Historically, Hong Kong has lacked a legal framework for
regulating mergers or otherwise deterring conduct that is harmful
to competition. The country's traditional laissez‑faire
landscape was substantially altered in June 2012, when Hong
Kong's Legislative Council passed a sweeping new Competition
Ordinance ("Ordinance") to prohibit
anti‑competitive conduct and business combinations. The
Ordinance also called for the establishment of a Competition
Commission ("Commission") and Competition Tribunal. The
Ordinance is slated to take effect in 2015.
The Ordinance contains three main substantive prohibitions. One,
it precludes agreements or concerted activity that has the purpose
or effect of preventing, restricting, or distorting competition in
Hong Kong. Two, it bars those with a substantial degree of market
power from abusing that power by engaging in conduct with the
purpose or effect of preventing, restricting, or distorting
competition in Hong Kong, such as by engaging in predatory behavior
towards competitors or limiting production, markets, or technical
development to consumers' detriment. (The Hong Kong Competition
Ordinance is available here.) Three, it prohibits mergers that
substantially lessen competition in Hong Kong, but it limits such
regulation to mergers of telecommunications entities. Potential
remedies for wrongdoing will include warning notices for less
serious conduct and fines for more egregious violations.
The Commission has been tasked with promulgating guidelines on
the scope of the Ordinance's substantive provisions and
procedural issues relating to their enforcement. Those guidelines
are expected to be finalized in the coming year. Moreover, the
Commission will play a crucial ongoing rule in policing
anti‑competitive conduct, such as by investigating potential
violations. In July 2014, it appointed its first chief executive,
Stanley Wong, who will steer the fledgling Commission, develop its
enforcement agenda, and oversee implementation of the Ordinance.
Wong's considerable international antitrust experience –
for example, he has worked both with Ireland's Competition
Authority and the European Commission– demonstrates that Hong
Kong takes seriously its entrance into the world of antitrust
The Ordinance has been criticized for not going far enough. For
example, its merger rule implicates only the country's
telecommunications sector, while leaving business combinations in
other industries untouched. Despite any perceived limitations,
however, the Ordinance reflects Hong Kong's emerging view of
anti-competitive conduct as a threat to economic well‑being
and growth in a globalized marketplace. Those with business
activities in or affecting Hong Kong would be wise to monitor the
Ordinance's impact and the Commission's continued
development into 2015 and beyond.
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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