After 15 years of deliberation, Hong Kong's Competition Bill (the "Bill") was unveiled on 2 July 2010 and is tabled to go before Hong Kong's Legislative Council on 14 July 2010. The new system will use a judicial enforcement model, with an independent Competition Commission ("Commission") investigating possible breaches and a Competition Tribunal ("Tribunal") adjudicating on these cases. The new regime is aimed primarily at anti-competitive behaviour and does not introduce a new merger regime, although the existing merger regime for the telecoms industry will remain in place.
The Bill introduces:
- a prohibition on undertakings from engaging in agreements, concerted practices or decisions with the object or effect of restricting competition in Hong Kong; and
- a prohibition on the abuse of a 'substantial degree of market power' which restricts competition in Hong Kong.
The Commission will have broad powers to:
- initiate investigations (either on its own, on receipt of complaints or on referral from the Hong Kong Government);
- require the production of documents, call persons for interview and enter and search premises with a warrant (non-compliance will carry criminal sanctions);
- issue infringement notices (as an alternative to bringing proceedings before the Tribunal) whereby undertakings believed to be in breach of the rules may settle, potentially on payment of up to HK$10 million (approx. €1.01 million) to the government;
- accept commitments to require a company to take or refrain from taking certain actions; and
- enter into leniency agreements with persons or companies that have breached the competition rules, but wish to mitigate the penalties they may receive.
The Tribunal will have powers to issue a wide range of remedies, including penalties of up to 10% of the turnover of the undertaking in breach, interim injunctions and the disqualification of directors.
There are a number of exclusions and exemptions, for example, agreements or conduct by statutory bodies are to be exempted (even if they engage in economic activity). The Bill also provides for the Commission to issue Block Exemptions or to exempt an agreement if it enhances overall economic efficiencies.
The Bill also provides for private actions to be brought by those who have suffered loss as a result of anti-competitive practices - both follow-on and stand-alone actions are envisaged.
Importantly, the new Commission is to draft detailed guidelines which will clarify the scope and application of the new law and provide much needed practical guidance for companies doing business in the region. It is clear however that, when the new law comes into force (which may not be until sometime in 2012), the new regime will have implications for companies that have operations affecting Hong Kong, even if they have no physical presence in the jurisdiction
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