Introduction

On 12 August 2026, the Competition Commission (the “Commission”) executed a second round of enforcement actions under its operation codenamed “Hunter”, targeting alleged bid-rigging and cartel conduct in the Hong Kong building maintenance sector. Building upon evidence seized during an initial wave of searches in January 2026, the Commission expanded its investigation after uncovering new leads that pointed to a broader, hidden bid-rigging network. The operation involved executing search warrants at 12 premises across the territory, encompassing maintenance contracts across 28 housing estates and buildings with an estimated aggregate value of around HK$500 million.

Background

Building maintenance has long been an enforcement priority for the Commission, given the sector’s direct impact on property owners, public safety, and broader public interest. The industry’s historical vulnerability to entrenched malpractices has necessitated sustained regulatory intervention.

When Operation “Hunter” first commenced in January 2026, the Commission seized a substantial volume of electronic evidence. A subsequent forensic analysis of that material unexpectedly exposed a far wider web of anti-competitive behaviour than initially suspected revealing not only the existence of a second, previously unknown bid-rigging syndicate, but also systemic coordination across multiple projects. While works for some of the 28 projects have already commenced or been completed, others have yet to be awarded, prompting the Commission to proactively reach out to affected building stakeholders to mitigate potential financial harm.

Uncovered conduct: The “Homework” mechanism and covert syndicate

The critical breakthrough came from text message exchanges seized during the January raid. These communications revealed that a building contractor not previously under investigation (the “Contractor”) had attempted to recruit other contractors through middlemen to submit cover bids for a maintenance project. In response, the Contractor was informed that rival contractors had already been recruited by another cartel for the same project – confirming the presence of a parallel syndicate.

Further investigation uncovered that the Contractor had allegedly engaged in systemic anti-competitive practices across multiple projects, including:

1.      Disseminating “Homework”: The Contractor distributed predetermined, exact bidding prices, commonly referred to within the trade as “homework”, to participating contractors. This tactic is typically used so that a syndicate’s designated winner (the “main character”) submits the lowest bid, while other complicit contractors (the “helpers”) submit artificially high “pig quotes” to create a false impression of genuine market competition.

 

2.      Market-sharing and cover bidding: Coordinating these cover bids and market-sharing arrangements among competing contractors to manipulate tender outcomes.

 

3.      Information Exchange: Exchanging competitively sensitive commercial information, such as internal pricing strategies, prior to tender submissions

 

The Commission suspects that such conduct constitutes bid-rigging, market-sharing, price-fixing, and exchanging competitively sensitive information, in contravention of the First Conduct Rule under section 6 of the Competition Ordinance (Cap 619).

Exercise of compulsory investigative powers

During the enforcement action on 12 August 2026, the Commission exercised its statutory powers under the Ordinance to:

1.      Execute search warrants at 12 premises, targeting the corporate offices of four building contractors and the private residences of the involved individuals.

 

2.      Issue statutory notices requiring relevant parties to produce documents and information.

 

3.      Require key individuals to attend formal interviews before the Commission to give information.

 

Practitioners should note that non-compliance with such statutory requests, including destroying evidence or refusing to attend an interview, may give rise to separate criminal liability under sections 52 and 54 of the Ordinance.

Takeaway

This expanded enforcement action underscores the Commission’s relentless resolve to dismantle persistent cartel networks in the building maintenance market, utilizing intelligence gathered from one raid to launch the next.

In light of the Commission’s increasingly investigative techniques, industry participants and property managers should bear the following in mind:

Digital footprint risks: Text messages from initial raids provided the critical leads for this secondary investigation. Hidden cartels can be rapidly exposed once electronic devices are seized.

Severe statutory penalties: Sharing “homework” or tender parameters constitutes a severe contravention of the First Conduct Rule. Undertakings face pecuniary penalties of up to 10% of their annual Hong Kong turnover for a maximum of three years, while individuals face director disqualification orders for up to five years.

The leniency race: The Commission’s Leniency Policy offers immunity from pecuniary penalties for the first cartel participant who reports the conduct and cooperates. With only one leniency marker available per cartel, time is of the essence. Suspected participants should utilize the Leniency Hotline immediately.

Vigilance for procurers: Property managers should utilize Non-Collusive Tendering Certificates (NCTCs) and remain alert to suspicious bidding patterns, as anti-competitive conduct in this sector frequently intersects with criminal fraud and corruption investigations.

 

For enquiries, please feel free to contact us at:

E: competition@onc.hk                                                      T: (852) 2810 1212 W: www.onc.hk                                                                    F: (852) 2804 6311 19th Floor, Three Exchange Square, 8 Connaught Place, Central, Hong Kong

Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.

Published by ONC Lawyers © 2026