The Competition Tribunal shed light on restricting use and disclosure of confidential information
Introduction
In the case of Competition Commission v Quadient Technologies Hong Kong Ltd and
Others [2023] HKCT 1, the Competition Tribunal (the “Tribunal”) clarified the principles and
applicability of redaction on the grounds of confidentiality from documents
previously filed in the Tribunal. The Tribunal opines that the redactions and
confidential treatment of certain information must be justified and
supplemented with relevant evidence.
Background
The Competition Commission (the “Commission”) commenced the proceedings
against the Respondents in November 2021 for their participation in cartel
conduct regarding the sale of inserters (i.e. an inserter is a machine that
inserts letters and other correspondence into envelopes for mass mailing) in
Hong Kong. The Respondents were believed to carry out conducts that amounted to
serious anti-competitive conduct in the form of price-fixing, market-sharing
and bid-rigging, in contravention of the First Conduct Rule of the Competition
Ordinance (Cap. 619) (the “Ordinance”).
After the Commission commenced its
investigation, the Respondents were cooperative with the Commission pursuant to
the Commission’s Cooperation and Settlement Policy for Undertakings Engaged in
Cartel Conduct (the “Cooperation Policy”),
including but not limited to facilitating the Commission’s investigation and
enhancing the Respondents’ internal corporate competition compliance policies. As
such, the Commission agreed to enter into cooperation agreements (whereby the
Commission has recommended a cooperation discount to the Tribunal and agreed
not to pursue the employees of the companies involved in the misconduct) with
the Respondents by submitting joint applications to the Tribunal seeking orders
to allow the proceedings to be disposed of by consent.
The
issues
In accordance with the Kam Kwong procedure (you may refer to our previous article on the
Kam Kwong procedure), the Commission
and the Respondents had agreed Statements of Agreed Facts. Yet, the main issue
of the current proceedings arose at the first hearing where the Commission
sought confidentiality treatment of various information in the agreed
Statements of Facts as follows:
1.
Information which is confidential against the public including: (a) price-related
information; (b) identities of individuals employed or formerly employed by the
Respondents which the Commission does not intend to pursue; and (c) identities
of certain non-parties; and
2.
Information which is confidential against the Respondents and the public
including: (a) the relevant value of sales directly or indirectly related to
the Respondents’ contravention (the “Value of Sales”); and (b) the
turnover of the respective Respondents in the relevant financial year (ended on
31 January 2019 for the 1st and 2nd Respondents and on 31
December 2018 for the 3rd and 4th Respondents) (the “Turnover”).
The
Law
Pursuant to Part 8 of the Ordinance, the
Tribunal has the power to restrict the use and disclosure of confidential
information provided to the Commission. By confidential information, it is
defined under section 123
of the Ordinance that it shall include: (i) the private affairs of a natural
person; (ii) the commercial activities of any person that are
of a confidential nature; (iii) the identity of any person who has given
information to the Commission; (iv) information that has been given to the
Commission on terms that or in circumstances that require it to be held in
confidence; or (v) information given to the Commission that has been identified
as confidential information.
Although Part 8 of the Ordinance is
limited to identifying the types of information that may be confidential and
does not apply to disclosure ordered by the Tribunal, the Tribunal may make
orders restricting the use and disclosure of confidential information in
proceedings before it. In determining an application for a confidentiality
order, the starting point is the strong presumption that all evidence
should be available to a person against whom the Commission alleges a breach of
the First/Second Conduct Rule. It is also necessary for a party applying for a
confidentiality order to adduce evidence that justifies the restriction on the
use and disclosure of information it contends to be confidential and should be
redacted.
Ruling
The Commission has made the following
arguments during the proceedings:
Restrictions on
the Open Justice Principle
The Commission argued that it has been
consistently recognised by the courts that while the principle of open justice
is important, courts have an inherent jurisdiction to determine how it should
be applied, and that when it is necessary in the interests of justice, the
courts have the power to permit certain information to be withheld from public
disclosure.
The Tribunal held that a more disciplined
and rigorous approach should be adopted in competition enforcement proceedings
for breach of the First Conduct Rule. That is because these proceedings involve
“the determination of a criminal charge”, thereby engaging Articles 10 and 11
of the Hong Kong Bill of Rights Ordinance (the “BOR”), which have constitutional force by virtue of Article 39 of
the Basic Law. Pursuant to the laws of Hong Kong, it is clear that a respondent
to a case brought against them under such circumstances shall be entitled to be
fully informed of the allegations against them. Therefore, there is little room
for restricting information relied on by the Commission being made available to
a respondent on the grounds of confidentiality.
Also, the intention of Articles 10 of the
BOR is clear that it is exceptional to place restrictions on information that
ought to be available to public about legal proceedings before a tribunal. Accordingly,
since the Statements of Agreed Facts form part of a judgment of the Tribunal
which had to be made public, redaction should only be made if Article 10
of the BOR is satisfied. Unless it can be demonstrated that such disclosure of
information would harm competition and frustrate the purpose of the legislation
and the proceedings, the open justice principle cannot be justified to depart
from.
Applications for
confidential orders
In order to justify the applications for
confidential orders, one has to satisfy with cogent evidence that (i) such
information involve allegations against
individuals, who may or may not be respondents, which may interfere with their
business or personal reputations and interests; and (ii) if the information
sought to be kept confidential is made public might have a consequence.
The
Tribunal held that the individual names in the Statements of Agreed Facts shall
be replaced by the description of “an employee of X Limited” or “X Respondent”
upon taking into account the following circumstances:
1.
Regarding the identity of individuals in statements of agreed facts or
decisions of the Tribunal, it shall be referred to as “an employee of X
limited” or similar language. The Tribunal is of the opinion that if the name
of the individual is important, the Commission is expected to be able to adduce
precise evidence justifying its redaction;
2.
Regarding the originating notices of motion, the Tribunal will in future
agree to the redaction of names of individuals as against the public. The
redactions should take the form of a footnote to the name redacted describing the
individual as “an employee of X limited” or “X Respondent” or similar
description unless the Commission can provide substantive evidence for not
doing so; and
3.
Regarding the Value of Sales and the Turnover, the Tribunal is of the
opinion that there was no basis for the redaction of the same as it was not
apparent how making such information public might frustrate the purpose of the
proceedings.
Takeaway
The
Tribunal has clarified that in determining whether to grant a confidential
order, it must be justified and demonstrated with cogent evidence that it will
harm competition and frustrate the purpose of the legislation and the
proceedings. In any event, the current proceedings is the first case in which
all the subjects of the Commission’s investigation cooperated with the
Commission during the investigation stage and agreed to fully settle the case
under the Cooperation Policy. With the benefits of early cooperation and to
avoid prolonged litigation, it is expected that more companies engaging in
cartel conduct will be willing to cooperate with the Commission in the future.
For enquiries,
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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. |
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Published by ONC Lawyers © 2023 |
