2015 - The year of competition in Hong Kong
Yesterday the Hong Kong Competition Commission (Commission) published revised implementation guidelines (revised Guidelines) to the Competition Ordinance (Cap. 619) (CO). In revising the Guidelines the Commission considered 64 submissions from a range of organisations commenting on the previous draft of the Guidelines1.
The CO will have a profound impact on the way business is conducted in Hong Kong. As businesses review their commercial practices, the revised Guidelines will hopefully provide greater legal certainty and elucidate the extent to which businesses will have to restructure certain agreements and change established practices to comply with the CO.
While the Commission has not commenced operations, it has been monitoring the market and conducting targeted studies and research on certain matters, such as building management. The Commission is also welcoming parties to come forward with any concerns about potentially anticompetitive practices; any information it receives before the CO comes into force will be kept on record and may be used in future enforcement activity. In this legal update, we summarise the headline points in the revised Guidelines to inform you about what has changed and what has not changed from the previous draft Guidelines.
The Status of the Guidelines
The revised Guidelines set out the Commission's general approach to its interpretation of the CO, however, the Commission has made clear it will defer to the Competition Tribunal (Tribunal) and courts as the final arbiter of the meaning and application of the CO.
This means that whereas the Guidelines can as a matter of legitimate expectation serve as a reliable indication of the Commission's interpretation of the CO, the Tribunal is not bound by the Guidelines and may take a view inconsistent to that of the Commission.
At a Glance: What Has Changed and What Has Not?
The First Conduct Rule (FCR)
The Commission has indicated the revised Guidelines will be tabled before the Legislative Council for negative vetting, tentatively on 27 April 2015.
In the coming months, we expect the Commission will continue to publish further guidance on the implementation and enforcement of the CO, including:
- Policies and publications on how to comply with the CO, including sector-specific guidance;
- A Leniency Agreement Policy setting out the Commission's intended treatment of whistle-blowers;
- An Enforcement Policy setting out the Commission's enforcement priorities; and
- Procedures for dealing with disputes with respect to legal professional privilege claims, in the context of the Commission exercising its investigation powers, especially pursuant to a "dawn raid" under section 48 of the CO.
The Commission aims to complete its preparation work by mid-2015, with the CO to come into force at a date to be set by the Government.
The Commission welcomes comments on the revised Guidelines to be submitted by 20 April 2015. Should you wish to know more about the revised Guidelines or have concerns regarding which you wish to submit comments to the Commission or evaluate internally, please contact John Hickin, Hannah Ha or your usual contacts in the firm for assistance.
The full text of the revised Guidelines is available on the Commission's website at:http://www.compcomm. hk/en/draft_guidelines_2015.html.Footnotes
1 The previous draft of the Guidelines was published in October 2014. Please refer to our previous legal update for further detail.
2 Where the Commission determines conduct to be by "object" anti-competitive, it would be unnecessary to examine the effects of such conduct on the relevant market.
3 Note however that this approach does not apply to "object" infringements. 4 In practice, a business that wishes to avail itself of the efficiency exclusion should conduct a detailed self-assessment and create a report to capture its findings, as evidence to present to the Commission.
5 Pricing below AVC, as opposed to average total cost, is likely to be more anti-competitive as a business will be making a loss on each unit of output, hence the proposed by object treatment.
6 Note that exploitative conduct is expressly prohibited under the Telecommunications Ordinance, but the previous draft Guideline on the SCR was silent on this issue.
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