The Competition Ordinance (the "Ordinance") provides for a limited regime of exclusions and exemptions. Agreements or conducts falling within the scope of an exclusion or exemption will not contravene the First Conduct Rule and/or the Second Conduct Rule (the "Conduct Rules"). There is no requirement to apply to the Competition Commission (the "Commission") for a decision to secure the benefit of a particular exclusion or exemption.
However, undertakings needing greater legal certainty may choose to apply to the Commission for a Decision under section 9 and/or section 24 of the Ordinance. Under these circumstances you are always encouraged to seek legal advice as early as possible before considering submitting an application and of course contacting the Commission.
Overview of Exclusions and Exemptions
The Conduct Rules will not apply to:
- Agreements enhancing overall economic efficiency, i.e., agreements that help to improve production or distribution or promote economic or technical development which benefit consumers (note however that this exclusion only applies to the First Conduct Rule).
- Agreements or conducts made or engaged in for the purpose of complying with a legal requirement imposed by Hong Kong law or for the purpose of providing a service of general economic interest (when entrusted by the Government to do so).
- Mergers (however mergers are still subject to the merger rules requiring telecommunications mergers to be notified).
- Agreements or conducts of lesser significance: agreements are excluded from the First Conduct Rule when the combined turnover of the undertakings party to the agreement is less than HK$200 million (insofar as it does not involve serious anti-competitive conduct); anticompetitive conduct will not be caught by the Second Conduct Rule when the turnover of the undertaking is less than HK$40 million.
- Statutory bodies unless specifically brought within the scope by regulation of the Chief Executive (such as the Federation of Hong Kong Industries). It does not extend to undertakings who may engage in anti-competitive arrangements with an excluded statutory body or to entities controlled by a statutory body.
- Agreements and conducts exempted by the Chief Executive on public policy grounds or to avoid a conflict with international obligations that directly or indirectly relate to Hong Kong
What Does the Application Process Involve?
The Commission's review of an application is not subject to any deadlines. The time required to make a Decision depends on the complexity of the case and the availability of Commission resources.
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Originally published 7 July 2016
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