone, filed a series of “shared monopoly” cases that sought to break up or radically reconfigure the petroleum and breakfast cereal industries. The latter case was based on the proposition that companies could stifle competition by introducing too many brands. The com­mission also filed a monopolization case against DuPont, charg­ing that the company had built a titanium dioxide plant that was too large and too efficient. The antitrust agencies also showed a special interest in agreements involving intellectual property. For example, the DOJ sued to break up a cross-licensing agreement among air­craft manufacturers. Ironically, the industry had formed the agreement nearly six decades earlier at the urging of the gov­ernment because patent litigation had made manufacturers reluctant to build airplanes during the First World War. The Jus­tice Department summarized its approach to patent licensing in its legendary “Nine No-no’s,” a term the agency used with­out apparent irony. One bright spot for business was the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which

provided for pre-merger review. Until then, the agencies often filed suit against consummated mergers and sought divestitures, a costly route for all involved. The filings often came months or years after the merger, and the divestitures years after that. The modern regime eliminated indefinite jeopardy and litigated divestiture in merger cases. New learning, new policies The activism of the1970s did not play well on Main Street and in corporate offices. Complaints moved the Democratic Congress to threaten to shut the FTC down, and the agency had to close its doors briefly in 1980. Among academics, a steady and growing stream of analy­sis eroded the near-consensus for strict enforcement. The 1974 publication of Industrial Concentration: The New Learning, edited by Harvey Goldschmid, H. Michael Mann, and Fred Weston, reflected the shift in opinion on the economic role of large firms. Legal commentary showed similar changes. Richard Pos­ner published Antitrust Law: An Economic Perspective in 1976 and Robert Bork’s Antitrust Paradox: A Policy at War with Itself appeared two years later. Both books took the then-controversial view that the antitrust laws should promote economic efficiency or consumer welfare, rather than protect small traders and wor­thy men besieged by more efficient organizations. Both books also employed a crisp intellectual approach.

The courts also began to reverse some of the restrictive hold­ings of the 1950s, ’60s, and early ’70s. Ronald Reagan’s victo­ry in 1980 gave new momentum to laissezfaire policies. Rea­gan’s appointment of William Baxter to head the DOJ’s Antitrust Division and James Miller to chair the FTC moved the agencies in a new direction. By any measure, 1982 was the watershed year. In January, the Department of Justice abandoned the IBM case and signed a consent decree with AT&T, stipulating a voluntary divestiture. The FTC dropped its “shared monopoly” case against the cere­al companies. The DOJ’s 1982 “Merger Guidelines” provided stability and structure for merger review, especially when cou­pled with the existing pre-clearance process. The Merger Guidelines, since revised several times, have proven crucial in taming merger review. The antitrust agencies also scaled back new large-firm monopolization cases, filing only three over the years 1981-1988, a historical low. Those cases also sought con­duct remedies rather than divestiture. Only one area experi­enced notably greater enforcement – horizontal agreements, often bid rigging and related offenses. One point deserves emphasis: A new generation of aca­demic

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ON COMPETITION

commentary supported and infused the shift in policy in the early 1980s, but the old and the new approach to antitrust analysis shared a defect that plagues policy analysis to the pres­ent day. Both approaches used a combination of abstract rea­soning and case study. The new Chicago approach strove for consistency and economic rigor. In the battle of theories, it was fortunate in the enemy it faced. However, its advantage soon dwindled. A new generation of mathematical models – often based on game theory – lacked the obvious flaws of earlier ad hoc explanations but was flexible to a fault and could easily explain any type of business behavior as anti-competitive. Because the debate stayed conceptual rather than empirical, the new models ultimately gave new wind to enforcement across a broad variety of alleged offenses. New policies, new results The shift in policies in the early 1980s offers a natural experiment with a clear result: Merger activity picked up. For example, a series of mergers previous­ly unimaginable changed the face of the oil industry. T. Boone Pickens drove calcified Gulf Oil into the arms of Chevron, and Texaco acquired Getty Oil in 1984. Related developments – in particular changes in takeover law and the development of junk bond financing – contributed to the merger wave and also encouraged management buyouts and

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leveraged buyouts. The most visible deal was Kohlberg Kravis Robert’s $31 billion leveraged buyout of RJR Nabisco in 1988, an event later portrayed in unflattering detail in the book Barbarians at the Gate and in a movie starring James Garner. The buyouts contributed to our understanding of how changes in control can improve economic and financial performance. Additionally, though the other transactions did not raise tra­ditional antitrust flags, they provided fuel for the coming polit­ ical reaction to mergers and other forms of restructuring. The simultaneous appearance of less stringent merger poli­cy, a merger boom, and an economic boom is a familiar pattern in U.S. history. Outright suspension of merger enforcement in the late 1890s and effective suspension in the mid- and late 1920s under Coolidge coincided with a merger wave and an econom­ic boom. That raises the possibility that a generous merger pol­icy is good for the economy. Clearly, other related developments had an influence on

the economic climate of the 1980s, chief among them the decline in the inflation rate. But given histori­ cal experience, it seems unwise to rule out merger policy. Several mechanisms are possible. Henry Manne’s 1965 arti­cle “Mergers and the Market for Corporate Control” argues that companies in the same industry are in the best position to iden­ tify and run poorly managed firms. Horizontal mergers and the possibility of takeover would increase output and the value of existing assets. To the same effect, Lester Telser views mergers as facilitating the transfer of intangible capital across firms. Removing the obstacles to transfers leads to greater output. Finally, a less restrictive merger environment opens up more exit strategies for firms, thus increasing entry, investment, and firm value. Although some critics claim that 1980s merger pol­icy was too lax, I know of no systematic body of evidence show­ing that consumers were harmed.

In each instance, the case for antitrust action was specula­tive and eminently susceptible to critique. Perhaps more impor­tantly, the cases plausibly signaled to business that the agencies had become or were about to become untethered again, as they had been in the 1970s and at other times.


