Introduction

Regulators around the globe have strengthened enforcement of competition law in 2021, with their efforts making news headlines on a regular basis. What is the current antitrust landscape in Hong Kong and what are the enforcement priorities of the Hong Kong Competition Commission (the “Commission”) in the near future?

Latest development and outlook of the Commission’s work

Mr Rasul Butt, Chief Executive Officer of the Commission recently highlighted various achievements and views of the Commission on enforcement, policy and advocacy work.

Since the Competition Ordinance (Cap 619) (the “Ordinance”) came into effect in 2015, the Commission has obtained successful judgments in all 5 cases already handed down by the Competition Tribunal. The Commission has also resorted to non-litigation measures stipulated in the Ordinance to deal with 3 cases involving less serious antitrust concerns promptly and cost-effectively. Such measures included issuing infringement notices and accepting commitments from the relevant parties.

The Commission has endeavoured to deepen public understanding of the Ordinance and the Commission’s work by publishing a new policy on commitments under section 60 of the Ordinance, organising a number of public engagement events, and providing advisory work on over 30 public policies and initiatives concerning Hong Kong consumers and the business environment. The Commission will also launch its first ever documentary drama TV series, showcasing the first few competition cases in Hong Kong.

Mr Butt outlined 3 main areas of focus of the Commission in the coming years. They are (a) anti-competitive behaviours affecting people’s livelihoods, particularly low income or grass-root groups; (b) cartels that take advantage of government or public funding; and (c) the digital economy.

Coordination with overseas regulators

The Commission has a good connection with anitrust regulators in other jurisdictions and regularly works with overseas regulators to share information, know-how and experiences. Such regulators are not limited to those in jurisdictions with a formal memorandum of understanding with Hong Kong. The Commission also works closely with law enforcment agencies such as the Independent Commission Against Corruption and the Hong Kong Police Force on enforcement and investigation matters.

In terms of international cooperation, antitrust issues in relation to labour markets have become a pupular topic. There has been increased scrutiny of restraint of trade clauses in relation to employees by antitrust authorities, in particular in the US and EU member states. The Commission previously published an advisory bulletin on labour-related issues in 2018, which has since remained an area of focus for the Commission.

Digital economy

The digital economy is a new area of focus of the Commission’s enforcement work and it is building up its capacity and expertise to deal with such cases. In particular, the Commission has recently been looking into online delivery platforms and their compliance with the Ordinance.

When considering cases relating to the digital economy, the Commission will avoid investigating cases with little connection with Hong Kong, or where a remedy available overseas also tackles potential issues in Hong Kong.

Policy development

Further to its policy on commitments under section 60 of the Ordinance, the Commission is considering issuing more policies or guidance to share its recent experience.

As regards environmental, social and govenrance issues and sustainability agreements, the Commission recognises that this is an important topic and the Commission will closely monitor the development in this area.

Passenger car warranty

On 3 March 2022, the Commission released a statement about its investigation into passenger car warranty.

The statement expressed that the Commission is looking into whether the agreements between certain manufacturers of passenger cars and their respective importers, distributors or authorised dealers (collectively “Distributors”) in Hong Kong mandate the use of restrictive warranty terms and conditions on passenger car owners in Hong Kong, which ties the continuous validity of the relevant warranty to their cars being repaired and/or maintained exclusively at authorised repair centres (which are typically owned by the Distributors).

Under such restrictive warranty terms and conditions, the validity of passenger car warranties is conditional on the exclusive performance of maintenance and/or repair services at authorised repair centres, regardless of whether the maintenance or repair item is covered by the warranty. As a result of such terms and conditions, car owners who visit independent car repair workshops during the warranty period risk having their warranty voided on the basis that their passenger car was not serviced and/or repaired at the authorised repair centre.

The Commission noted that the costs associated with the maintenance and repairs of passenger cars are significant expenses for car owners in Hong Kong and it is concerned that the restrictive terms and conditions may deter passenger car owners from using independent car repair workshops during the warranty period, and restrict the ability of independent car repair workshops to compete with the authorised repair centres. This may unduly reduce car owners’ choice of service and ultimately lead to higher prices for maintenance and repair services.

As part of its investigation, the Commission is seeking views of any interested parties, including passenger car owners and independent car repair workshops, who have concerns or information about these restrictive passenger car warranty terms and conditions.

Takeaway

A windening scope of industries and sectors put under the microscope of the Commission shows its continued endeavours to protect consumers. Consumer businesses engaging in practices which potentially fall foul of the Ordinance should be mindful of the potential enforcement risks and seek legal advice promptly where appropriate.