'New law no contest for supermarkets' power'
759Store owner fears Competition Ordinance will have little effect on possible pricing tactics
A retailer has voiced fears about whether the Competition Ordinance will be able to tackle concerns over how much power the city's supermarkets wield over the prices Hongkongers pay for their groceries when it takes effect next year.
A battle against alleged pricing tactics made headlines three years ago when a drinks distributor refused to supply Coils Lam Wai-chun's 759Store retail chain, saying his prices were too low.
Under the new law, which bans price-fixing between traders and abuse of market power by dominant players, Lam could demand an investigation to see if the distributor had acted under pressure from customers.
Lam, however, has little confidence in the effectiveness of the law, which was passed in 2012. "The law will not be able to break the oligarchy," said the businessman, whose chain expanded to 200 outlets in less than four years.
He claimed supermarkets and suppliers were in a complex relationship and had various ways to influence the market. Distributors recommend a retail price for all retailers, but the legality of this arrangement under the competition law remains unclear. Even if the system of recommended retail prices was banned, suppliers would still be able to control market prices indirectly, Lam said.
Suppliers could simply sell to supermarkets at lower prices and allow them higher profit margins. Then they would sell the same products at higher prices to small stores, which would then find it harder to undercut the supermarkets, he suggested.