ON COMPETITION

The Antitrust Empire strikes back Antitrust lawyers complained about Reagan’s antitrust policies from their very inception, and have consistently lobbied for stricter enforcement. Tellingly, they did not argue that restrained enforcement made consumers demonstrably worse off; rather, they wanted policy that was less “ideological” and that “enforced the law” by filing types of cases that the Reagan officials ignored. Milton Handler, an influential antitrust lawyer whose career spanned six decades, complained about the “lawlessness of this administration,” saying, “The government is not merely failing to enforce the law, it is changing it unilaterally.” Ira Millstein incongruously complained, “Business in general feels that no one is going to enforce the antitrust laws anymore. That makes counseling and voluntary compliance with the law much more

Milton Handler, an influential antitrust lawyer whose career spanned six decades, complained about the “lawlessness of this administration,” saying, “The government is not merely failing to enforce the law, it is changing it unilaterally.” difficult.” Without enforcement, counseling and compliance are not unnecessary. A former Democratic antitrust official, perhaps hoping for more business, called the Reagan admin­istration’s record “nothing short of pitiful.” Thomas Kratten­maker and Robert Pitofsky lambasted the Reagan administra­ tion’s antitrust record because it had challenged very few of “an unprecedented wave of mergers.” Separately, Pitofsky conceded that those facts alone did not prove or imply that merger enforcement had been misguided. The American Bar Association summarized the complaints of antitrust lawyers in a 1989 task force report on antitrust enforcement that requested more resources for the DOJ’s Antitrust Division, an end to the division’s advocacy of reform, and an end to “non-enforcement rhetoric.” The report urged more case filings, more monopolization cases, and more vertical-restraints cases, without the least evidence that consumers had been hurt. Congress was also unhappy with less stringent enforcement and the wave of mergers. Senator Paul Simon (D-Ill.) com­plained in

hearings on the Antitrust Division that “antitrust lawyers are closing up shop,” seemingly oblivious to possible upsides. On a related front, the House Ways and Means Com­mittee approved anti-takeover legislation and then backpedaled when the proposal was implicated as a precipi­tating factor in the October 1987 stock market crash – a sus­picion later confirmed in academic research. Billable hours In the late 1980s, newly elected President George H. W. Bush installed a group of antitrust officials who signaled “more vigorous enforcement.” He appointed James Rill, a 25­-year veteran of the antitrust bar, to head the Antitrust Division. Sen. Howard Metzenbaum, a critic of Reagan-era enforcement, hailed the appointment as “a signal that President Bush intends to break stride with his predecessor.” Bush also appointed Janet Steiger, formerly chair of the Postal Rate Commission, to chair the FTC. She also offered tougher talk. Cases and investigations soon followed. In many instances,

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the harm to consumers from challenged business behavior was speculative at best. The DOJ filed a case against the Ivy League colleges in 1989, claiming that their “Overlap Group” financial aid practices represented a restraint of trade. Twenty schools had agreed to offer identical financial aid packages to commonly accepted students. Upper-middle class parents of very good stu­dents were hurt, but plausibly students with less affluent parents were helped. Because the challenged arrangement involved price discrimination by a non-profit, the question of who benefited was a little slippery. (One was suggested that monopoly gains went to administrator salaries.) On any view, elimination of the Overlap Group agreements merely represented a reshuffling of the extensive price discrimination and

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cross-subsidization that universities of all types continue to practice. The Justice Department also began an investigation of air­line pricing in 1989 that culminated in a December 1992 case filing. The allegation was “price-fixing,” but the airlines had no meeting of the minds. Rather, they had merely posted current and future prices on airline reservation systems, an ambiguous practice at worst. Mere investigations without filings also send signals. In the “keiretsu” probes, both antitrust agencies moved beyond con­ sumer protection by looking at arrangements in Japan that allegedly kept U.S. auto suppliers from doing business there. The Washington Post called the probe “loopy and dangerous.” A spike in oil prices accompanying Iraq’s 1990 invasion of Kuwait led to the inevitable DOJ investigation of the

oil industry, though the industry had been turned inside out and found clean several times over the preceding two decades. The FTC pursued high tech targets, investigating both Microsoft and Intel. It eventually dropped the Microsoft inves­ tigation, and its interest in Intel resulted in a 1999 settlement and a second investigation that the agency dropped in 2000. The FTC filed a case against infant formula makers in 1991 that was reminiscent of 1970s “shared monopoly” suits. Two defen­dants settled. The third, Abbot, was vindicated in court in 1994. The FTC also returned to filing vertical-restraints cases, charg­ ing swimming pool equipment maker Kreepy Krauly with “price fixing” because it sought to prevent discounting of its pool vacu­um cleaners. The market for swimming


Libby Levi

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Corporations have been found to use antitrust law to target competitors.

pool vacuums is hardly a prime candidate for monopolization, and an excellent candidate for the “special services argument.” Point-of-sale promotion is hard to charge for, and discounters can easily free-ride on the pro­motional efforts of full-price retailers. The FTC joined state attor­neys general in charging Nintendo with “price fixing” in a case set­tled in 1991. The agency later dropped a separate investigation of Nintendo’s product design and licensing practices. In each instance, the case for antitrust action was specula­ tive and eminently susceptible to critique. Perhaps more impor­ tantly, the cases plausibly signaled to business that the agencies had become or were about to become untethered again, as they had been in the 1970s and at other times. Conceptually, it was not a big leap from the investigations’ actual cases filed under the first Bush administration to the “shared monopoly” cases filed against the oil and cereal companies. In general, the Bush administration’s domestic policy appa­ratus appeared to be on automatic pilot, guided by Republican mandarins headed for the revolving door rather than

by an over-arching economic vision. In desperate straits, the Bush administration itself implicitly conceded the point when it imposed a “regulatory moratorium” in early 1992 ahead of the presidential election and at the bottom of the 1991-’92 reces­sion. If that downturn was a “regulatory recession” as some crit­ics claimed, Bush’s antitrust authorities may have done their part to bring it on.

Bipartisan consensus or conspiracy against the public? Bipartisan consensus on antitrust is the rule. Unfortunately, consensus is no guarantee against foolishness. In the 1912 elec­tion, both Woodrow Wilson and William Howard Taft took the view that the only good trust was a divested trust. The econ­omy suffered until U.S. entry into World War I,

defend and no one would work to recreate today. Since the struggle to redirect policy in the 1980s, successive leaders in the antitrust agencies have again demonstrated a dis­turbing coziness. Antitrust officials write papers and give speeches with titles indicating an entrenched and sterile har­mony: “The Essential Stability of Merger Policy in the United States” (FTC Commissioner Thomas B. Leary) and “Antitrust Enforcement at the Federal Trade Commission: In a Word – Continuity” (FTC Chair Timothy J. Muris). The consensus on antitrust arises from both fear and greed. The public fears monopoly, and rightly so. Consensus means nei­ther major party looks soft on monopoly. A cop on the beat has appeal, even if the cop has no idea who the crooks are. Fear of monopoly is also easi­ ly exploited and diverted to serve private interests. In the 1970s, the

The Microsoft case also raises a riddle, discussed by Milton Friedman and others: Why does the business community sup­port policies that seemingly have more longterm costs than short-term benefits. when the Wil­son administration backed off on business in return for help with the war effort. More recently, over the years that span from Eisenhower to Carter, both Republicans and Democrats pur­ sued an aggressive policy, but the result was a policy few would

antitrust cops went too far, pistolwhipping suspects at random. Although the antitrust bar pros­ pered, political support eroded. The reforms of the 1980s showed how the consensus could be rebuilt. The party in power allows the antitrust bar to collect a large part

