Hong Kong: Grocery buyout highlights major shortcomings in competition law

Following the announcement that mainland China grocery conglomerate China Resources Enterprises plans to buy grocery chain ParknShop from Hutchinson Whampoa, some say the transaction highlights major shortcomings in Hong Kong’s competition law to prevent transactions leading to market dominance.

ParknShop is one of the top chains in the area; reports place the company’s market control between 30 and 40 percent. But if China Resources’ bid for the chain succeeds, it would launch the firm into the top spot in the supermarket sector, due to the fact the company already owns the market’s third-top company Vanguard.

In an editorial originally published in the South China Morning Post, the buyout raises alarms but is not likely to face antitrust scrutiny as Hong Kong’s Competition Ordinance is not yet in effect. The legislation passed more than a year ago, say reports, and 14 commissioners have been appointed.

The watchdog has yet to establish a website, offices or even staff.

Even if the law were to come into effect, however, reports say the deal would still likely be cleared as the new competition law’s guidelines on market dominance abuse do not apply to mergers and acquisitions, except in the telecommunications sector.

Full Content: SCMP

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