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Following is a question by the Hon Emily Lau and a written reply by the Secretary for the Environment, Transport and Works, Dr Sarah Liao, at the Legislative Council meeting today (July 9):

Question:

The acquisition of the holding company of the Citybus Limited by the major shareholder of the holding company of the New World First Bus Services Limited last month has caused public concern that the move is paving the way for monopolizing the franchised bus services on Hong Kong Island. In this connection, will the Executive Authorities inform this Council whether:

(a) they have assessed if the acquisition has violated the principle of fair competition as set out in the Government's Statement on Competition Policy promulgated in May 1998; if the assessment result is in the negative, of the justifications for that;

(b) they will reconsider introducing a comprehensive competition law, or at least, adopting a sector-specific approach, in order to introduce an approval process for mergers and acquisitions in the franchised public transport sector;

(c) they will conduct a study to examine the pros and cons of the acquisition in the light of public interests; if so, of the details of such a study; if not, the reasons for that; and

(d) they have the legal authority to set up mechanisms similar to those governing the broadcasting and telecommunications industries, for the purpose of curbing anti-competitive behaviour or abuse of dominant positions in the public transport sector; if so, of the details of such authority and mechanisms; if not, the reasons for that?

Reply:

Madam President,

The acquisition is a commercial transaction between the parties concerned. It only involves a change in the shareholder of the holding company of Citybus Limited (Citybus) and does not involve any assignment or disposition of Citybus's franchises. Citybus' services have remained unchanged and we have not received any proposal for revising these services.

The Competition Policy Advisory Group (COMPAG) chaired by the Financial Secretary has considered the change of shareholder of Citybus's holding company and the competition aspects in respect of bus services. COMPAG noted that in the absence of specific proposals affecting the franchised services, the Government is not in a position to assess the competition issues involved. The Government will continue to monitor development.

The Government has carefully reviewed the pros and cons for the enactment of a comprehensive competition law for Hong Kong. The conclusion is that a non-interventionist policy, supported by sector-specific measures as necessary, rather than an all embracing competition law best suits the needs and circumstances of Hong Kong.

On public bus services, sector-specific regulatory arrangements are in place for the approval of any takeover or merger proposal for franchised bus services. Section 7 of the Public Bus Services Ordinance (PBSO) stipulates that "a grantee shall not assign or otherwise dispose of its franchise, or any part thereof, without the approval of the Chief Executive in Council".

Up till now, the Administration has not received any proposals relating to joint venture between Citybus and New World First Bus Services Limited. If any such proposals are received, we will evaluate the impact on competition and assess the impact on the staff of the companies. We will also need to be satisfied that proper and efficient bus services will be maintained, and the proposed change would benefit the passengers as well as Hong Kong as a whole.

Bus franchises are granted by the Chief Executive in Council in accordance with the PBSO. There are provisions in PBSO and bus franchises to ensure that franchised bus operation shall provide proper and efficient bus services at all times during the franchised period. Any changes to the level or routeing of bus services or bus fare levels would require approval by the relevant authority under the PBSO. In addition, rights to operate franchised bus routes are granted on a non-exclusive basis. Competitors can be introduced in case of need. Transport Department is closely monitoring the bus services operated by the companies concerned and will take actions as appropriate to ensure the provision of a proper and efficient service to the general travelling public.

End/Wednesday, July 9, 2003

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