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of its implicit regulatory tax by guiding firms through a structured but complex merger review process and brokering con­sents. Tamed antitrust also serves other constituents. For exam­ple, Jesse Jackson’s Citizenship Education Fund initially opposed the SBC/ Ameritech deal but then shifted its position after SBC made a $500,000 contribution to the fund and agreed to sell a seven-percent share of its cellular operations to a black busi­nessman. (The example is slightly flawed because Jackson voiced his complaints at the Federal Communications Com­ mission.) The post-1982 merger process avoids the political and economic costs of bitter battles over divestiture, still allows various influential constituents to get in the loop, and keeps the cop reassuringly on the beat. Over time, the ratio of public fear to private greed has prob­ably declined. We have learned to live with big business, and have seen by the examples of Microsoft, Wal-Mart, and Intel on the one hand, and General Motors, U.S. Steel, and ITT on the other, that alleged dominance is not all it

was cracked up to be. In addition, with the secular increase in direct or indirect stock ownership, an attack on business has become an attack on the public. We have met the alleged monopolists, and they are us. However, the contrary forces that led to the antitrust adventure of the 1970s remain and have reasserted themselves. Starting with the first Bush administration, both Republican and Demo­cratic administrations have shown troubling initiative. New guidelines, new competitive theories, and new types of cases strengthen the power of the agencies, mollify Congress, offer levers to interest groups eager to use the regulatory process for their own ends, and provide officials and staffers with valuable human capital for future privatesector employment. Innovation markets An ever-greater share of economic activ­ity involves intangible assets, technology, and intellectual prop­erty. Antitrust authorities, the antitrust bar, and economists eager to establish their credentials have noticed that trend and

adapted their arguments and claims to competence. Technology and informationbased industries lead to situ­ations in which traditional antitrust approaches based on price effects and market shares do not apply. If two firms are engaged in similar research but do not yet have viable products, should the government block or force modifications to their merger, joint venture, or licensing agreement? The agencies and many antitrust theorists answer affirmatively. Under the concept of “innovation markets,” they argue that they can predict which deals ultimately will lead to less innovation and some combi­ nation of poorer products and higher prices. Interestingly, some representatives of the antitrust industry – attorneys and economic consultants – are skeptical and argue that the resulting analysis would be slippery and speculative. A sound business reason for that position is that giving advice and litigation support is fraught with hazard in an innovation market. Additionally, enthusiastic application of the concept may lead to a repeat of the “shared monopolies” fiasco and political backlash of the 1970s. Mergers As advertised by the agencies, merger policy for breadand-butter mergers has been remarkably stable. Merg­er policy was particularly generous in the telecom area. The proximate

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origin of that generosity was the 1996 Telecom­munications Act, which sought to encourage intermodal com­petition (say between telephone companies and cable TV companies). A Washington insider’s view is that the Telecom Act put Congress back in the loop and led to an inflow of campaign contributions from the telecom companies. A succession of large deals followed – the consolidation of the Baby Bells, large cable acquisitions by AT&T, and the AOL / Time Warner merg­er, for example. The AOL / Time Warner merger raised no hor­izontal issues, but entailed a large and politically

merge with Sprint in the fall of 1999, fears of monopoly in longdistance seemed quaint. They have become quainter still. The deal was in trouble at the European Union, and U.S. antitrust authorities found an opportunity to oppose a telecom deal without actually affecting its outcome. When the agencies opposed mergers, reasonable observers could disagree about the prospective effects. The Jus­tice Department opposed Microsoft’s acquisition of Intuit even though Microsoft agreed to divest its own money-management software.

In theory anything is possible, and the blackboard debate about the effects of Microsoft’s actions remains a stalemate. Microsoft is hard to love, but software and applications are winner-take­-all products, so somebody had to be on top. sensitive ver­tical merger. The “open access” debate was in full swing and Internet service providers competing with AOL feared they would be excluded from Time Warner’s cable-based broad­ band. Defense mergers also faced a low hurdle, with the Defense Department often urging and even subsidizing con­solidation in the industry. (The exception was the blocked Lockheed Martin / Northrop Grumman merger opposed by both the Defense Department and the DOJ.)

The effects of the deal hinged on whether consumers are better off having Microsoft’s deep pockets, execution skills, and aggressive strategy behind the category leader at a time when Internet banker was a possible “killer app.” The FTC blocked Staples’ move to buy Office Depot although the two jointly had less than six percent of the total office supply mar­ket. The strength of the FTC case depends on one’s willingness to view office superstores as a separate market. When World-Com proposed to

Microsoft The May 1998 case filing against Microsoft repre­sented a return to large-firm monopolization cases. The Jus­tice Department charged Microsoft with a variety of monop­olistic practices, chief among them Microsoft’s effort to displace Netscape’s Navigator as the most popular Internet browser. In theory anything is possible, and the blackboard debate about the effects of Microsoft’s actions remains a stalemate. Microsoft is hard to love, but software and applications are winner-take­-all products, so somebody had to be on top. Off the blackboard, the facts favor the “anti-anti-Microsoft” view (Paul Krugman’s term). The government’s case was mar­bled with political calculation and posturing. Strong political support came from California and Utah, home to major com­petitors to Microsoft, and participation of 18 state attorneys gen­eral complicated settlement and likely led to the proposed and ill-fated divestiture remedy. Taken as a package, the case gener­ated uncertainty in the industry, consumed time and energy, and raised legitimate fears about where antitrust policy in

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general would go. (See “All the Facts that Fit,” Winter 1999.) The stock market provides evidence for that view. Through­ out the 1980s, antitrust actions directed against Microsoft pushed down not only Microsoft’s stock price, but also the stock prices of its putative victims. Setbacks for aggressive actions against Microsoft had the opposite effect, helping both Microsoft and the rest of the computer sector. That should have been a signal to the DOJ. Disaster struck in April 2000 when settlement talks collapsed and news leaked two weeks later that the government-plaintiffs would seek divestiture. NASDAQ shuddered and began a long descent. Tech stocks probably were oversold and over-believed, but the attempt to break up one

The Microsoft case also raises a riddle, discussed by Milton Friedman and others: Why does the business community sup­port policies that seemingly have more long-term costs than short-term benefits?

The end of antitrust history? Antitrust policy over the last 25 years can claim substantial achievements. First, the stated terms of the debate have shifted to consumer welfare and efficiency, and away from vague and easily misused goals such as dispersion of political and economic power. Clearly, affirmation of the stated goals may still go hand in hand with the misuse of antitrust laws to clobber competitors or extract

Under the concept of “innovation markets,” they argue that they can predict which deals ultimately will lead to less innovation and some combi­nation of poorer products and higher prices. of the big names was a totally unnecessary and costly blow. As in other historical episodes in which downturns and trust bust­ing coincided, it is hard to quantify the financial and econom­ic effects. But it seems unlikely that the Microsoft case has made the U.S. economy wealthier and more productive. (See “The Benefits of MS-Settlement,” Spring 2002.)

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tribute. Second, the 1982 and subsequent Merger Guidelines and the Hart-Scott-Rodino review process provide safe havens, comparative predictability, and effective protection against suits filed after a deal is done. Third, the agencies still file large-firm monopolization cases as illustrated by the Microsoft case, but they have done so less frequently.

