The Impacts of a New Competition Regime on Construction Industry in Hong Kong

Project: Research

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The curtain for afirst-evercross-sector competition regime for Hong Kong was raised when the Hong Kong Legislative Council passed the Competition Bill on 12th June 2012. TheCompetition Ordinanceshall come into force in 2014. The main features of the Ordinance essential to this study are: - A cross-sector“First Conduct Rule”prohibiting anti-competitive agreements and other arrangements between undertakings e.g. price-fixing, bid rigging, market allocation and output control. - A cross-sector“Second Conduct Rule”prohibiting abuse of market power by undertakings with asubstantial degree of market power.- Exemption from the First Conduct Rule can be granted for agreements that enhance overall efficiency - Exemption from the Second Conduct Rule can be granted for conducts that meet public policy grounds or avoid conflict with international obligations.This proposal is a re-submission and the objectives have been developed with due regard to the reviewers’ comments. Facing a ‘new’ competition regime is a reality; the main purpose of the project is to assist the Hong Kong Construction Industry to prepare for the coming into force of the Competition Ordinance.The operating objectives and the respective research tasks are as follow:I. Study the application of a competition regime to the construction industry:I.1 studying the theoretical underpinnings of having a competition regime. I.2 comparing the competition legislations of other developed economies.II. Prepare for the challenges by:II.1 examining the minefields against the First and Second Conduct Rules. II.2 exploring arrangements/conducts for block exemption. II.3 suggesting compliance measures;III. Explore implications on the business models in construction.The project shall be executed by a team comprises academic, market analysis expert and a post-doctoral fellow. Senior management of leading organizations will form a focus group and provide valuable industrial input.Upon completion of Task I.1, the potential impacts on the construction industry can be assessed firstly on the applicability of the theoretical arguments of having a competition regime on construction industry. Competition is not new and many developed economies have already had competition legislations. By studying these legislations, their respective guidelines and decided cases, the possible interpretations of the Hong Kong Competition Ordinance can be unveiled. Thus, the outcomes of Task I.2 shall inform the identification of minefields for Tasks II.1.For Task II.1, restricted practices identified from Task I.2 will be operationalized in construction contexts and then their happenings in Hong Kong will be examined. Market concentration analyses will also be carried out for vulnerable markets. Applying for exemption should be considered for those operations that meet the criteria for exemption. In construction, due consideration should be given to agreements and conducts that enhance the pursuit of sustainability. These will be studied for Task II.2. Prevention is better than cure; compliance programs should be installed to avoid infringing the Competition Ordinance.Outcomes of Tasks II.2 and II.3 can assist the industry to derive respective strategies as appropriate. Competition theory advocates that competition drives efficiency. On the proactive side, the final operative objective aims to capitalize on the competition regime in refining the business models in construction. As market is central to any competition analysis, the possibility of long-term market restructuring will be studied.


Project number9042028
Grant typeGRF
Effective start/end date1/01/1522/02/18

    Research areas

  • Competition Law,Economic Efficency,Concentration,Compliance,