Introduction

The Competition Commission (the “Commission”) is an independent statutory body established under the Competition Ordinance (Cap. 619) (the “Ordinance”) which was enacted in 2012. Since its establishment, the Commission has been playing an important role in investigating conduct that may contravene the competition rules governed by the Ordinance and enforcing the provisions of the Ordinance.

Recently, the Hong Kong General Chamber of Commerce (“HKGCC”) expressed concerns regarding certain new practices in investigations introduced by the Commission by way of a letter to the Secretary for Commerce and Economic Development, Mr Edward Yau Tang-wah. Such letter was referred to the Commission which responded to the said concerns.

Concerns from the HKGCC

Practices in question

On 16 May 2018, Mr Jeffrey Kin-fung Lam wrote on behalf of the HKGCC to Mr Edward Yau Tang-wah, expressing concerns regarding the following two practices introduced by the Commission:

• Confirmation Letter signed by a “proper officer” (“Practice 1”)During the investigations as to any potential breach of the Ordinance, it is common that the subject of the investigation will engage lawyers to communicate with the Commission. For the lawyers to receive communications from the Commission on behalf of a business under investigation, the Commission requires the business to produce a letter confirming the appointment of the law firm and the scope of the law firm’s appointment (the “Confirmation Letter”). The Confirmation Letter shall also be signed by a “proper officer” of the business.
• Providing information and/or documents “acting by its proper officer” (“Practice 2”)Under Section 41 of the Ordinance, for the purpose of conducting an investigation, the Commission may by notice in writing require any person to produce any document or provide any specified information relating to any matter the Commission reasonably believes to be relevant to the investigation. The Commission requires a business to provide information and/or documents “acting by its proper officer” in response to a notice issued by the Commission pursuant to Section 41 of the Ordinance.(collectively referred to as the “Practices”)

Concerns

In the said letter, Mr Jeffrey Kin-fung Lam expressed the concerns with regard to the Practices as follows:

• Both the Ordinance and the Guideline on Investigation required by the Ordinance made no mention of the Practices.
• It would be impracticable to produce a Confirmation Letter in the event that a business had to seek immediate and unforeseen assistance from a law firm (e.g. in a “dawn raid”).
• Practice 1 conflicted with Article 35 of the Basic Law which provided for the right to choice of lawyers for timely protection of legal rights.
• Practice 2 was inappropriate as officers of a company might have no knowledge of the allegations under the investigation and might be subject to a real risk of personal exposure to a pecuniary penalty under Section 92 of the Ordinance, if the Commission had reasonable cause to believe that such officer has contravened a competition rule or has been involved in a contravention of a competition rule.
•  Based on the above, Mr Jeffrey Kin-fung Lam sought clarification regarding the Practices, in particular, the legal basis for the Commission to introduce the Practices and whether the Law Society has been consulted on such issues.

The Commission’s response

By a letter dated 1 June 2018, Mr Rasul Butt, Senior Executive Director of the Commission wrote to address the HKGCC’s concerns. In gist, he stated that:

• Regarding Practice 1:
  • The Commission was seeking nothing more than the kind of authorization that a law firm must have already received, and such requirement would not restrict, hinder or impede a person’s ability to seek legal advice or impose any undue or disproportionate burden on the persons subject to investigations.
  • The Confirmation Letter helped to ensure that the Commission communicated with the right law firm(s).
  • Unlike some other law enforcement agencies, the Commission did not have a pre-existing supervisory, regulatory or licensing relationship with the persons subject to its investigations, and hence requesting a written authorization was appropriate to avoid conflict of interest between the persons involved.
  • The Commission did not consider that such routine practice should require consultation with the Law Society.
• Regarding Practice 2:

• • Practice 2 was not a new practice of the Commission. It was well established that a company subject to a legal requirement to provide information must comply with the requirement through its proper officer.
  • The officer would be required to provide to the Commission but not verify the documents or information, and the mere provision of documents or information would not attract personal liability under Section 92 of the Ordinance.

Conclusion

In sum, the Commission confirmed in its letter that Practice 1 was a necessary practice for Commission investigations and provided benefits to everyone involved in an investigation, while Practice 2 was a routine and established Commission practice.

Whilst the response made by the Commission sought to address the HKGCC’s concerns, it appears that some enquiries of the HKGCC, e.g. definition of “proper officer”, are left unanswered. It remains to be seen whether there will be further enquiries or challenges by the HKGCC or other groups or organizations regarding the Practices of the Commission which may arouse further discussion on such issues. For the time being, companies and businesses subject to investigations are reminded to comply with the Commission’s requirements regarding the Practices in a timely manner to avoid unnecessary complications.

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.