Taken as a whole, the 1980s shift yielded dividends. It helped slay the conglomerates, themselves partly the progeny of strict prohibitions against horizontal mergers in the 1950s and ’60s. The policy shift also deserves credit for a more efficient cor­porate sector and quite plausibly an expanding, dynamic econ­omy and a booming stock market. It does not appear to have caused or fostered monopoly. The antitrust pendulum has swung back since the late 1980s, and a new bipartisan consensus has emerged under the Clinton and the two Bush administrations. The basic merger regime has remained stable, but other aspects of policy – notably large-firm monopolization cases – represent a partial return to the 1970s. That movement took place at the behest of identifiable private and political interests, in particular the private antitrust bar and the managers of aggrieved competi­tors, but benefits to the general public remain speculative. More gains are possible if we learn more about what antitrust policy has done in practice, rather than relying on the antitrust tailors to tell us what is fact and what is not. © Cato Institute. All Rights Reserved. Reprinted with permission. George Bittlingmayer is the Wagnon Distinguished Professor of Finance at the University of Kansas and is a former visiting economist at the Federal Trade Commission.


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Heritage: Crumbling Property Rights Lazar Pravdic finds heritage conservation in a wreck, putting all stakeholders at risk

Richard Wong

Ho Tung Gardens

H

eritage conservation in Hong Kong is a quagmire. The situation involving Ho Tung Gardens is but the most recent example of a string of cases over the last few years where the government has intervened under the banner of “heritage conservation� to impose its will. Close analysis of these events, case-by-case, makes two things alarmingly clear. First, current conservation policy is in direct contravention of property rights and the rule of law and second, the policy fails to achieve its legislative objective to protect and conserve Hong Kong’s heritage with most properties possessing true heritage

characteristics simply falling through the cracks. The inadequate policy and law in place ultimately ends up destroying far more than it conserves. The topical situation in Ho Tung represents only the tip of the iceberg and reflects best the status quo that has recently emerged. The AMO (the Antiquities & Monuments Office) exercises its autonomous declaratory powers in the name of heritage preservation to create a deadlock which puts private property owners in a limbo with no easy way out. The legislation is partly to blame, as well as the actors in the AMO itself, who have for years noted these gross inadequacies.

Ho Tung gardens is a residential property located on The Peak and was built in 1927 as the private home of tycoon Sir Robert Ho Tung. The current owner of the property, the granddaughter of the late Sir Robert Ho Tung, had decided that it was time to redevelop the site and so followed all the right, legal procedures to have her redevelopment proposals and plans, which were to amount to a HK$3 billion investment, passed by the relevant authorities. Her demolition plans to allow for the redevelopment had been approved by the Buildings department in late December last year. Yet, on the 28th January, Carrie Lam, in her capacity as the Antiquities Authority, stopped everything by making use of her emergency declaratory powers under the Antiquities and Monuments Ordinance. Secretary Lam put the site under

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protection from any demolition or redevelopment as a “proposed monument,” effective for a year, giving the authority supposedly “much-needed” time to discuss and consider whether or not to declare the site a permanent monument.

will “justly” compensate an owner with plans for a multi-billion dollar re-development is yet to be seen. The only real certainty that remains is that if no mutual agreement is reached, the AMO has the right to declare the site a monument

Any society like Hong Kong that claims to be defending the rule of law must have laws that possess a nature of certainty, generality and equality, yet the sheer retrospective and haphazard, ad hoc approach of the government ultimately undermines the reasonable certainty of citizens in their daily activities in the most arbitrary way.

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while the owner is merely left with the right to claim financial loss, which would only lead to the timely process and additional costs associated with filing a writ seeking

179 Prince Edward Road West It only takes a moment to learn what the government advocates between private owners of deemed heritage that result in Richard Wong

In the meantime, the owner has had mounting tangible and intangible costs to deal with while they face uncertainty as to future of their plans and personal property. What is perhaps most appalling is the Secretary’s own public admission that her actions were necessary as a way of reaching a preservation deal with the owners, which simply acts to usurp any notion of lawful legitimacy and due process on the part of the government. Furthermore, her attempts at consolation by mentioning that incentives of an economic nature will be extended out to the owners to compensate them for the loss of their right to develop simply fall short. How the government

damages in the High Court. The Basic Law expressly protects property rights while implicitly placing much trust and importance on the rule of law, central to the inherited common law system. Any society like Hong Kong that claims to be defending the rule of law must have laws that possess a nature of certainty, generality and equality, yet the sheer retrospective and haphazard, ad hoc approach of the government ultimately undermines the reasonable certainty of citizens in their daily activities in the most arbitrary way. Astoundingly, the declaratory tool has become one which the state uses to force landowners to succumb to their will in a costly and inefficient manner.


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Richard Wong

that are made to bear all of the associated financial costs, not to mention the fact that they are usurped of a right to go ahead with what they had initially planned. The outcomes of the negotiations reflect the only real alternative open to private property owners who choose to enter into negotiations and reach an “agreement” which effectively means capitulating to the government’s demands.

What merits heritage? “preservation-cum-development” schemes. The particular example regarding a site at 179 Prince Edward Road West is touted throughout the “Liberal Studies Teaching Kit” manual as illustrative of the effectiveness of heritage conservation policy in striking the, “best balance between the preservation of historic buildings and respecting the private property owners’ rights and interests.” On the façade, it certainly would seem to be the case that a harmonious agreement was reached that satisfied all parties’ desires, making all stakeholders pleased, but it only takes a little analysis to see that this is far from the truth. The site at 179 Prince Edward Road West was constructed in 1937 as a four-storey Tong Lau/shop house and had been confirmed to be a Grade 3 Historic Building (which signifies that the site possesses “some merit” historically by the government’s definition) in 2010 by the AMO. Originally, the private owners had legitimate plans for the existing run-down, decrepit

Tong Lau to be demolished to make way for the construction of a hotel. Once again, the owners were placed in a deadlock by the government facing the prospect of not being able to go ahead with plans they had previously drawn up and organized. The agreement reached effectively meant that in exchange for a slight raise in the plot ratio of the property, apart from bearing the additional construction costs associated with conserving the existing building, the owner would be burdened with having to revitalize both the preserved portion on the second floor into a museum that would have to be open to the public for free as well as arrange free guided tours. The preservation-cum-development outcome that resulted from the forced negotiations reveals that the scheme advertised as striking the perfect balance for stakeholders is short-sighted in that it not only disrespects the rights of the property owners, but it puts onerous burdens on the owners

What is also noteworthy in the Prince Edward Road West case, among others, is a fact that is easily overlooked but pervades the entire inquiry which is whether the site even has characteristics worth preserving? This is another major part of the problem since what constitutes “heritage” is an inherently subjective question yet we see contentious notions of “heritage,” clearly difficult to define, interfering so directly with the very clear and settled notions that constitute property rights and the rule of law. The fact that the AMO Ordinance that deals with heritage does not even include a clear and comprehensive definition of “cultural heritage,” “cultural significance,” and “heritage value” clearly makes it impossible to create a system and framework that aims to protect and conserve heritage. Adding to this, since the task of cultural heritage conservation involves so many government and non-government

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bureaucratic departments, bodies and legislation, any attempt at a stable, long-term broad based heritage conservation policy remain futile – not that there has been one.

