A proposed new anti-monopoly law has been greeted with skepticism by both free-marketeers and pro-regulators who claim Hong Kong's status as a world trading hub is being put at risk.
Essentially, the law is designed to prevent price gouging and protect consumers and Hong Kong's budding entrepreneurs from overlording cartels.
However, backers of the competition law argue the proposal doesn't go far enough to rein in market-dominant companies, while detractors claim legislation would distort Hong Kong's fam-ously laissez-faire economy.
The government, which recently launched a three-month public consultation on its proposals, says it wants a law that will prevent price-fixing and the creation of domineering cartels that push smaller companies to the sidelines of Hong Kong's economy.
"Hong Kong enterprises have always thrived in a competitive environment. It is important for our economy and for our competitiveness that our competition policy is effective and in step with the times," Secretary for Economic Development and Labor Stephen Ip (葉澍) said.
Despite Hong Kong's claims to being the freest economy in the world, there have been growing grumblings, and they are getting louder, that laissez-faire economic policy has not benefited everyone.
"The free market functions well when there are sufficient participants and nobody has cornered the market," said David Webb, a board member of the Hong Kong Stock Exchange.
"But that economic efficiency breaks down when you reach boundary conditions and there emerges a dominant player or cartel," Webb said.
The government hails its free flows of capital, low taxes, minimal government intervention and free port status with no tariffs as reasons for overseas investors to put their capital here.
But analysts complain the point has been overplayed and that large companies have been able to edge smaller overseas competitors out of the market.
Such claims have been leveled at the retail, oil and construction industries, although the government has only investigated the petroleum market, where it found no price-fixing.
"There is a need for a law that will give statutory powers for investigation and powers to sanc-tion," said Webb, citing a recent court case in which a group of companies were found to have acted as a cartel, stinging the government for millions of dollars in a contract to supply steel doors for public housing.
"The court could not prosecute the companies because there was no competition law for them to have fallen foul of," Webb said.
The government's response to the criticism came in June last year when a Competition Policy Review Committee concluded that anti-trust laws were necessary.
Webb, however, said the latest consultation proposal falls short of the panel's recommendation.
"If they had no problem with the recommendation, they wouldn't be having a consultation now," he said. "It's simply an excuse to drop the whole affair. It gives them a scapegoat -- the public -- for not pursuing a competition policy."
Free-marketeers have equally condemned the proposal, saying competition laws would provide the government with too much power to interfere in the market and to arbitrarily punish companies it wants to keep in line.
"This proposal was put together by bureaucrats for bureaucrats," said Andrew Work, executive director of the Lion Rock Institute, a free market think tank.