Competitive Multi-faceted View #2｜Removal of fee restrictions promotes healthy competition to benefit consumers

Shopping around is a designated action for savvy consumers before shopping.

However, in the past, some industry associations had regulations restricting members' price competition, resulting in uniform fees or designated commission rates in some industries; some suppliers used different methods to control retailer prices.

The situation has changed only after the "Competition Ordinance" came into effect. Many industry associations have successively cancelled the charging guidelines and left the industry participants to independently determine the fees. Retailers are generally free to set prices.

Consumers can continue to enjoy cheaper prices, better services, and more choices.

In a free market, merchants can set prices freely and adjust prices in response to competition, while consumers can choose products or services according to their budget.

However, before the "Competition Ordinance" came into effect, some of the practices of some industry associations in Hong Kong might be detrimental to competition, including issuing price or fee guidelines to members.

There is no limit on home ownership commissions, citizens save more

Take the real estate industry as an example. In the past, some agency associations, in accordance with the recommendations of the Hong Kong Real Estate Agents Association, charged a commission of 1% of the property price to both buyers and sellers of the building.

After being contacted by the Competition Commission, the Commission has cancelled the relevant commission recommendations.

The Estate Agents Authority also issued a practice notice in 2016, setting out guidelines for the industry to follow, including that estate agency companies are not allowed to negotiate commissions, discounts or rebates; estate agency associations should refrain from making any instructions or suggestions to members regarding commission rates. And its members should not implement guidelines or recommendations that may harm competition.

At present, the public can discuss with real estate agents about the commission arrangements for the sale of buildings on their own.

At present, both buyers and sellers of the building can arrange their own commissions and discuss with real estate agents.

Mr. Lin, who bought a property in Shatin for $3.55 million in 2016, believes that this move will not only promote healthy competition, but also benefit prospective home buyers. "At that time, I agreed with the broker to set the commission at about 0.4% of the property price, or about 15,000. It’s a savings of more than 20,000 yuan compared to 1%. I think it’s a good thing to cancel the commission recommendation. On the one hand, it can save money to help repurchase the property. On the other hand, the broker will also strive for more commissions and serve more carefully."

Intimidate retailers to set the same price regulation to discourage suppliers from controlling resale prices

The lack of price competition does not stop at the above-mentioned situation.

When shopping in the past, citizens often found that the prices of sneakers, electrical appliances and other products in different merchants were the same. According to past reports, this was originally due to the supplier's price when the retailer sold the product, or the establishment of a minimum resale price. It might even threaten Penalties or suspension of supply and other tactics intimidate retailers into submission.

In some cases, the supplier may be pressured by a retailer or distributor to manipulate the resale price to limit competition at the retail level.

Before the "Competition Ordinance" came into effect, sneakers, electrical appliances, etc. were often sold at the same price in different stores.

According to previous reports, the "Competition Ordinance" only came into effect six years ago, and many sports shoe stores and electrical appliances stores have launched concessions to attract citizens to sweep goods.

Today, suppliers often only list the "recommended retail price". Retailers can generally set the actual selling price of their products. The selling prices of the same products in different stores are also different.

Take sports shoes as an example. The same sports shoes are sold at three shoe stores in Tsuen Wan for $599, $639 and $719.

And another speculative sneaker that is highly sought after by the fashion industry is sold at different stores in Mong Kok for $2480, $2700 and $2999, with a price difference of more than $500.

Electrical appliances are also in a similar situation. Recently, the weather has begun to turn cold. Many people searched for products to protect against the cold. A heater was sold at three electrical stores for $1,130, $1,420 and $1,498.

Although the current situation has improved compared to before the regulations came into effect, the Commission reminds merchants to be vigilant. If a supplier retaliates or threatens to retaliate when its "recommended" resale price is not complied with, the price is not the real recommended price , But a kind of manipulation of resale price, and related practices may violate the regulations.

It should also be noted that, in some cases, the manipulation of resale prices may not necessarily harm competition.

For example, when a new product is launched on the market, the supplier requires retailers to sell the product at a uniform price within a short period of time to encourage retailers to promote the product. Since this approach may help the new product gain a foothold in the market, it is unlikely to be regarded as Harm competition.

The Commission will review the evidence from all parties to consider whether the relevant agreement can indeed improve overall economic efficiency.

(Information and photos provided by the customer)