Hong Kong Competition Commission Commenced the First Case in the Competition Tribunal

02-2018

The Competition Commission has filed an application under sections 92 and 94 of the Competition Ordinance (the "Ordinance") on 23 March 2017 against five information technology companies. The case concerns suspected bid-rigging in relation to a tender exercise conducted by the Hong Kong Young Women's Christian Association ("YWCA") in mid-2016 for the supply and installation of an IT server system.

In Hong Kong, the Ordinance prohibits any undertakings (which include individuals and entities) from entering into any arrangement or agreement which has the object or effect of harming competition in Hong Kong. "Bid-rigging", which generally involves an arrangement or agreement between competing bidders in a tender process to decide who would submit the most favourable bid, is "serious anti-competitive conduct" under the Ordinance in breach of the first conduct rule.

The Commission alleged that, based on its investigations, one of the defendant companies sent the template of its tender application and its pricing information for reference to the other defendant companies. Moreover, a report made by YWCA exhibited more dubious behaviour, as YWCA discovered consistent mistakes in the tender applications submitted by the companies, including spelling errors and omissions of important information. The Commission further uncovered information from WhatsApp messages and emails exchanged between the companies to further its allegation of illegal tendering arrangements amongst the companies.

The Commission is seeking remedies including a declaration that each party has infringed the first conduct rule, and pecuniary penalties.

This was the first time the Commission commenced enforcement proceedings in the Competition Tribunal since the Ordinance came into force in Hong Kong in December 2015. The enforcement action sent a clear signal to all market participants that the Commission is ready and willing to investigate potential breaches of the Ordinance and to commence enforcement actions. The Commission will treat suspected bid-rigging cases seriously, in light of its potentially direct and significant harm to the welfare of consumers and other market participants.