Speeches and Presentations



LCQ15: Combating pricing frauds

Following is a written reply by the Secretary for Commerce and Economic Development, Mrs Rita Lau, to a question by the Hon Frederick Fung in the Legislative Council today (March 16):

Question :

It has been reported that the National Development and Reform Commission (NDRC) has recently announced that a number of mainland outlets of large supermarket chains (supermarkets), such as Carrefour and Wal-Mart, were found to have engaged in pricing frauds, including fabricating the original prices, luring customers with low prices but charging them higher prices at the checkout counters, failing to honour the claims on prices, and displaying misleading price labels (e.g. substantially raising the original prices of products before offering discounts so as to create a false impression of great price reductions), etc. It has also been reported that NDRC has ordered these supermarkets to make rectifications, confiscated their unlawful gains, and imposed fines which amounted to five times of their unlawful gains. In Hong Kong, the Consumer Council also released survey results in 2009, revealing that supermarkets in Hong Kong had engaged in similar pricing frauds, including the display of misleading price labels mentioned above. In some cases, the discounted prices of some items were even higher than the original prices. In this connection, will the Government inform this Council:

(a) of the number of complaints about supermarkets engaging in pricing frauds received by the authorities in each of the past two years, and the authorities' follow-up actions; whether the authorities have conducted any investigation; if they have, whether they have found any pricing frauds similar to those of the supermarkets on the Mainland; of the legislation and measures currently in place in Hong Kong to curb such pricing frauds of supermarkets; and

(b) whether the authorities have studied how the mainland authorities combat pricing frauds of supermarkets; whether the authorities will follow the practices of the Mainland or overseas countries in vigorously curbing pricing frauds of supermarkets (e.g. making reference to the consumer protection laws in Australia and the United Kingdom which require the selling prices of discounted items to be lower than the prices throughout a continued long period of time in the past); if not, of the reasons for that?

Reply :

President,

(a) In the past two years, the Consumer Council received two complaints about allegedly fraudulent pricing practices adopted by supermarkets. After the collection of information and analysis by the Council, there was no evidence to confirm that fraud was involved.

At present, the Trade Descriptions Ordinance (Cap. 362) (the Ordinance) prohibits anyone from applying false trade descriptions to goods in the course of any trade or business. The current definition of "trade descriptions" under section 2 of the Ordinance does not cover descriptions of price advantages. The latter therefore are not subject to the regulatory control of the Ordinance.

The Government consulted the public on legislation to enhance protection for consumers against unfair trade practices last year. One of the legislative proposals is to broaden the definition of trade descriptions of goods to cover any indication with respect to goods, including "the price, the manner in which the price is calculated, and the existence of any price advantage". We are now working on the drafting of legislative amendments, and we aim to introduce them into this Council in the current legislative session for scrutiny and passage.

(b) As regards the prohibition and regulation of fraudulent pricing practices in the Mainland, we understand that Article 14(4) of the Price Law of the People's Republic of China prohibits business operators from luring consumers or other operators to enter into transactions with them by means of false or misleading pricing practices. The then State Development Planning Committee implemented the Price Tagging Rules of Commodities and Services and the Rules on Prohibition against Price Fraud Conducts in October 2000 and January 2002 respectively to provide for general guidelines on price indications. Besides, the consumer protection legislation of Australia and the United Kingdom also regulate price indications. We will draw reference from the experience of and statutory measures adopted in the Mainland and other countries in the drafting of the above legislative amendments.

Wednesday, March 16, 2011