Navigating Hong Kong's Competition Law – Infringement Notices

Last week we examined the role of the Competition Commission (Commission) as an investigatory body and identified the broad range of enforcement powers available to it. This week we will take a closer look at the Commission's power to issue infringement notices to parties where the Commission suspects that a person has committed a possible breach of the Competition Ordinance (Ordinance).

What is an infringement notice and when may the Commission issue one?

An infringement notice is an offer by the Commission not to bring proceedings in the Tribunal for the alleged contravening conduct on the condition that the person makes a commitment to comply with requirements of the notice within the specified compliance period.

An infringement notice may be issued by the Commission where it has reasonable cause to believe that there has been a contravention of:

• the First Conduct Rule (FCR) involving serious anticompetitive conduct (such as cartel conduct); or
• the Second Conduct Rule (SCR) (which involves a misuse of substantial market power).

See our comprehensive discussions on the FCR and SCR.

It is important to note that it is not mandatory for the Commission to issue an infringement notice as it may take advantage of any number of enforcement options at its disposal. For example, the Commission can accept a commitment to address concerns about a possible contravention, issue a warning notice or commence proceedings in the Competition Tribunal (Tribunal). In some instances, the Commission must issue a warning notice before being able to commence proceedings in the Tribunal.

What is the effect of an infringement notice?

The Commission will not bring proceedings against a person who has been issued with an infringement notice for the alleged contravention identified in the notice, unless the undertaking has not complied with the notice within the compliance period or the Commission has withdrawn the infringement notice.

The Commission has wide discretion to determine the actions required by the notice, which may include, but are not limited to, requiring a person to refrain from specified conduct, or taking specified action that the Commission considers appropriate, or admitting to a contravention of one of the conduct rules. The Commission cannot require a person to pay a fine as a condition of an infringement notice as only the Tribunal has the power to impose penalties.

The Commission may extend the compliance period if it considers there is a good reason for doing so and provided a written request is sought before the compliance period expires.

What happens if you do not comply with an infringement notice?

There is no obligation to make a commitment to comply with an infringement notice. If you do not, the Commission may subsequently bring proceedings in the Tribunal.

What information does an infringement notice contain?

An infringement notice will set out the following details:

• the conduct rule(s) alleged to have been contravened;
• the person whose conduct is alleged to constitute the contravention and a description of that conduct;
• evidence or other materials the Commission relies to support of its allegations;
• specific requirement(s) for a person to satisfy the infringement notice;
• the notification period and the compliance period; and
• a copy of Section 68 of the Ordinance (that a person is not obliged to make commitment).
• Notification period

The Commission must give a person at least 15 days' notice if it intends to issue an infringement notice. The notification must:

• state it is proposing to issue an infringement notice;
• contain a draft of the proposed infringement notice; and
• provide a minimum of 15 days for the person to respond and to put forward an argument as to why the infringement notice should not be issued.

Any evidence provided to the Commission by a person in response to a notification notice will be completely confidential. The information and/or representations will not be subject to discovery by any other person, and the Commission may not use it in any proceedings other than in other than proceedings against that person for an offence under Section 172 (Provision of False Information).

If the Commission is satisfied by the party's response, it may choose not to issue an infringement notice.

Will the details of an infringement notice be available to the public?

The Commission does have the ability to publish an infringement notice on the internet, and in any other manner it considers appropriate. However, it will not publish the infringement notice until the compliance period has expired, a party has not made a commitment to comply within the compliance period, or the Commission has withdrawn the notice. A commitment given pursuant to an infringement notice will be made publically available on the Infringement Notice Register.

The benefits of an infringement notice

Infringement notices are an important opportunity for parties to respond to allegations and cooperate with the Commission before proceedings are commenced.

Like in many other jurisdictions, the purpose of infringement notices under the Ordinance is to provide the Commission with a timely and cost-efficient enforcement option for contraventions of competition laws.

In the event that parties under investigation are able to effectively respond to or comply with the requirements of the infringement notice, the investigation may be terminated by the Commission without the need to engage in costly and lengthy litigation.

Interested in other aspects of Hong Kong's Competition Law?

You may be interested in reading other related fact sheets in this series, such as those that cover the First Conduct Rule, Second Conduct Rule, Role of the Competition Commission vs the Role of the Competition, Penalties, Damages and Remedies, Commitments and Self Incrimination and Legal Professional Privilege.