Study of the Auto-Fuel Retail Market

By Ann Whitfield and Greg Houston et al.

In August 2005, the government of Hong Kong commissioned NERA to assess the competitive environment in the auto-fuel market in Hong Kong to determine the potential for anticompetitive conduct. The NERA team worked in conjunction with Sydney-based law firm Gilbert + Tobin and its Hong Kong affiliate, Arculli & Associates. The first of its kind in Hong Kong, the resulting report examines whether there is evidence that the oil companies might have engaged in anti-competitive practices; considers how retail competition might be enhanced to facilitate lower retail auto-fuel prices; and makes recommendations on whether measures, including legislation, might be required to enhance competition.

The team concludes that there is no clear evidence of collusion by the oil companies, but recommends that the Government consider preventive measures against cartel behavior, either through general or sector-specific competition laws. The team also recommends a number of approaches to enhancing competition in the market, including improving the transparency of the auction process for public filling station sites.