The Consumer Council has achieved a major breakthrough in opening up the lift maintenance market to the free play of competition.
This came after years of indepth study and intensive discussions with the Government and market participants in a joint effort to find a solution to a long-standing issue. In particular, the Council's initiatives are strongly supported by the Electrical and Mechanical Services Department.
Major lift suppliers have now undertaken the commitment to allow access to technical information that is necessary to safely and efficiently provide a competitive lift maintenance service.
Specifically, the lift suppliers will make available Operation and Maintenance manuals through property management companies and owners' associations, to independent contractors of lift maintenance.
Further, the Consumer Council has secured the assurance of major lift suppliers to provide and sell spare parts for lift and escalator maintenance purpose.
Property developers are also urged to take proactive action, in the bargaining stage of contracting for supply of lifts, to ensure reduced ongoing costs of lift maintenance by the building's eventual owners.
These immediate measures combined will have far-reaching implications to owners and tenants of the estimated 50,000 lifts in both residential and commercial properties in Hong Kong where multi-storey buildings abound.
A conservative estimate has put the total annual market turnover for lift maintenance at $3.6 billion, or $6,000 per lift per month.
At a press conference today (December 11), the Consumer Council unveiled the findings of a report compiled in response to public concerns over the lack of choice in obtaining lift maintenance services and allegations of anti-competitive conduct.
The report highlights the progress made on a number of issues as well as future work that still needs to be done.
In the report, the Council stressed that a major issue in maintaining a competitive maintenance market is whether competent parties other than the original lift suppliers can have access to technical information, which is essential to ensure adequate supply of high quality and affordable lift maintenance services.
Otherwise, in the absence of a viable independent maintenance provider sector, tenants' demand for lift maintenance services will be captive to the services provided by the original lift supplier.
The agreement of the industry to make accessible technical information and spare parts represents a significant breakthrough in increasing competition in the provision of lift maintenance services.
Property developers have also an important role to play. They can secure from lift suppliers a longer warranty period than currently provided, and the provision from lift suppliers of technical drawings and diagrams as well as spare parts to the building owners for the purpose of ongoing maintenance work after the expiration of the warranty period.
The Council believes that "as building owners become more conscious of the burden on management fees attributed to lift maintenance, this factor could be a selling point for prospective unit purchasers."
It is an obligation of building owners to make provision for the financial burden of long-term maintenance of their lifts. They are urged to make full use of EMSD's information service and the Home Affairs Department's district building management liaison teams, for assistance to choose and negotiate competitive maintenance agreements.
The Council has put forward suggestions for further deliberation by the concerned parties, recognizing that gauging public feedback and industry response on the viability of these proposals takes time. They are as follows:
In view of the Government's preference for self-regulation and administrative measures to address competition issues, the Council considers a joint code of practice is needed for the lift industry to address disputes over supply of spare parts and technical information.
Such a code should introduce competition safeguards such as the ability for a competitor to seek arbitration where it claims it is being unreasonably denied access to inputs necessary to compete in the repair and maintenance market.
The code should also include a general exhortation on pricing conduct, for instance, not to take advantage of any position of market power by levying unreasonable charges, and to submit its charges to independent cost assessment in the event of a complaint.
In addition, depending how effective the current agreed positions on the development of O&M manuals for use of maintenance contractors will provide positive results for competition in the industry, a data bank of technical information might need to be maintained by the Government.
Though doubts have been raised on its feasibility, it should remain an ongoing option for long-term consideration. Such a data bank is not dissimilar in principle to the current requirement whereby electrical circuits, water supply and gas pipe layouts need to be filed with the relevant authorities for control purposes.
The press conference is chaired by Prof. TSANG Shi-ki, Chairman of Competition Policy Committee. Full text of the Executive Summary of the report in English and Chinese, will be made available on the Consumer Council website ( http://www.consumer.org.hk ).
The full text of the report can be purchased from the Consumer Council at HK$80 per copy. Enquiry telephone number: 2856 3123