Antitrust – Hong Kong jurisdictional summary
It has been said that Hong Kong is the truest form of free market economy in the world. The antitrust regime in Hong Kong is designed to promote competition and prohibit ant-competitive practices by making certain business practices which undermine competition illegal.
What is the governing legislation?
The primary source of competition law is the Competition Ordinance (Cap 619) (the “Ordinance”) and its related subsidiary legislation.
Which is the enforcement agency?
The Competition Commission is the principle enforcement agency responsible for enforcing the Ordinance through enforcement proceedings brought before the Competition Tribunal. Decisions made by the Tribunal and other courts are also important sources of law for the competition regime in Hong Kong.
What type of anti-competitive conduct is prohibited?
The First Conduct Rule, as set out in section 6(1) of the Ordinance, seeks to prohibit arrangements between market participants (whether they are competitors or not) which prevent, restrict or distort competition in Hong Kong. Examples of conduct which may contravene the First Conduct Rule include:-
- Exchange of Information
- Activities of trade associations and industry bodies
- Joint Ventures
- Vertical price restrictions
- Exclusive distribution and exclusive customer allocation
The Second Conduct Rule, as set out in section 21 of the Ordinance, restricts business with a substantial degree of market power from abusing that power to harm competition. Examples of conduct which contravene the Second Conduct Rule include:-
- Predatory pricing
- Anti-competitive tying and bundling
- Margin squeeze
- Refusals to deal
- Exclusive dealing
The Merger Rule prohibits mergers that have or are likely to have the effect of substantially lessening competition in Hong Kong. The scope of the application of the Merger Rule is currently limited to mergers relating to undertaking directly or indirectly holding carrier licenses issued under the Telecommunications Ordinance (Cap. 106).
What are the sanctions?
A business found to have infringed the rules can be fined up to 10% of its Hong Kong turnover.
In addition, the Tribunal has the power to disqualify directors and impose penalties on individuals, award damages to aggrieved parties and injunctions. The full list of orders that may be made by the Tribunal in relation to contraventions of the rules is set out a Schedule 3 to the Ordinance.
To find out more about the Hong Kong Competition Ordinance and its application to your business, please contact our team.