Grocery Market Study
- The Consumer Council (the Council) studies the foodstuffs and household necessities retailing sector; with special reference to the Council’s report on supermarkets 1 published in 1994 and that concerning the state of competition between wet markets and supermarkets in 2003 2. The Council was also subsequently commissioned by the Government to investigate two complaint cases, related to the alleged anti-competitive practices in the grocery sector. 3
- In 2012, the Council noted several press reports on allegations made by businesses against restrictive practices on the part of supermarket chains in relation to the sale of groceries. The allegations concerned exclusionary practices, refusal to supply to competitors and inducement of resale price maintenance. The Council considered that it would be prudent to undertake a sector wide study to assess the current state of competition and to ascertain if there was prima facie evidence of restricting competition, for example: whether alleged abuse of market power was being carried out by undertakings with substantial market power 4.
- This study, commenced in 2012 therefore seeks to follow up the preceding studies, update relevant market information on the sector, and examine allegations of anticompetitive conduct, gleaned from industry interviews and market surveys. In summary, it is intended to:
- examine the state of competition in the Hong Kong foodstuffs and household necessities retailing sector taking into account geographic factors, product dimensions and service attributes;
- examine the possible existence of market power of relevant players in the various relevant markets in Hong Kong; and
- determine whether there is any prima facie evidence of anticompetitive practice as alleged through anonymous interviews with concerned parties in the sector.
1 Consumer Council Report, Report on the Supermarket Industry in Hong Kong, November 1994.
2 Consumer Council Report, Wet Markets versus Supermarkets: Competition in the Retailing Sector, August 2003.
3 Cases were mentioned in Competition Policy Advisory Group Report of 2006-2007 and 2011-2012.
4 According to the Second Conduct Rule of the Competition Bill, Clause 21(1) at the time, “An undertaking that has a substantial degree of market power in a market must not abuse that power by engaging in conduct that has as its object or effect the prevention, restriction or distortion of competition in Hong Kong.”