After several years of preparation, the Hong Kong government
published the Competition Bill (Bill) on 2 July
2010. The Bill aims to introduce a cross-sector competition law
regime in Hong Kong for the first time.
Importantly, and in line with international practice, the Bill
proposes competition law with extraterritorial application. Even
where anticompetitive conduct is carried out outside of Hong Kong,
an undertaking would still be caught if the conduct has the object
or effect of preventing, restricting or distorting competition in
Businesses should take steps now to assess the possible impact
of the Bill on their activities, and to map out the changes that
they will need to make to their practices if the Bill is
Summary of the Bill
In line with global competition laws, the Bill proposes to
prohibit abuses of substantial market power and the making of
anti-competitive agreements. Whilst the Bill does not include a
general merger control regime, it does establish a new Competition
Commission (Commission), which will have
substantial powers to enforce the laws that have "made the
cut". Similar to other competition regulators such as the
Australian Competition and Consumer Commission, the Commission will
have search and seizure powers and the ability to instigate
The penalty regime set out in the Bill is significant and
includes: fines of up to ten percent of a company's turnover
for each year in which the contravention occurred; awards of
damages to those who suffered loss as a result of anticompetitive
conduct; disqualification orders preventing individuals from
holding directorships; and criminal sanctions for obstructing the
Commission's investigations. Individuals who breach the laws,
or who have assisted or been involved in the anti-competitive
conduct, may also incur pecuniary sanctions.
The evolution of the Bill
The publication of the Bill comes after several years of policy
debate, culminating in a recommendation from the Competition Policy
Review Committee in 2006 to establish cross-sector competition
legislation. Following this, there were two rounds of public
consultation. The Bill reflects many of the Government's
earlier proposals, in particular those relating to the enforcement
model, the level of fines, and the treatment of public sector
Timing for implementation
If the Bill is enacted, it is understood that the Government
intends to use a phased-in approach in regard to implementation;
the institutional provisions would come into force first to allow
the authorities to be set up and to commence work on the
enforcement Guidelines. The substantive provisions would come into
force at a later date and probably not before 2012, by which time
Guidelines should have been finalised. The Guidelines will be
important, as the Bill is drafted in fairly broad terms and is
reliant on the Guidelines to fill in key gaps.
We will let you know of any significant developments.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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