The Competition Ordinance ("Ordinance"), in force from 14 December 2015, is enforced by the Competition Commission ("Commission") and the Competition Tribunal ("Tribunal"). Although the Hong Kong competition law resembles that of UK and the EU, the judicial enforcement model is actually akin to the one in the US.
What is the general enforcement framework under the Competition Ordinance?
Essentially, competition enforcement in Hong Kong involves both an investigative and a prosecutorial approach.
The Commission will assume the dual functions of a promoter of competition and an investigatory body. It will be responsible for the investigations of competition-related complaints and the commencement of actions before the Tribunal in respect of anti-competitive conduct.
The Tribunal is a superior court of record established under the Ordinance. It has primary jurisdiction to hear and adjudicate on competition cases brought before it by the Commission or by private parties (follow-on actions). It assumes all the powers, rights and privileges of the Court of First Instance.
What is the role of the Competition Commission as a promoter?
The Commission is a statutory body responsible for promoting public understanding of the value of competition and the benefits of the competition law. In this regard, the Commission organises a number of seminars and publishes useful information to educate the public and to assist businesses in understanding and complying with the new competition law.
The Commission has also published a series of Guidelines which describe how it intends to interpret and apply the Ordinance. Although the Guidelines are not binding on the Tribunal, they serve as general guidance for compliance with the Ordinance.
What is the role of the Commission as an investigatory body?
The Commission is tasked with the function of investigating possible contraventions of the Ordinance. The Commission is also responsible for making decisions on exclusions and exemptions, commitments and leniency.
The Commission has a broad range of enforcement powers under the Ordinance. For the purpose of conducting an investigation, it may issue written notices requiring any person to provide relevant documents or to give evidence before it. A person will not be excused from being required to explain a document or answer a question on the basis that it will self-incriminate him or her but will be excused if he or she can validly claim legal professional privilege.
The Commission also has the power to obtain a warrant to enter and search any premises for obtaining evidence relevant to an investigation. This power is not limited to the premises of the investigated party but also covers the premises of the investigated party's supplier or customer.
Following an investigation, the Commission may initiate proceedings in the Tribunal.
Exclusions and exemptions
The Ordinance provides for certain exclusions and exemptions to the First Conduct Rule (prohibiting anti-competitive agreements), Second Conduct Rule (prohibiting abuse of substantial market power) and Merger Rule. The Commission determines applications for a decision as to whether an exclusion or exemption applies to an agreement or a conduct. Where it is satisfied that a particular category of agreements enhances overall economic efficiency, it may also issue a block exemption order upon an application or on its own volition.
Leniency and commitments
The Commission has powers under the Ordinance to enter into leniency agreements in exchange for a person's cooperation in an investigation. The Commission has published a specific leniency policy for cooperation in relation to cartel conduct and it may also grant leniency in relation to alleged breaches of a conduct rule that are not covered by the policy. The Commission may also accept commitments by a party to address competition concerns.
Warning notice and infringement notice
The Commission is also tasked with the function of issuing warning notices and infringement notices. If it has reasonable cause to believe an undertaking has engaged in serious anti-competitive conduct or a contravention of the Second Conduct Rule has occurred, it may issue an infringement notice to the parties involved. For other anti-competitive conduct under the First Conduct Rule, the Commission is required to issue a warning notice to the parties involved before bringing proceedings before the Tribunal.
What is the role of the Competition Tribunal?
The Tribunal is a specialist court established under the Ordinance comprising judges of the Court of First Instance. It has primary jurisdiction to hear and determine various competition-related actions including:
- enforcement actions brought by the Commission for alleged breaches of the competition rules;
- applications for review of reviewable determinations under the Ordinance, including the Commission's decisions regarding block exemptions and mergers;
- follow-on actions for damages brought by private parties in respect of an act that has been determined to be a contravention of the competition rules;
- applications for the enforcement of commitment;
- allegations of contraventions of the competition rules raised as a defence; and
- applications for the disposal of property in the possession of the Commission.
If the Tribunal finds a breach of the Ordinance, it has the power to impose a wide range of sanctions against a contravening party. These include pecuniary penalties, director disqualification orders, award of damages and other ancillary orders.
The procedures under the Competition Tribunal Rules differ somewhat from the Rules of the High Court. The Tribunal has the power to determine certain matters in respect of the conduct of hearing. For example, the Tribunal has discretion to make an order for discovery and discretion to determine whether pleadings should be filed.