Challenges in the existing paradigm Not only is the government’s present policy an innately, inequitable hap-hazard approach to heritage conservation but it spits in the face of any real intention to even try to conserve Hong Kong’s heritage. Over 1996-2000, the AMO conducted a territory-wide survey of buildings in Hong Kong that had been built before 1850 and recorded 8800 buildings as requiring assessment of heritage status. More detailed surveys over 2002-2004 focused on 1444 buildings out of the 8800 yet at a meeting on 13 December 2004, the AAB (Antiquities Advisory Board) recommended that an expert panel be formed to undertake in-depth assessment of heritage value of the buildings

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which was in effect what the AMO had already set out to do from the onset years earlier. This panel was formed in March 2005 and it had taken the 7-member panel four years and in excess of 2000 focused hours backed by enormous resources to complete the assessment. Yet, even after undergoing survey upon survey of hundreds of properties over the years, resulting in the assignment of particular “gradings” to each of the buildings assessed, what we see repeatedly is that these gradings do not effectively translate to anything in the way of conservation, since it is only the conferral of a “monument” status that can conserve a site and prevent it from being demolished. Furthermore, we see that many of the surveys often result in contradicting results and only spur and cultivate further uncertainty to private owners and the publicat-large with the panel itself expressing reservation as to the results of their assessment that, “the evaluation of the heritage value of buildings is a continuous effort,

and their heritage value can always be reassessed.” The trend we have seen over the past few years is that “monument” status often does not even correlate to a site’s grading assessment with most decisions as to monument status being made immediately before an owner has decided to commence property redevelopment/demolition (as illustrated well in Ho Tung) or just after the calls of a small group of outspoken individuals. The latter is best exemplified in a case involving King Yin Lei Mansion, where despite numerous invitations for the site to be assessed over the years, it was declared a monument following the protests of a conservancy group which called for King Yin Lei to be saved despite the site never being assessed or considered worthy of assessment in the past despite ongoing requests. It is also pertinent to note that the historical significance of Ho Tung gardens led the AMO to assign the site with a Grade One rating (which is meant to signify that a site possesses “outstanding merit”) after


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All of these developments beg one to question whether government even has heritage conservation on its agenda or whether, in the words of the Secretary for Development, the government is simply taking, “no action if the enemy makes no move.” The state of affairs regarding heritage conservation and the blatant hypocrisy of the government could not be better summed up than by what was said by its officials in an official statement to the Legislative Council: “If a law can be played around by an official like this to stop someone from carrying out some lawful acts, I think it would not be accepted by the Council and the community at large. This would also be contrary to the three major principles mentioned… [of] certainty, stability and uniformity.” This paper has not sought to undermine or disregard heritage conservation as an area of need, particularly in a place like Hong Kong where more and more people see protecting and conserving heritage as a way of facilitating peoples’ urge to strengthen a sense of place and identity, but simply posits that the ways in which it is being done is pathetic. The government’s budget, released this month, highlights a government promise to earmark an additional $500 million to the area of heritage conservation without making any major amendments to current policy, but rather seeking to continue the existing legal and administrative framework and

Richard Wong

years of reviews and assessments stretching back since 1980. Despite this, as counterintuitive as it may seem, these grading assignments achieved nothing in the way of protecting the site’s heritage value, which speaks directly to the ineffectiveness of the underlying framework in place. It is dumbfounding how it can be the case that a site that didn’t merely spring up overnight, had been assessed over many years, and was deemed as possessing “significant heritage value” can only be acted upon by the government in a retrospective, last-minute manner after the owners who have held the property over the entire time have faced continued uncertainty and costly engagements. If a grading framework to ascertain a site’s heritage value is provided, why not stick to it, and let that provide guidance as to whether a site is worthy of attaining monument status, especially since a site’s final grading is arrived at after years of assessment by experts in the field. There is a clear disparity and lack of clarity with what is deemed to be of heritage status despite the government’s attempt to keep up appearances of a standard and systemic framework with a grading system that is innately flawed.

employing the innately flawed “diversified approach” it has been using for decades. If Hong Kong really wants to be the “world city” it claims to be, why not start with an overhaul of current policy and the introduction and implementation of a practical, long-term legal and administrative framework, one that does its job but also manages to strike the balance between respect for property rights, the rule of law and heritage conservation. For further information on Heritage in Hong Kong, see IPRI Case Study 2011, “Hong Kong: Sidestepping Property Rights in Preservation,” http://bit.ly/ lionrockipri and “Heritage Rules in Dire Need of an Upgrade,” http:// bit.ly/gJT9VN. Lazar Pravdic is currently enrolled in a combined Commerce/ Economics degree at the University of Western Australia.

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Universal Pensions in Hong Kong: The Case Against Jim Walker warns against following other nations’ mistakes

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ecently there have been calls from some legislators which raise the issue of whether or not Hong Kong, like so many other countries, should introduce a universal pension scheme. After all, Hong Kong has an embarrassment of fiscal riches so why not make good use of them by taking good care of our old folk? While I would agree that there is plenty that the government could be doing to better use Hong Kong’s fiscal stockpile (who needs an even faster rail link to Shenzhen, for example?) adopting policies which are abject failures in other countries is not a sensible option. Admittedly, this seems to be lost on the Hong Kong government as it continues to introduce and propose Westernstyle policies – a minimum wage, Competition Law, maximum work hours – that have done nothing but reduce employment and entrepreneurship levels elsewhere. Albert Einstein once wrote, “The definition of insanity is doing the same thing over and over again and expecting a different outcome.” We need to guard against Hong Kong falling into the same traps as everyone else.

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Caring for seniors and a Universal Pension may not go hand in hand.

Old age pension: historical backdrop Neville Chamberlain introduced the Widows, Orphans and Old Age Contributory Pensions Act into the UK parliament in 1925. This act promised a pension to male citizens on reaching the age of 65 (60 for women). Despite the loss of life in the First World War the UK was then a relatively young, vibrant country with a low dependency ratio i.e., many more workers than dependents (under 15s plus over 65s) in the population. The only problem with

Chamberlain’s proposal was that in 1925 the average life expectancy for a man in the UK was 56 and, for a woman, 60. In other words, the government of that day was promising something that it never intended to pay – hence the reason that no UK government since has ever actually pooled National Insurance (the original MPFstyle form of contribution) into a pension fund for the future. When the Welfare State was given the green light by the Labour Government in 1945 its commitments barely meant a thing either. By that time the life


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Politicians like to promise the electorate something for nothing. European governments have been doing so for decades. In most of Europe government spending is now over 50% of GDP. Fiscal deficits have been used for many years to prop-up this spending but government debt loads have now reached levels that cannot be tolerated. From here onwards the private sector in Europe is going to find out just how much the past promises of politicians are going to cost it. It cannot pay.

