Report on the work of the Competition Commission
Law enforcement
Mr CHAN Chun-ying noted that a dedicated funding of some $200 million had been reserved by the Government to support the Commission’s litigation work since 2018-2019. He enquired how long the funding could sustain the operation of the Commission having regard to the anticipated increase in the number of litigation cases.
Mr Rasul BUTT of the Commission appreciated the Government’s financial support for the Commission’s litigation work. While it was expected that the funding was enough to support the Commission for several years, it was hard to predict the exact timeframe which largely depended on the number of cases processed each year, complexity of cases, as well as outcomes of lawsuits.
Competition concerns involving other sectors
Referring to the application for decision from the banking sector concerning the Code of Banking Practice (“the Code”), Mr CHAN Chun-ying welcomed the Commission’s decision that although the Code was not excluded from the First Conduct Rule by the legal requirements exclusion in the Ordinance, the Commission had no intention to pursue further investigative or enforcement action in respect of the present version of the Code as it recognized that the Code was intended to promote good banking practices that might benefit service users in particular ways. He sought further information about similar applications made from other sectors and asked about the number of complaints and enquiries involving the financial sector that the Commission had received.
Mr Brent SNYDER of the Commission said that apart from the application from the banking sector, the Commission also received an application for a Block Exemption Order from the Hong Kong Liner Shipping Association in 2016 and issued the decision in 2017. In addition, the Commission received in January 2019 an application for decision from the Hong Kong Association of the Pharmaceutical Industry and expected to release the decision later on in 2019. Mr SNYDER added that he could not disclose details of cases involving the financial sector due to confidentiality considerations.
Update on the development of the three-runway system at the Hong Kong International Airport
Fill materials for reclamation works of 3RS
Mr CHAN Chun-ying noted that in order to increase the supply of fill materials, the main reclamation contractor of the 3RS project was procuring sand fill from the Philippines and Malaysia, and that the construction and demolition materials generated from the reconfiguration works of Terminal 2 would be reused as far as practicable. He asked about the details of the above two measures, including the proportion of fill supply from non-Mainland sources, the 3RS works where construction and demolition materials could be reused, and the related cost implication.
Mr Kevin POOLE of AAHK advised that the main reclamation contractor was responsible for the supply, delivery and placing of all fill materials in accordance with the contractual requirements. The prices associated with any single source did not reflect the overall cost of the materials as it had always been the intention of the main reclamation contractor to acquire fill materials from multiple sources. Apart from manufactured sand from Guangdong and Fujian provinces, AAHK was committed to maximizing the use of public fill in the 3RS reclamation works. The main reclamation contractor was also pursuing fill materials from other overseas and Mainland sources. It was anticipated that marine sand supply from Guangxi would commence by mid-2019. AAHK would continue to work with the main reclamation contractor to secure the supply of fill materials. Notwithstanding the delay in the schedule of reclamation filling, AAHK would catch up the work progress by re-phasing/re-prioritizing the reclamation works to match with the site handover schedule for the runway construction. AAHK was confident to commission the new third runway by 2022 and the entire 3RS by 2024 and within the budget of $141.5 billion (at MOD prices), with the cost of the additional Deep Cement Mixing (“DCM”) works having been taken into account.
Financial arrangements of 3RS
Mr CHAN Chun-ying noted that AAHK was planning to issue a 3-year HKD5 billion retail bond to retail investors in 2019-2020, and sought information on the annual interest rate AAHK planned to set for the retail bond as well as the arrangement for the use of standby revolving facility.
Mr William LO of AAHK advised that generally speaking, retail investors would be more vulnerable to investment risks than institutional investors. Therefore, the interest rate of retail bond would usually be set at a higher level than institutional bond. Setting of interest rate for the retail bond would need further discussion with the joint lead managers and also take into account interest rate trend and other market conditions, and that it was too early to have any decision at this stage. He further advised that AAHK currently had a standby revolving facility of HKD5 billion, and that it was planned to be expanded to HKD10 billion when needs arose.