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4. Results: Answers
FinTech
7.
Competition
7.1
Does the fintech sector present any specific challenges or concerns from a competition perspective? Are there any pro-competition measures that are targeted specifically at fintech companies?
Hong Kong

Answer ... The Competition Ordinance (Cap 619) was enacted in June 2012 and came fully into force on 14 December 2015. The regime is thus still relatively new.

Given the rapid rise of fintech in recent years – which has both become embedded in existing industries and introduced wholly new markets into our daily lives – both regulators and private citizens have spotted many potential issues from a competition perspective. For example, one common issue that start-up enterprises will encounter is how to compete with long-established incumbents (eg, virtual banks versus traditional banks).

In this regard, depending on how entrenched incumbent players are in the relevant sector, such incumbents may be tempted to use various pricing strategies to prevent start-ups from encroaching on their markets (while on its own this might be a genuine commercial action, from a bigger-picture perspective it may result in competition law concerns).

For example, a key feature of virtual banks in Hong Kong is that there is no minimum deposit requirement. Traditionally, in Hong Kong, a minimum deposit requirement applies; should a customer fall below this minimum, he or she may face penalties. Now that virtual this traditional minimum deposit requirement. The question is therefore whether this action might attract liability from a competition standpoint.

Another key risk area for fintech is information sharing. Many fintech enterprises (especially those within the distributed ledger technology space) share information (eg, through open source technology). However, this practice is rife with risks from a competition law perspective, as data may be shared with what might be potentially construed as competitors. In such cases, the parties must ensure that such actions cannot be construed as an exchange of competitively sensitive information.

As yet, there is no statute that specifically targets fintech companies. As such, the same competition laws apply across the board: the same Competition Ordinance that applies to ordinary businesses will apply to fintech companies.

For more information about this answer please contact: Dominic Wai from ONC Lawyers
Contributors
Topic
FinTech