Government finances: your money It is worth stating a simple truth at this point: the government is

It is worth stating a simple truth at this point: the government is entirely financed by the private sector. businesses are greater than the demands from the growing old age pensioner cohort. The UK and Europe, because of the ageing population, is fast reaching a point where, between pensions and social welfare entitlement programmes, the Ponzi scheme is being laid open. (A Ponzi scheme is where payments to earlier members of a project or fund are funded from the contributions of new members. It comes to a crashing end when there are fewer and fewer new entrants and more and more existing members looking to take money out).

entirely financed by the private sector. Only private sector workers and companies pay taxes. Public sector workers’ net salaries (i.e., less the taxation which they pay) are entirely funded by private sector contributions (or, in some countries, borrowing). Public sector capital spending is also entirely funded by the private sector, either at home or abroad. Even government revenue from land sales – and who granted the government the right to own land in the first place? – is dependent on private sector purchase. The distinction in people’s

Cliff1066™

expectancy of a man in the UK was 64 while that for a woman was 68. At least the state pension would only need to feed half the population and that only for eight years. Of course, by 1999 the picture had changed somewhat. Male life expectancy in the UK had risen to 75 and female to 80. They have since increased further. Between 1925 and now the UK, along with nearly every other European country, has made no attempt to set aside funds explicitly for old age pensions. These have been non-contributory entitlement schemes. This is all very well as long as the contributions to National Insurance and general taxation from workers and private

Remember Einstein’s advice

minds (aided and abetted by bad economists, I freely admit) between the private and the public sectors is mythical. The public sector is entirely paid for by the private sector. That is why the terms “public servant” or “civil servant” came into use and are still appropriate – not that government employees act like they are. With that in mind, the question should be asked of the Hong Kong Government, “Why do you have so much of our money in reserves and what are you going to do with it?” Hong Kong is in something of an unique situation in that – for now – it runs a budget surplus and has accumulated vast wealth to the tune of 65% of current GDP (in the Budget Statement it is claimed that reserves amount to only 30% of GDP but that is purely fiscal reserves and omits many other capital funds in the overall public accounts, including the HKMA). There is absolutely no good reason for this to be the case. It is not government’s role to “save for a

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ON POLICY

From here onwards the private sector in Europe is going to find out just how much the past promises of politicians are going to cost it. It cannot pay. rainy day” nor are these surplus reserves necessary to support the Hong Kong dollar peg. That aside, governments should run only balanced budgets at any time (or at least balanced through a normal economic cycle). Neither borrowers nor lenders should they be – unfortunately that is not the way of the world.

Hong Kong’s future Here is a recent comment from someone described as a “battlescarred veteran of municipal finance boards”: “During my time on two pension boards, the boards did less as the problems got worse. Board members tend to be town employees caught in the headlights. They are not financially trained, and they tend to believe rather unsophisticated consultants who all say the same thing: ‘You can earn your way out in 15 years.’ This is not true. Not even compounding can save you when benefits are rising faster than the return on assets. We have yet to begin to seriously attack this problem. The most we have done is ‘tried’ to initiate cuts of annual percentage increases in benefits.” Maybe Hong Kong public servants would be better than this but I doubt it.

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The problem with European and US pension schemes is that they have never been fully costed nor have they ever been based on realistic assumptions about what pension scheme managers can be expected to produce as a return. The 8% per annum projected returns of most US state and private pension schemes is an artifact of the inflationary 1970s when pension plans were exploding in addition to state guaranteed benefits. Here is what you have to consider before Hong Kong plunges headlong into the same hole: • What are the realistic outgoings to the Hong Kong old age population based on a realistic monthly pension and a realistic life expectancy? • How much will have to be contributed by every worker in the economy on an annual basis to pay for this scheme out of current income? • Assuming that some portion of the current fiscal reserves can be ring-fenced (I would argue that that is not a safe assumption in any event, but that is by the way) as a bequest to “the old,” what realistic return on that pool of capital can be expected? I would

urge that you do not assume anything better than the risk-free return on a 10-year government bond at best. • What are the demographic dynamics facing Hong Kong over the next 50 years and how do these change the payments and contributions profiles? • What are the chances that, in 2047, Hong Kong’s fiscal balance will be subsumed into a central Chinese pool and how will that change the financing dynamics? At the moment, the government’s finances would tell us that Hong Kong is a very rich place. That encourages politicians and pressure groups to be generous with the money. That is all well and good but it is very different from setting in place an unfunded entitlement programme. It is open-ended, unfunded entitlement programmes that are quickly becoming the rod for people’s backs all over the developed world. It is not good enough to adopt schemes such as old age pensions just because everyone else has done so. Bear in mind that, when all is said and done, “the road to hell is paved with good intentions.” This article first appeared on Webb-site.com Jim Walker is the Founder and Managing Director of Asianomics Ltd., an economic research and consultancy company servicing principally the fund management industry.


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The Liberation of the Chinese Woman – and the Chinese Entrepreneur Mark Tier explains how the free market freed women and entrepreneurs in Hong Kong

T

he visitor to Hong Kong today sees a bustling hive of energy where even the New Yorker is a slowpoke. It’s a place where people of all races and cultures live and work in harmony. It’s also a place where, even before the change of sovereignty from Britain to China in 1997, the gweilos [“long-nosed barbarians”] were being displaced in all spheres of human action by locals. [Under British rule, only the government lagged behind – only there could the criterion of race override the criterion of ability.]

Hong Kong is one of the most successful multi-racial societies in the world. But this is a relatively recent development. The major difference between

is that in the US minorities, over time, lose their separate tribal identities and become members of a single tribe: Americans. There remains some differentiation based on whether your ancestry was Irish, Polish, African, or Asian. But by the third or fourth generation, all these groups share one thing in common: they are culturally and linguistically Americans, and have lost the language and to a large degree cultural affinities of their parents. But in Hong Kong, the different ethnic, linguistic and national groups maintain their separate identities: there is no (or very little) “absorption” of minorities into the Chinese majority. The best example is the Indian

Whether in government or business, the Chinese were second-class citizens in their own country. Hong Kong and other peaceful multi-racial/multi-ethnic societies like the United States (or Australia)

minority, which has existed in Hong Kong almost since the British arrived in 1841. More than any other group,

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Hong Kong’s racial/class structure Until the 1950s and early 1960s, Hong Kong’s social structure was a replica of Britain’s class system, except that “class” was defined by “race.” Whether in government or business, the Chinese were secondclass citizens in their own country. In the police force, for example, a Chinese could get to sergeant, while all the officers were British.

