Most Read Contributor in Hong Kong, September 2016
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
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
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
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
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
1 The previous draft of the Guidelines was published in
October 2014. Please refer to ourprevious legal updatefor further
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
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
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.
This article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
discussed herein. Please also read the JSM legal publications
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As mentioned in our previous alert in this series, the Hong Kong Competition Commission's investigative process begins with an Initial Assessment to screen suitable cases for further investigation or other action.
The investigative process begins by the Hong Kong Competition Commission (the "Commission") identifying a potential contravention of a competition rule.
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