Tuesday, December 3, 2013, 07:54
Try fighting HK’s big monopolies in so-called free market
By Stephen Vines

One of my favorite American expressions is: “go fight city hall”. It’s a way of saying don’t waste your time getting into a battle with a more powerful opponent because the outcome is predetermined.

Unfortunately, I am one of those people who tend to ignore this wise advice. Experience should be sufficient to know that little people should not try and change the way Try fighting HK’s big monopolies in so-called free marketHong Kong’s big monopolies do things because they are so powerful and we are so weak.

In theory, Hong Kong is a vibrant free market center where avid competition ensures that consumers get a fair deal and companies are kept on their toes by competition.

The reality is very different because monopolies litter the commercial landscape and the dominance of very big companies is growing rather than diminishing. The all important property market, for example, is dominated by less than half a dozen companies; in some districts there is only one landlord worth speaking about and elsewhere it is practically a foregone conclusion that at government auctions prime land will only go to the big companies.

There are monopolies for certain key products such as petroleum and liquefied petroleum gas, resulting in the elimination of price competition. Basic foodstuffs such as rice and meat are sold in the wholesale market by monopolies regulated by the government, thus keeping local prices among the highest in Asia. Similarly government created monopolies also control electricity and town gas supplies. Then there are a myriad of smaller monopolies eliminating competition in the provision of such staples as school uniforms and textbooks. Meanwhile, the government itself has its own monopoly over postal services and a web of licensing systems requiring those wanting to obtain licenses to employ a small number of “consultant” companies largely run by former civil servants.

The one area where the government made a great fuss about creating competition was in the supply of telecommunications services, previously under the monopolistic control of the British-based Cable & Wireless Corporation.

C&W’s Hong Kong operations were bought out by PCCW, a company controlled by Richard Li, the son of the tycoon Li Ka-shing. Under new management it held on to a substantial share of the business despite competition around the edges.

For some of us old-fashioned enough to use landline telephones and living away from central areas of Hong Kong, the PCCW monopoly remains intact because there is no other service.

When the time came to renew my contract with PCCW an affable salesman offered terms that seemed more or less reasonable. However, when the contract arrived in paper form it bore no resemblance to the verbal agreement reached over the phone.

I do not have the energy nor, I suspect, do readers have a sufficiently high boredom threshold to want full details of the many hours spent trying to get the verbal and written agreements to match.

I was basically told that PCCW had its way of doing these things and a mere customer (i.e. a small customer) could not expect anything would be done to change this system. Lurking in the background of increasingly bad-tempered telephone exchanges was the knowledge on both sides that if I didn’t like how PCCW did things I had no alternative.

At one stage I made what I thought was a good point that if my own company tried to give customers a contract that didn’t match a verbal agreement we would soon be out of business. However, that’s small company talk. Really big companies, such as PCCW, do not need to behave like this because even if push comes to shove they have the financial muscle to go to court and outspend small customers any day of the week. Everyone may well be equal under the law but there is no equality for access to legal redress. On the contrary, access is entirely dependent on how much money you have to pay lawyers’ fees and can afford to risk losing in the end.

I am still not sure what the outcome will be in my little telephone drama but I should have learned a lesson long ago because this is not the first time that I’ve made a hapless attempt to secure a fair deal with one of Hong Kong’s monopolist companies.

So, what is to be done to give customers a break? The idealistic answer is to create a more level playing field with more competition but, frankly, this is not going to happen anytime soon … if ever.

Ironically the only realistic solution lies with more government intervention. Free market advocates will probably shudder at this suggestion but it is the only way forward. As matters stand Hong Kong has weak consumer protection legislation and a Consumer Council that lacks statutory powers. It does its best to name and shame customer abusers, but it has no way of securing redress.

Other jurisdictions have found ways to champion customers’ rights without recourse to expensive legal redress. At the very least Hong Kong should be looking at these models for ideas.

Meanwhile, the small customers will probably have the resolve not to fight city hall, however tempting it is to do so.

The author is a former newspaper editor who now runs companies in the food sector and moonlights as a journalist, writer and broadcaster.