Anti‑competitive behaviours & competition policy: Practice Questions

Under competition policy, which of the following is an example of a horizontal agreement among competitors?

In an effort to avoid price wars, two major car repair shops in a district agree to allocate customers based on their vehicle brands. Shop X will handle all European brands, while Shop Y will handle all Japanese brands. This practice is an example of ____________, and it most likely leads to a ____________.

Suppose a group of independent pharmacies agrees to a production quota, limiting the number of masks each pharmacy can sell during a health crisis to maintain high prices. Which of the following statements regarding this agreement is correct?

In Hong Kong, three major supermarket chains have been accused of secretly agreeing to set the same price for a specific brand of milk to eliminate price competition between them. Which of the following anti-competitive practices does this behavior most likely represent under the Competition Ordinance?

The Competition Commission in Hong Kong investigates a case where a dominant broadband service provider offers heavily discounted internet packages only to customers who also subscribe to their pay-TV service. This practice is most likely to be addressed under which aspect of the Competition Ordinance?

Identify the anti-competitive practice under a vertical agreement where a manufacturer requires a retailer to sell its products at a specific minimum price.

Explain one direct negative impact on consumers if competing firms secretly agree to impose sales or production quotas.

Consider a scenario where the only two ferry operators between two islands secretly agree on their respective sailing schedules and ticket prices. Beyond higher prices, explain one long-term negative impact on the quality of service for passengers.

A renowned luxury watch brand, "Timeless Elegance," enforces a strict policy that all its authorized retailers must sell its watches at a minimum price set by the brand. Retailers who offer discounts below this minimum price risk losing their authorization to sell "Timeless Elegance" watches.

(a) Identify and explain this specific anti-competitive practice.

(b) Discuss how this practice could negatively affect consumers.

(c) Suggest one argument a firm like "Timeless Elegance" might use to justify this practice.

Company X is the sole provider of a critical software component for smartphones in Hong Kong, holding a near-monopoly position in its market. It recently announced that it would only license its software to smartphone manufacturers who also agree to exclusively use Company X's newly launched, less popular, battery units in their devices.

(a) Identify the specific anti-competitive practice Company X is engaging in and briefly explain its nature.

(b) With reference to the Hong Kong Competition Ordinance, explain how this action could be considered an "abuse of market power" under the Second Conduct Rule.

(c) Discuss two potential negative impacts of this practice on consumers in Hong Kong.