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The Council also reiterates its concern over the apparent profit level of LPG

  • 1999.04.23

The following is issued by the Consumer Council in response to media enquiries today (April 23) on the issue of petroleum product pricing.

The observations made by the Economic Services Bureau (ESB) are one important step forward towards greater transparency of petroleum product pricing.

The Consumer Council generally shares ESB's observations in the report. It was, however, not provided with detailed confidential information on costing and pricing.

The Council also reiterates its concern over the apparent profit level of LPG and believes that the industry should pass on the benefit, for not adjusting until January this year, the retail price, despite falling import costs last year, to the consumers.

The Council is currently undertaking a study on the petroleum industry that will analyze the different functional levels in the industry, that contribute to the costs of unleaded gasoline, diesel and LPG.

The study is being conducted in order to understand the competitive dimension in supply and demand for those products and to consider how competition might be improved.

The Council has always maintained that the most efficient mechanism for determining reasonable prices is through vigorous competition, at every level in the chain of supply from the product source to its end use.

The Council notes that the analysis conducted by ESB is in effect almost similar to the function expected from a general competition authority that has powers of investigation enabling it to obtain information from parties in circumstances where allegations of anti-competitive conduct arise.

But a more proactive approach is to introduce a general competition law and competition authority which will provide, amongst other matters, the power to obtain industry wide information up to the level of detail it determines, and a prohibition against price fixing agreements or similar restrictive trade practice, instead of currently relying on voluntary co-operation.

This is a course of action the Council has been urging Government to take since the release of its November 1996 report 'Competition Policy: The Key to Hong Kong's Future Economic Success'.