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In the British “hongs” which dominated Hong Kong business, an invaluable – and highly rewarded – employee was the “compradour,” or the Chinese go-between who mediated and negotiated the business affairs of the company between the British managers and the Chinese employees and suppliers. But no way could a Chinese become “taipan.” Naturally, the Chinese resented being the underclass, and riots and strikes broke out occasionally, especially in the years following the 1911 revolution in China. There was one important exception to this general rule that the tribes and races didn’t mix: in the marketplace. While a Chinese or Indian could never become “taipan” in a British “hong,” he could start his own “hong” – and even put the British out of business. The legal system of common law and property rights meant that the arena of the marketplace was color-blind. And, of course, the “language” of the marketplace – money, profit and loss – has no terminology for tribe, or race, or prejudice.

The liberation of the Chinese woman As the 1950s began, the tribes of Hong Kong remained separate and apart socially. In business, price and quality were the only considerations. Banks would finance a promising entrepreneur – even if they’d never invite him to tea. But the most marked change caused by the forces of the market

Matt Riggot

including the Chinese, they have resisted “westernization” and kept their original cultural, linguistic and religious traditions intact. Historically, Hong Kong shares many similarities with other former British colonies. First, of course, is the British heritage of common law. Second, a history of racial inequality (“dogs and Chinese not allowed” – actually a sign on a park in Shanghai, but it applied just as much to Hong Kong): white was superior to yellow because the reins of power were, of course, in British hands. But racial [or tribal] prejudice went far deeper than white vs. Chinese. Indians kept to themselves (and, as a continuing minority, remain the most culturally cohesive, and “unwesternized” group). Eurasians were despised by both whites and Chinese (any Chinese girl seen with a gweilo was, “by definition,” a whore). As a result, Eurasians (like Indians) formed a separate community and lived in specific area. And then there were tribal divisions amongst Chinese, based primarily on dialect [language].

Nowadays, traditional dress is worn in celebration of holidays or as a fashion statement.

was the altered status of the Chinese woman: not only did interracial barriers disappear, at the same time the market also liberated the Chinese woman from her subservient state. In all societies – except the mythical Amazons – woman was subservient to man. And so too in China. Daughters were always less valued than sons – often, female children were (and sometimes still are) killed at birth, especially if times were hard. A new wife moved in with her husband’s family, where, often, she was treated not much better than a slave – especially by her new mother-in-law (until, of course, she became the mother-inlaw). No woman could become an official of the empire because only men could take the all-important civil service exam. In Hong Kong, this Chinese “cultural” attitude to woman was, in one aspect, recognized in law. Chinese men (but not men of other races) could keep concubines (“junior wives”) and take tax deductions for them and their children on the same basis as the first wife. This provision of the law lasted until the early 1970s. Most tribal and other barriers


ODDS AND ENDS

Yat Fai Ooi

were not legal but social, as each cultural group maintained its own customs despite the “challenge from the marketplace.” One “index” of this change (or “westernization”) was dress. Well before the 1950s, most Chinese men had ceased to wear the traditional Chinese long gown in favor of western suits. But only on the “swinging sixties” did the Chinese woman begin to discard the traditional Chinese garb in favor of the unending variety of western dress. One factor was economic: Hong Kong had become a source of cheap textile products for export to the west. But only in the 1960s, within Hong Kong, did ready-made western clothing become cheaper than the tailor-made Chinese. More important was the effect of rising affluence on the freedom of the Chinese woman (and, of course, on the freedom of all other

This bride getting ready, like most Hong Kong women, works full-time, if not manages, as a professional.

individuals). As more women were employed at higher rates of pay, they achieved the economic independence to escape the cultural restrictions imposed by the Chinese male. Or, in the specific context of any individual woman, the restrictions imposed by her parents. With no government-imposed impediments to any person choosing to live where they wished, with whom they wished, only cultural barriers remained to be overcome. Meaning: the disapproval of one’s parents, elders, and peers. As the Chinese woman was no longer economically dependent on her parents and/or prospective husband, she was now free to reject an arranged marriage; and so free to choose her own partner – or none at all. She was now free to and capable of moving out of the restrictive life placed on her by her parents. She displayed this new independence in small ways, such as dress; in major ways such as living with someone of a different race; or in perplexing ways, such as starting her own business – hitherto, a completely male domain. Evidence of this change of status comes from the number of women in business at executive or ownership level. A recent [in 1986] survey of Asian countries showed more women in Hong Kong in business than anywhere else. I believe (from observation only) that in Hong Kong there are more female business executives than anywhere else in the world (per capita). And yet, just 30 years

earlier, women in Hong Kong were the “naturally subservient race.”

The rise of the Chinese entrepreneur In 1949, when the communists won China’s civil war, Hong Kong was still a sleepy colonial outpost. The main business center on the China coast was not Hong Kong but Shanghai. The communist victory caused a massive influx of refugees into Hong Kong. Among the refugees was an incredible concentration of entrepreneurial talent and capital. It was this “first wave” of entrepreneurs who began to transform Hong Kong into the dynamic, entrepreneurial city the visitor sees today. Most of these entrepreneurs, in the main Shanghainese, were already established businessmen. Some had lost all their assets, but using their contacts and talents they were quickly back in business. But the truly aggressive entrepreneurs came in the “second wave,” from the tens of thousands of people who fled across the border from China to freedom, usually arriving in Hong Kong without a penny in their pockets. People like Fung King-hey, who started Sun Hung Kai Securities, and Li KaShing, who built Cheung Kong – in both cases, from nothing. Hong Kong also attracted entrepreneurs from all over the world, of all nationalities – in the way that flowers attract bees. From 1949, although the British “hongs” prospered, it was the

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Chinese businesses – Shanghainese and Cantonese – which grew most rapidly. This entrepreneurial activity was not confined to a select few. For every entrepreneur who made a billion dollars, hundreds made millions – and tens of thousands made far more money than they could ever achieve as an employee. (Indeed, a major problem in Hong Kong can be getting good middle management staff: almost everyone with an ounce of talent starts their own business.) What allowed this enormous entrepreneurial activity was the laissez-faire attitude of Hong Kong’s British rulers. Hong Kong was in the lucky position of having an indeterminate political future. Since Britain leased the major part of Hong Kong’s area from China, Hong Kong could not become an independent nation. So Hong Kong was spared developments in other British colonies, where Britain aggressively handed over power to local elites, who’d usually been trained in the “virtues” of interventionist, socialist government at the London School of Economics (or, in the case of Idi Amin, at Sandhurst). As Chinese businessmen grew in numbers and wealth, the social barriers of the adapted British “class” system slowly broke down.

