Hong Kong Competition Court clarified the scope of privilege against self-incrimination

Background

Competition Commission v Nutanix Hong Kong Limited & Ors CTEA 1/2017 is the first case brought by the Competition Commission, since its full operation in December 2015.

The case concerns the alleged collusion between Nutanix and the other defendants in submitting "dummy bids" in a tender exercise by the Hong Kong Young Women's Christian Association (YWCA) for the supply of IT services, which harmed competition by maximising Nutanix's chance to win the bid. In competition law, this is known as "bid-rigging", which is "serious anti-competitive conduct" under the Competition Ordinance (Cap.619). The Competition Commission seeks a declaration that the defendants have contravened the first conduct rule, as well as pecuniary penalties.

In its investigations, the Competition Commission interviewed an employee of Nutanix (Mr A) and requested that he provide information and answers pursuant to its powers under the Ordinance. Nutanix and another defendant, BT, applied to the Competition Tribunal (i.e. the court in Hong Kong which handles competition matters) to strike out references to Mr A's statements in the Competition Commission's case, on the basis of privilege against self-incrimination under section 45 of the Ordinance.

Court’s ruling

The Court rejected the application by Nutanix and BT. It ruled that Nutanix and BT did not enjoy privilege against self-incrimination in respect of answers made by Mr A or any other employees.

Section 45(2) of the Ordinance states that "no statement made by a person (a) in giving any explanation or further particulars about a document; or (b) in answering any question, under this Division is admissible against that person in proceedings… unless, in the proceedings, evidence relating to the statement is adduced, or a question relating to it is asked, by that person or on that person's behalf."

The applicants advanced two major arguments. First, Mr A represented his employer in answering the questions; secondly, Mr A's answers can be attributed to his employer and should be regarded as the employer's answers. Godfrey Lam J rejected both arguments because:

1. The Commission's request for information and answers was addressed to Mr A personally.His answers are personal to him and not made on his employer's behalf, such that the answers would not bind the employer.The employer is not liable for any false or misleading answers given by the employee.
2. There is no principle or law which attributes the employee's answers to his employer.Policy considerations also militate against any attribution, for example, where the employment may have ceased when the employee is requested to give answers and there is no realistic element of compulsion in the employment relationship.

The Court therefore held that an employer cannot rely on the privilege against self-incrimination in respect of the information or answers given by its employee under section 45(2). "Person" in section 45(2) refers to the employee, not his employer. The Commission can refer to the information or answers in its case, which are also admissible as evidence in the court proceedings.

Implications

The decision narrowed the scope of privilege against self-incrimination in the competition law context. But it will also impact on the court's interpretation of similar statutory provisions in other Hong Kong legislation.

Its practical implication is that companies may face considerable difficulties in relying on this privilege in practice, where a statutory provision similar to section 45(2) of the Ordinance is in place. The reason is that, as highlighted in the decision, the Commission's information requests are often made to the individual employee, who is personally liable to give information and answers. He cannot refuse to answer any question on the basis that it may tend to incriminate his corporate employer. If his employer does not enjoy privilege over his answers, the availability of privilege is necessarily limited in practice. These arguments have been explored in paragraphs 88 to 100 of the decision, and the Judge decided against the employer. This narrow approach now represents the law in Hong Kong, until it is re-visited by the Hong Kong higher courts in future.