New publicity campaign launched to combat market sharing cartels

Hong Kong’s competition watchdog launched a campaign on 22 November 2017 targeting market sharing practice. The Competition Commission (the “Commission”) noted Hongkongers may be less familiar with market sharing cartels than bid rigging or price fixing practices, and said it hoped to foster awareness with a new publicity campaign, which encourages whistle-blowers to come forward.

In August 2017, the Commission took a market-sharing and price-fixing case to the Competition Tribunal involving the provision of renovation services in a public housing estate by 10 construction and engineering companies.  The Commission alleged that the companies agreed among themselves to carve up each block by floors and only approach tenants on their allocated floors, and also conspired to fix prices.  This is a classic case of market sharing which could hurt consumers’ interest by limiting choices for them and reducing pressure on businesses to keep prices competitive, the Commission said.  Businesses convicted of anti-competitive practices would face a fine of up to 10 per cent of their annual local turnover for a maximum of three years.

The Commission warned businesses it identified three industries with numerous accusations of market sharing.  The Commission has received 2,500 complaints and inquiries on various issues since the competition law came into effect two years ago.  The most prominent ones were market sharing behaviours featuring real estate and property management, telecommunications, and machinery and equipment companies.  It assessed 160 of the complaints and conducted in-depth investigations for about 10 percent of the cases, the last step before it proceeds to file charges against the delinquent market player.

But the Commission said it was open to striking a deal with offenders prepared to admit their guilt and turn themselves in at the earliest opportunity in exchange for leniency or even immunity.  The Commission said the first party to come forward would have a chance to get maximum reduction in penalties, while the later could still seek a reduction in penalties, depending on the circumstances, but they have to provide substantial information or evidence, such as details of meetings, or documents which would assist with the commission’s prosecution efforts.

The government announces extra litigation funding for the commission

The government has announced that it will provide extra dedicated funding of HKD 200 million (approximately US 25 million) to support the Commission’s litigation work, which signifies a determination by both the government and the Commission that the Competition Ordinance be enforced rigorously.  This is in addition to the annual grant (which will also be increased and it is unknown how much) which the government gives to the Commission.  It is however not clear whether this fund would be a one-time payment, or if it would be replenished annually.

The extra funding is likely to boost the Commission’s enforcement efforts and provide it with sufficient financial strengths to continue to bring big and complex cases that might involve large conglomerates and multinationals to the Competition Tribunal.

Hong Kong’s new antitrust chief is expected to invigorate enforcement

Mr Brent Snyder (an ex-criminal prosecutor at the U.S. Department of Justice (DoJ)) who has a wealth of enforcement and trial experiences became the third CEO of the Commission in early September 2017 following the departure of Rose Webb.  Under the lead of Mr Snyder, the Commission is expected to invigorate its enforcement actions.  Mr Snyder said that in order to strengthen enforcement, the Commission would bring in additional local and overseas talent. This should help cope with a growing number of complaints and investigations of the Commission.

Hong Kong keeps open mind on criminal sanctions for cartel behaviours

Currently, anti-competitive behaviour in Hong Kong is not considered a criminal offence but only subject to civil sanctions.  However, the new chief of the Commission did not hide his desire to seek jail sentences whenever possible in the long run.  Mr Snyder told the local Hong Kong media in November that jail time was the “single most effective deterrent” against cartels, and suggested Hong Kong should follow the US’s footsteps and introduce a criminal regime. However, at the moment, that would not be his current focus.

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

E: competition@onc.hk

T: (852) 2810 1212

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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.