Hong Kong: What You Need To Know About Hong Kong Competition Law (Part 6) - Practical Compliance With The Competition Ordinance

The implementation of the new Competition Ordinance (Chapter 619 of the Laws of Hong Kong) (the Competition Ordinance) on 14 December 2015 will mark the first time that Hong Kong has a general and cross-sector competition law.


The Competition Ordinance was enacted on 14 June 2012 as a general and cross-sector competition law to curb anti-competitive conduct, and will come into full effect on 14 December 2015. In this issue, we will provide some practical tips to assist you with ensuring compliance with the Competition Ordinance.

Risk Identification

Companies must first conduct a thorough review of its existing operations, business practices, business arrangements and contracts to identify aspects of the Competition Ordinance that are of particular relevance. Such a review will assist with the determination of an appropriate compliance strategy and the priority of compliance measures to be undertaken.

As a starting point, companies should be wary of and avoid "high risk" conduct as set out below:

High Risk Conduct
Price Fixing
  • Agreements or concerted practices with competitors with the aim of fixing, maintaining, increasing or otherwise controlling prices.
  • For example, direct agreements on matters of price or any element of price (e.g. discount, rebate or concession), or agreements between undertakings who are competitors not to quote a price without consulting each other.
Market Sharing
  • Agreements or concerted practices with competitors that seek to allocate sales territories, customers or markets for the production or supply of particular products.
  • For example, even a mere understanding that parties will not supply a competitor's existing customers, and/or will encourage such customers to stay with their existing supplier if the customer seeks to switch suppliers can be considered as market sharing.
Output Limitation
  • Agreements or concerted practices with competitors which fix, maintain, control, prevent, limit or eliminate the production or supply of products.
  • For example, production or sales quota arrangements limiting the volume or type of products available in the market.
Bid Rigging
  • Agreements or concerted practices with competitors not to compete for particular projects.
  • For example, any agreement not to submit or to withdraw previously submitted bids (bid suppression), or any agreement to take turns at being the winning bidder (bid rotation).
Joint Buying
  • A joint buying arrangement may be considered by the Competition Commission as having the object of harming competition if it is a disguised buyers' cartel.
  • An example of a buyers' cartel would be where buyers collude in secret on the prices they will pay for purchases made individually.
Information Exchange with Competitors
  • Concerns may rise arise where competitors exchange information and in particular, competitively sensitive information.
  • Generally, information relating to price and quantities (e.g. information concerning sales, market shares, sales to particular customer groups or territories) is most competitively sensitive.
Group Boycotts
  • An agreement or concerted practice amongst competitors not to do business with targeted individuals or undertakings may be considered an anti-competitive group boycott.
Resale Price Maintenance Risk
  • Vertical agreements where suppliers control or attempt to control the price at which buyers may resell goods will be considered as having the object of harming competition if there is evidence that such arrangements were implemented by a supplier:
    1. in response to pressure from a distributor seeking to limit competition with other distributors at the same level; or
    2. to foreclose competing suppliers.

If a company has a substantial degree of market power, it should also be wary of and avoid further "high risk" conduct as follows:

High Risk Conduct
Predatory Pricing
  • Imposing prices below cost with an aim to eliminate a competitor from the market, or to make it difficult for new competitors to enter the market.
  • For example, pricing below average variable cost, pricing below long run average incremental cost, pricing below average avoidable cost or pricing below average total cost.
Tying & Bundling
  • Making the purchase of a product in respect of which it has substantial market power (the tying product) conditional on the purchase of other products (tied products).
Margin Squeeze
  • Reducing or "squeezing" the margin between (i) the price it charges for the input to its competitors on the downstream market and (ii) the price its downstream operations charge to their own customers, such that the downstream competitor is unable to compete effectively.
Refusal to Deal
  • Refusing to supply an input to another undertaking, or supplying that input only on objectively unreasonable terms thereby preventing that undertaking from operating or competing effectively in the market.
  • For example, unduly delaying or degrading supply of, or imposing excessive prices for certain input.
Exclusive Dealing Arrangements
  • Arrangements requiring a customer to purchase, directly or indirectly, all or a substantial proportion of its requirements of a particular product from a particular undertaking.
  • For example, the imposition of exclusive purchasing obligations, or provision of conditional or loyalty rebates.

For companies that are holders of carrier licenses under the Telecommunications Ordinance (Chapter 106 of the Laws of Hong Kong), they should be alert whenever they are in a "dominant position"1 and/or considering a merger transaction.

Risk Mitigation

Given the difference in nature and size of each business, companies will need to consider the actual impact of the Competition Ordinance on its practices and formulate a compliance strategy suitable to the size and risk profile of its business.

For reference purposes, we set out below a list of non-exhaustive measures that companies can adopt in order to mitigate and manage potential or identified risks:

Measures Actions

Cease or modify business practices
  • Existing business practices that are likely in breach of the Competition Ordinance should be ceased or modified.
  • Keep records of how identified risks have been dealt with.
Provide training
  • Organise training seminars or workshops to educate officers and employees about business practices or conduct that may constitute unlawful anti-competitive activity.
  • Targeted training may be necessary for "higher risk" staff (e.g. front line sales staff. staff that often participate in events where competitors will be present, senior management involved in making pricing decisions etc.).
Prepare a compliance manual
  • Prepare a compliance manual to remind employees of the key restrictions and requirements under the Competition Ordinance, the company's compliance policy and key do's and don'ts that are particularly relevant to the company's business.
  • Consider issuing specific guidelines on matters such as dealing with competitors and trade associations, resellers and customers, handling competition investigations etc.
Appoint a compliance officer
  • Designate a member of staff as a compliance officer responsible for overseeing the implementation of the company's compliance strategy.
  • In the event that a member of staff has queries about the company's compliance policy and compliance manual, the compliance officer may serve as the first point of contact.
Seek legal advice
  • For issues that are unclear or complex, consider seeking legal advice.

Regular Reviews

Competition compliance is an on-going process. Companies should regularly review its policies and practices (which, in light of changing market conditions or new legal developments, may change from time to time) and where necessary, update and refine its compliance measures to ensure continuing compliance with the Competition Ordinance.


This imminent implementation of the Competition Ordinance marks a significant step in the evolution of Hong Kong's fledgling antitrust regime. Multinational enterprises doing business in Hong Kong can no longer afford to dismiss the Special Administrative Region as a jurisdiction that has no competition regime or antitrust enforcement.

Understanding and complying with competition law principles is therefore more important than ever.


1. See What you need to know about Hong Kong Competition Law (Part 4: The Merger Rule and the Telco Rule)
( http://www.cadwalader.com/uploads/cfmemos/8ec74d645416f99dbb6e47327182e95c.pdf)

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions