Background

In March this year, the Competition Commission (the “Commission”) commenced proceedings in the Competition Tribunal (the “Tribunal”) against five information technology companies (the “Five Respondents”) for (i) a declaration that the Five Respondents have contravened the First Conduct Rule under the Ordinance and (ii) the imposition of a pecuniary penalty on each of them.

The Commission alleged that the Five Respondents engaged in bid-rigging for the supply and installation of an IT server system. The case involved some of the Five Respondents submitting “dummy bids” in response to a tender issued by Hong Kong Young Women’s Christian Association to ensure that the bid from BT Hong Kong Limited (“BT”, one of the Five Respondents), which purported to adopt a system supplied by Nutanix Hong Kong Limited (“Nutanix”, one of the Five Respondents), would win.

Admissibility of the Evidence in Dispute

Before the substantive hearing of the case, Nutanix made an application for orders to strike out references to certain statements from the Originating Notice of Application (the “Statements”) in this case. BT also applied to debar the Commission from adducing into evidence or relying upon all such Statements in the substantive hearing.

In short, Nutanix and BT argued that by virtue of section 45(2) of the Ordinance, the Statements made by the Commission in the interview of Mr A of Nutanix, Mr B and Mr C of BT under section 42 of the Ordinance are inadmissible in the proceedings for pecuniary penalty brought by the Commission.

Law

Persons may be required to attend before Commission

According to Section 42 of the Ordinance, for the purpose of conducting an investigation, the Commission may, by notice in writing, require any person to attend before the Commission, at a time and place specified in the notice, to answer questions relating to any matter it reasonably believes to be relevant to the investigation.

Self-incrimination

Section 45(1) of the Ordinance states that a person is not excused from giving any explanation or further particulars about a document or from answering any question on the grounds that to do so might expose the person to proceedings referred to criminal proceedings except those for giving false evidence and proceedings in which the Commission applies for an order for a pecuniary or financial penalty (the “Specified Proceedings”).

Direct Use Prohibition

Section 45(2) also provides that no statement made by a person in giving any explanation or further particulars about a document or in answering any question is admissible against that person unless evidence relating to the statement is adduced, or a question relating to it is asked, by that person or on that person’s behalf in the Specified Proceedings.

Judgment

The Tribunal held that, on the true and proper construction of the Ordinance, only the person compelled to provide information is given the benefit of the direct use prohibition.

Section 45(2) imposes a restriction on the direct use of the statements so obtained. Such direct use prohibition negates only the admissibility of the statements made in the Specified Proceedings against the particular person giving the statements. Such prohibition terminates in relation to a statement if evidence relating to it is adduced, or a question relating to it is asked, by the person or on his behalf. Where a natural person is served with a section 42 notice, it is he who is compelled to attend before the Commission and answer questions, and it is his privilege that is abrogated by section 45(1), which removes any excuse that to answer questions might expose the person to criminal or penalty proceedings.

As neither Nutanix nor BT was the subject of the relevant section 42 notices in this case, neither of them can rely on section 45(2) to exclude the records of interviews of Mr A, Mr B and Mr C as being inadmissible against them respectively.

Implications

In giving its judgment in this case, the Tribunal articulated that the Ordinance confers extensive powers on the Commission (modelled on the powers of the Securities and Futures Commission) for the investigation of a suspected contravention of the competition rules and creates offences in relation to investigations. The Commission is empowered to require “any person” to attend the interviews under section 42 of the Ordinance. Where a section 42 notice is issued to a natural person, his obligation to attend before the Commission is personal to him, even if they are accompanied by lawyers acting on behalf of their employers.

The market participants should make note that the section 45(2) privilege against self-incrimination is only restricted to the incrimination of the person claiming it and not anyone else. Employers do not have a privilege that enables them to prevent their employees from answering questions on the ground that it may incriminate the employers.

For enquiries, please contact our Litigation & Dispute Resolution Department:

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.