When China Resources Enterprise confirmed its bid for business mogul Li-Ka-Shing’s supermarket chain Park’N’Shop earlier this week, it was poised to add another forty percent of the Hong Kong grocery market share to an existing five. If their bid is sustained and there are no legal ramifications, the territory is effectively cornered by the two supermarket giants of Hong Kong- Park’N’Shop (or whatever the operating name in the future) and rival store Wellcome.
When combined, that’s a projected eighty percent of the market share shared amongst two companies. A whopping eighty. Did someone mention competition laws?
The complete absence of any scrutiny or political acknowledgement is especially troubling in this dubious company, considering previous allegations of price-fixing between the two. (http://www.scmp.com/article/998034/fix-supermarket-shelves-study-suggests)
Price-fixing agreements- which is often derived from this alleged pseudo-competition happening in Hong Kong- is freakishly toxic for a free market. It is unapologetically unethical for the consumer, eventually driving prices up, and the survivability of other establishments down.
A consumer in Hong Kong’s free market should expect prices set by the forces of competition in combination with the natural ebb and flow of the economy. This may prove to become extremely difficult when consumers are faced with limited choice.
Then there are the external trading companies and shareholders affected by the lack of competition. Employees might have their opinions on working hours and compensation sequestered, and produce suppliers potentially face less-than-favorable trading partners in Hong Kong.
Indeed, there are provisions in Hong Kong law preventing market dominance, but they don’t happen to apply to mergers and acquisitions. That sounds to me a bit like a supermarket that is not legally allowed to sell any consumables- utter idiocy.