For
a time, Hong Kong had long remained one of the few advanced economies without a
general competition law. All this changed
on 14 December 2015 with the coming into force of the Competition Ordinance
(CO), Hong Kong’s new industry-wide competition law
The
CO draws heavily on other competition laws including those of the European
Union, United States and United Kingdom.
Businesses internationally whose activities and investments in or
affecting Hong King will need to keep abreast of the developments as the law
and enforcement practice are developing.
The
CO is based around three main “rules”: The First Conduct Rule, The Second
Conduct Rule and the Merger Rule, regulating, respectively, anti-competitive
agreements, abuse of substantial market power and mergers in the
telecommunications sector.
In
the new regime, while the Competition Commission will have the power to apply
the CO to all sectors of the economy, the Competition Commission and the
Communications Authority will have concurrent jurisdiction to apply the CO in
relation to the practices of undertakings in the telecommunications and
broadcasting sector. The powers of the
authorities to investigate and enforce the CO are broad and include the power
to require an undertaking to provide documents or information and conduct
unannounced inspections of premises (‘dawn raids’) under warrant.
The
First Conduct Rule identifies four categories of “serious anti-competitive
conduct”: price fixing; market sharing (allocation of customers, sales,
territories or markets); output limitation and bid rigging. The Competition Commission does not have the
power to determine whether a breach of the substantive provisions of the CO has
occurred. It may issue an infringement
notice where it suspects that an undertaking has breached the First Conduct
Rule involving serious anti-competitive conduct. In other cases it is required to issue a
warning notice affording the undertaking an opportunity to admit the breach and
enter into commitments to remedy its unlawful conduct. If the undertaking does not enter into the
commitments or the breach is continuing the Competition Commission may bring
proceedings before the Tribunal.
A
business or any person who is found by the Tribunal to be in violation of the
CO may face a range of penalties including a financial penalty of up to 10% of
annual turnover "obtained in Hong Kong" for each year of
infringement, up to a maximum of three years.
The
Competition Commission has already been active in developing its policies and
procedures and in competition advocacy.
It has launched a market study into oil pricing and completed a study of
the building management market. It has
also urged the Government to open up the electricity market.
It
seems that businesses are already taking note of the changes. For example, the Travel Industry Council pledged
to rescind its guidance on ticketing pricing.
The construction and petrol retailing sectors are also believed to be
targets for enforcement.
Businesses
that are familiar with UK, EU and other international competition laws are
well-placed to manage their competition law risk and to take account of the
opportunities presented by the new competition law regime in Hong Kong. In anticipation of the changes, many
businesses have been reviewing existing agreements and commercial practices for
compliance with the CO and developing competition compliance programmes.
Parties
who consider that they have been harmed by the anti-competitive practices of
their suppliers, customers or competitors might consider making a complaint to
the Competition Commission who may investigate the matter. Parties who consider
that their arrangements have efficiency benefits may want to apply to the
Competition Commission to determine the applicability of the exclusions or
exemptions set out in the CO to a particular agreement or type of agreement.
https://www.compcomm.hk/en/media/press/files/Competition_Ordinance_Comes_into_Full_Effect_Today_EN.pdf
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