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SOLICITORS AND NOTARIES
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 (852) 2868 1234

Competition Law

The Competition Ordinance (Cap. 619) (the “CO”) came into full force in Hong Kong on 14th December 2015. Business entities are advised to act now to ensure their full compliance with the CO.

The Competition Ordinance

In short, the CO prohibits three types of anti-competitive conduct:

1. the "First Conduct Rule" prohibits agreements and concerted practices that restrict competition;

2. the "Second Conduct Rule" prohibits abuse of substantial market power;

3. the “Merger Rule” prohibits mergers that substantially stifle competition in telecommunications 

    sector. Unlike other jurisdictions, there is no general merger control regime under the CO

The Commission and the Tribunal 

The CO will be enforced by the Competition Commission (the "Commission") and Competition Tribunal (the "Tribunal"). 

The Commission is the investigative body and regulator under the CO, while the Tribunal is a specialist court which has the primary jurisdiction to hear and adjudicate on competition cases.

The Tribunal will consist of Court of First Instance (CFI) Judges and has the same jurisdiction and powers as the CFI. Hearings will generally take place in open court. 

Enforcement focus

In relation to the First Conduct Rule, it is anticipated that the Commission’s enforcement actions shall focus on serious cartel activities among competitors (i.e. horizontal conduct), examples of which include: 

·   Market sharing (“瓜分市場”): allocating products / customers / territories among competitors

·   Price fixing (“合謀定價”): agreeing on customer prices, discounts and price ranges

·  Bid-rigging (“圍標”): circumventing bidding or tender processes by agreeing with competitors on bidding terms

·   Output restriction (“限制”): controlling production or sales output to drive up prices

·   Group Boycotts (“集體杯葛”): agreeing not to deal with a specific party

The above cartel activities are treated as serious anti-competitive conduct and the Commission can institute proceedings against the target undertakings without the need to issue any warning notice.  

Regarding the Second Conduct Rule, businesses with a substantial degree of market power are prohibited from abusing that power to harm competition. It is anticipated that the Commission shall target abusive behavior that have the object or effect of excluding competitors from the market, thereby limiting choices available to consumers. Examples of such abusive practices include predatory pricing, tying and bundling, exclusive dealing etc. 

Investigative Powers & Sanctions

The Commission has extensive powers to investigate suspected breaches of the CO, which include the power to require production of documents and information, to enter and search premises in “dawn raids”, and to compel individuals to attend interviews.

The Tribunal may impose a broad-range of sanctions on the party which contravenes the CO, including pecuniary penalties (of up to 10% of the Hong Kong total turnover of the party concerned for each year of infringement, for a maximum of 3 years), directors’ disqualification orders of up to 5 years, awards of damages in follow-on actions and other ancillary orders.

It should be noted that no criminal offences or sanctions are provided for under the CO.

Our team

Haldanes has been awarded the “Criminal Law Firm of the Year” in Hong Kong for its outstanding practice in criminal defence and regulatory matters. Investigations and enforcement actions under the CO will, of course, be one of our main practice areas going forward.  With our wealth of experience in dealing the regulatory authorities, we are able to assist clients in navigating through the CO together with its regulations, guidelines and practice directions.

Our work includes advising clients on dawn raids and enforcement actions, representing clients in Competition Tribunal proceedings, designing internal controls and compliance procedures, providing training to company staff on the CO and its regulatory regime as well as reviewing horizontal and vertical agreements to ensure that they are not considered anti-competitive.




 

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