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British clubs removed their restrictions on admitting members who were not white. Eurasians were no longer pariahs – and inter-racial marriages became commonplace. The “old elite” of British government officials and “taipans” eroded in significance – partly as Chinese became members of this “elite”; primarily as a “new elite” of wealthy Chinese businessmen displaced it in significance. And, as Hong Kong became a “consumer society,” the dominance of the Chinese increased in all areas – for the obvious reason that the Chinese, being 98% of the population, represented the mass market. An ironic example is that when the British-dominated government issued TV broadcasting licences, it required each licencee to operate an English-language station: in effect, to subsidize the Englishspeaking minority. However, the majority of viewers, even for the English-language stations, are Chinese, so programming on all channels is determined by the tastes of the Chinese majority.

The triumph of the Chinese entrepreneur The culmination of these cultural changes took place in the 1980s – on the Hong Kong stock market. In the marketplace, the new Chinese firms – together with American, Japanese and other multi-nationals – came to dominate business. Management of the British “hongs” tended to be sleepy by comparison – living in a world that

had long gone where to be British was to automatically be superior. The 1980-82 recession brought out these weaknesses, and losses or low earnings were reflected in weak share prices. Chinese entrepreneurs were quick to realize their advantage, and snapped up British “hongs” which had fallen on hard times. Sir Y.K. Pao bought out Wheelock Marden; and backed by the Hong Kong & Shanghai Bank (money in a free market, remember, is color-blind) Li Ka-Shing took over Hutchison Whampoa. (The bank was pretty prescient: today Li Ka-Shing is one of the wealthiest men in the world.) Only two British “hongs” still remain under British control: Swire Pacific (which owns Cathay Pacific Airlines), which didn’t make serious business mistakes and whose shares are tightly-held by the Swire family; and Jardine Matheson, which only avoided succumbing to a takeover bid through its cross-ownership with another then-ailing British firm, Hong Kong Land. Postscript: By the time Britain handed Hong Kong back to China in 1997, to judge by the Hong Kong stock market this transformation was complete: the overwhelming majority of companies that make up the Hang Seng Index of Hong Kong stocks were locally owned and run. Reprinted with permission. Mark Tier is an Australian writer and businessman who lives in Hong Kong “partly because paying taxes is against my religion.”


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Will the Competition Bill Help the Hong Kong Taxpayer? Merle Hinrichs on what the Government has not wanted you to know about the Competition Bill currently being considered by the Legislative Council

F

irst, rather than targeting specific hardcore anticompetitive conduct, the Government is proposing broad, uncertain prohibitions. There has been no attempt to analyze whether this approach is suitable for Hong Kong’s small, open and highly sophisticated economy. The Government has made no study to determine in real dollar terms the financial impact or benefit to our economy. Nor does it have any concept as to the benefit this bill will provide to individual taxpayers, SMEs or corporations. The Government’s consultations and reports just give empty platitudes saying the law will be good for Hong Kong. But once the bill is passed, should you wish to raise a complaint or appeal, or should you be investigated, you will then be expected to produce an economic study and financial justification. This will be true whether you are an individual, an SME or a major corporation. And the cost and time will be substantial. You will be liable for the Commission’s costs if you lose, with no ability to recover costs from the Commission if you

win. The Government has provided no guidance on exactly what that cost may represent, but you will be expected to pay for it. Overseas experience shows the legal costs of such cases can run into millions of dollars! Second, what the Government does not tell you is that it has no concept or measure of the size of the department required to administer the Competition Commission, which will be established to execute this bill once passed. But you the taxpayer will pay for it.

Third, what the Government does not tell you is that this bill, once passed, represents a huge windfall for Hong Kong’s legal community, many of whom have vested interests. They will provide services to individuals and to companies, large or small, and there is no estimate as to what this cost will be to the individual or to the economy. Fourth, what the Government does not tell you is that, unlike most other world governments who have passed a competition bill in which companies created by

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Government decree or statute are subject to the same competition regulations, in Hong Kong the government plans to exempt statutory bodies (of which there are over 500) from being required to meet the same criteria as private enterprises. Why you may ask? The Government does not want to face up to the fact that Government intervention, including through these statutory bodies, is the single biggest inhibitor of competition in Hong Kong. Individual taxpayers,

SMEs and corporations that suffer anti-competitive conduct by these statutory bodies will be given no say in the process. These statutory bodies will not be required to act competitively or account to anyone for their inefficiencies, while at the same time they will be able to use the law against those with whom they compete! It is Global Sources’ view that, if indeed a competition bill is needed, which is a major fundamental question in the first place, then it needs to be a

bill that is carefully considered, debated and evaluated. And one which treats companies created by Government statute on an equal footing with private enterprises. The Government has not considered the cost of this bill, as proposed, either to the economy or to you – a taxpayer, an SME or a corporation. Merle A. Hinrichs is the Chairman and Chief Executive Officer of Global Sources, Ltd. in Hong Kong.

Endnotes and Image References The Myth of Competition Law 1

Full Quotation reads: “LANDES: When I took over Aaron’s role of teaching antitrust with a lawyer, Ronald said he had gotten tired of antitrust because when the prices went up the judges said it was monopoly, when the prices went down, they said it was predatory pricing, and when they stayed the same, they said it was tacit collusion [laughter].” Edmund W. Kitch, Ed. “The Fire of Truth: A Remembrance of Law and Economics at Chicago, 1932-1970.” Journal of Law & Economics, vol. XXVI . William M. Landes on p. 193 (transcript of a discussion held March 21-23, 1981, in Los Angeles).The University of Chicago Press: April 1983.

Photo Credits p4 Phil Roeder, http://www.flickr.com/photos/tabor-roeder/5554035521/ p5 Steve Punter, http://www.flickr.com/photos/spunter/2907555506/ p9 http://www.flickr.com/photos/uberzombie/1507282876/sizes/o/in/photostream/ p10 Bay Leung p15 Libby Levi, http://www.flickr.com/photos/opensourceway/4862920313/ p19 Richard Wong, http://www.flickr.com/photos/richardwonghk/4528111230/in/pool-hkhistoricbuildings p20 Richard Wong, http://www.flickr.com/photos/richardwonghk/4534630914/in/pool-hkhistoricbuildings p21 Richard Wong, http://www.flickr.com/photos/richardwonghk/4527479653/in/pool-hkhistoricbuildings p22 Richard Wong, http://www.flickr.com/photos/richardwonghk/4527479407/in/pool-hkhistoricbuildings p22 http://www.flickr.com/photos/old-hk/3181873627/ p23 Richard Wong, http://www.flickr.com/photos/richardwonghk/4533996171/in/pool-hkhistoricbuildings p24 http://www.flickr.com/photos/whitecatsg/2543957684/#/ p25 Cliff1066™, http://www.flickr.com/photos/nostri-imago/3007483608/in/set-72157608691473072/ p27 http://www.flickr.com/photos/jarkkos/818470968/ p28 Matt Riggot, http://www.flickr.com/photos/riggott/2449754988/ p29 Yat Fai Ooi, http://www.flickr.com/photos/oyf/193202931/ p30 http://www.flickr.com/photos/49326187@N07/4522042691

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Best Practice Vol. 3 No. 2  

Best Practice quartlery journal by The Lion Rock Institute

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