The Consumer Council has warned against market monopoly and manipulation by major supermarket chains, and called for urgent measures to deal with the problem.

It said unless such practices are stopped, they would use the monopoly to interfere with fair market competition as leading supermarket chains and key food suppliers have a "considerable extent of market power". The consumer watchdog was reacting on Wednesday to recent reports that a prominent supermarket chain had applied pressure on the sole agent for a manufacturer of instant noodles to force a grocery store not to sell the products at prices lower that the chain's.

The owner of the store in Sham Shui Po said he was angered by the agent's threat to cut off supplies if he refused to raise the price.

The owner, who began operations in September, said he had been selling the noodles at HK$3 for each packet initially, but the agent reportedly suggested he sell them at HK$10 for three packets.

He was told to follow the instruction after the agent said it had received a complaint from the supermarket concerned that the grocery store's price was low. If he refused, the agent would have his supplies stopped. The owner said he operated on the principal of "small profits, but quick turnover" and lower prices would also benefit the grassroots in Sham Shui Po.

The Consumer Council said the markets for fast-moving consumer goods (FMCG) are over-concentrated, and some major supermarket chains and key foodstuff suppliers could use their market power to interfere with fair competition in the market.

However, the proposed Competition Bill does not explain in what circumstances market share could be defined as "a considerable extent of market power", so it might be difficult for the Competition Commission to investigate and enforce rules, the watchdog said. The council said that when deciding whether abuse of market dominance could hinder, limit or distort competition in the market, the interests of consumers must be given due consideration.

In response, Chief Executive Donald Tsang Yam-kuen said on Wednesday he expects the Competition Bill to become law during his administration.

Echoing Tsang's views, Starry Lee, vice-president of the Democratic Alliance for the Betterment and Progress, hoped the bill could be passed at the end of the year.

She told China Daily she was surprised to learn of the incident, saying it's up to retailers to formulate their own strategy on prices and the behavior of major suppliers or retailers could affect fair competition in the market and harm consumers' interests.

A spokesman for the Commerce and Economic Development Bureau said if retailers with a big market share force out rivals by price manipulation, such as interfering in their retail pricing through upstream supplier, they might violate the bill.

He said the Competition Commission would have the right to investigate allegations of price manipulation after the bill is passed.

fanfeifei@chinadailyhk.com

China Daily

(HK Edition 11/03/2011 page1)