In a free market, competition is closely related to life. In a competitive market, consumers can compare prices and find products that meet their wishes; sellers can introduce discounts and adjust sales strategies in response to market reactions and competition.
Take newly-incoming public housing tenants as an example. When renovation contractors engage in anti-competitive behaviors such as market sharing and price collusion, the residents may have to bear high prices and unsatisfactory services, which will have a more serious impact on low-income families.
With the "Competition Ordinance" coming into effect in December 2015, the Competition Commission launched an investigation into related conduct. Many decoration contractors have been fined for violating the regulations. The current situation has improved.
Cracking down on renovation contractors to carve up the market and prevent conspiracy to price public housing tenants
Whenever a new public housing is completed, the Housing Authority will arrange for qualified renovation contractors to take turns to set up temporary exhibition booths in the housing estates to facilitate residents to choose services to renovate their new homes.
However, in the past, some residents reported that when they tried to obtain quotations from different contractors in the village to find a satisfactory and cost-effective renovation plan, often only one contractor was willing to approach the project, and the others refused to quote. The prices of the "decoration packages" launched are quite close, or even the same.
After investigation, the Competition Commission found that some decoration contractors were engaged in illegal conspiracy to divide up estate customers on their own, and they also jointly produced leaflets to standardize the price of the "decoration package".
The contractors also agreed that they would only take the initiative to solicit or undertake projects for the assigned tenants. If the tenants contact other contractors, they will all refuse to take orders and "refer" the tenants to their "owner" contractors.
In response to the above circumstances, the Competition Commission filed 3 related cases with the Competition Tribunal between 2017 and 2019. The contractor involved was ultimately found to have violated the First Conduct Rule of the Competition Ordinance, and the respondent in two of the cases had to pay A total of more than 7 million yuan was fined and the costs to be determined. In addition, the person involved in the case was disqualified as a director for 22 months.
The situation has improved following the trial and sentence of the case. For example, the new public housing estates in Kowloon, which were completed in recent months, have not seen signs of similar collusion in the past.
Some residents reported that they can ask for quotations from different contractors in the village, and similar decoration fees range from 25 to 50,000 yuan.
The director-general of the Public Housing Association, Zhao Guowei, believes that the judgment has deterrent effect: "In the past, it was unacceptable to hear that there were decoration contractors to carve up the market, and some residents reported that the quality of decoration was poor and even used as a model unit. The situation has improved after the judgment of the relevant case. I suggest that prospective public housing tenants should shop around before deciding on a contractor and not make a hasty decision."
Zhao Guowei, director-general of the Public Housing Association, suggested that the Commission should strengthen education for prospective residents before moving in, and encourage them to take the initiative to report suspicious situations.
In order to prevent decoration contractors from engaging in anti-competitive behaviors, the Housing Authority has also introduced a number of measures. For example, the village contractor must set up independent booths, send staff to inspect units under renovation, etc., and invite the Competition Commission to explain the Competition Ordinance to the contractors. ".
If a contractor violates the law, the Housing Authority will even take regulatory measures. The most serious case may even remove the contractor from the "Renovation Contractor Reference List".
The Commission urged the public to stay vigilant and report any suspected anti-competitive behavior as soon as possible.
An independent exhibition booth set up by the contractor in the estate.
Automatic contract renewal changes to public bidding to improve service quality of LPG supply
In addition to investigating the collusion of decoration contractors, the Commission has also provided advice on the selection of LPG service providers in public housing estates.
At present, 15 public housing estates under the Housing Authority have a central LPG supply system. After the supplier’s contract expires in the past, if the authorities are satisfied with the performance of the original supplier and consider the residents’ opinions on the supplier’s services, it will not do so. Bidding directly renews the contract for 10 years.
This practice undoubtedly hinders free market competition. Therefore, the Competition Commission put forward a proposal to promote competition in 2016. The Housing Authority decided to award new contracts by tender the following year, ahead of Aberdeen Wah Fu (2) Village and Cheung Chau Yaning Court is on a trial basis.
Among them, Huafu (II) Village has replaced new suppliers. Residents are generally satisfied with the handover process of the old and new suppliers. They are also pleased to see that the new supplier provides new services such as free inspection of stoves every year and exemption of minimum fees.
The Housing Authority then decided to implement the practice of re-tendering after the completion of the contract to other housing estates, and included requirements for quantitative risk assessment and required improvement projects in the tender documents, and required the successful bidders to provide different preferential treatment to the tenants.
In this case, even if the original supplier wins the bid, the residents can still enjoy better services.
The director-general of the Public Housing Association, Zhao Guowei, also agreed to renew the contract by bidding: "If there is competition, the residents will benefit in the end, and the new supplier provides services such as stove inspections. Residents generally agree."
(Information and photos provided by the customer)
