Introduction

In the case of Competition Commission v Atal Building Services Engineering Ltd and Others [2022] HKCU 4231, the Competition Tribunal (the “Tribunal”) considered the legal principles of treatment of confidential information under the Competition Ordinance (the “Ordinance”), inclusion or exclusion of a party in a confidentiality ring and witness anonymity etc. The court opines that obtaining confidentiality orders is not to be mistaken as routine and easy.

Background

The Competition Commission (“Commission”) commenced proceedings against the Respondents by an Originating Notice on 16 June 2022 (the “Originating Notice”). In issue was the orders dealing with redaction of information in the Originating Notice and the terms of an order to establish a confidentiality ring to which limited circulation of disclosed documents will be produced.

Statutory regime in the Ordinance

At the outset, the Court stated that the Ordinance established the Commission to investigate possible breaches of the First and Second Conduct Rules and gives the Commission powers to require persons to provide it with information. Such information, however, may legitimately be considered confidential (e.g. business or trade secrets) by the provider or the Commission itself. The Ordinance contains in Part 8 a regime for the Commission or other person to seek an order from the Tribunal which restricts distribution of information to the public or to respondents to proceedings:

1.       Section 123 of the Ordinance defines what constitutes “confidential information”;

2.       Section 124 imposes on the Commission a duty to establish procedural safeguards to prevent unauthorised disclosure of information;

3.       Section 143(1) provides that the Tribunal has all the powers, rights and privileges of the Court of First Instance with respect to the production and inspection of documents;

4.       Section 151 empowers the Tribunal to order a person not to publish or otherwise disclose any material the Tribunal receives.

 

Consistently, rule 37(1) of the Competition Tribunal Rules (Cap 619D) allows the Commission to make an application to the Tribunal, as it has done in this case, for an originating notice, or part of it, to be redacted on grounds of confidentiality if it is “intended to be filed, served or otherwise disclosed…..”.

Redaction of confidential information and confidentiality circles

The Tribunal visited the extensive decision of Taching Petroleum Company Ltd v Meyer Aluminium Ltd and Shell Hong Kong Ltd v Meyer Aluminium Ltd [2019] HKCT 1 which guides the Tribunal in making confidentiality orders. The principles in relation to ordering a confidentiality ring include, inter alia, the followings:

1.       The starting point in any civil proceedings is that it is the party who will be affected by a decision, not their advisers to decide how to advance or respond to a case. Discovery is made to a party not their solicitors. This allows the parties to litigate on equal footing and is a principle of natural justice;

 

2.       It would be exceptional to prevent a party from having access to information, which would play a substantial part in a case. A balance needs to be struck between the need to preserve confidentiality and the principle of natural justice;

 

3.       Cases involving private litigants and those involving a regulator such as the Commission should be distinguished. The question is how much confidential information provided to the regulator by third party for the purpose of the regulatory function should be disclosed to the applicant;

 

4.       Mere confidentiality is not enough to justify restricting its inspection. Confidentiality and sensitivity of information is to be proved by evidence; and

 

5.       A staged approach to the use of confidentiality rings is necessary. As issues crystallise and lawyers are able to make more informed decisions about the relevance of documents, they can form a view on whether individuals from clients not in the confidentiality ring need to see documents.

Ruling

(i)            Confidentiality ring

In the present case, the 5^th, 6^th and 7^th Respondents of this case are individuals and the Commission seeks against each of them pecuniary penalties. It was explained in Competition Commission v Nutanix Hong Kong Limited & others [2019] HKCT 2 that as the Tribunal was invited to impose penalties, the proceedings involve the determination of a criminal charge.

The Tribunal held that the individual respondents need to know the contents of documentary evidence before they can give instructions and they clearly need such information to defend themselves against serious allegations of misconduct, which is characterised as a criminal charge. The Commission has not demonstrated a legitimate reason for preventing the 5^th, 6^th and 7^th Respondents to have access to such information and therefore its suggestion that the individual respondents should be excluded from the confidentiality ring is unsustainable. The Tribunal therefore included the 5^th, 6^th and 7^th Respondents in the confidentiality ring.

The Tribunal further held that the same also applies to the boards of directors of the corporate respondents. A company makes important decisions about its affairs by resolutions passed by its board and it cannot do so if some directors are deprived of relevant information. If the Commission wishes to argue that limitations should be imposed on the information available to some of the directors, it must adduce credible evidence to support whatever concerns it has over making all information available to all board members. Nonetheless, no evidence has been filed directed specifically to the scope of the proposed confidentiality ring by the Commission.

(ii)           Witness anonymity

In this case, the Commission proposes that the names of all individual mentioned in the Originating Notice other than the Respondents should be redacted. Citing the case of R v Davis [2008] 1 AC 1128 which considers the practice of a court authorising witness anonymity, the Tribunal outlined the preconditions which must be satisfied before a witness anonymity order may be made:

1.       The measures to be specified in the order are necessary—(a) in order to protect the safety of the witness or another person or to prevent any serious damage to property, or (b) in order to prevent real harm to the public interest;

 

2.       Having regard to all the circumstances, the taking of those measures would be consistent with the defendant receiving a fair trial; and

 

3.       It is necessary to make the order in the interests of justice by reason of the fact that it appears to the court that—(a) it is important that the witness should testify, and (b) the witness would not testify if the order were not made.

 

As for the burden of proof, it was held in R v Davis that the use of the word “necessary” requires that the court must be satisfied to the highest standard. ‘Probably’ necessary will not do.

The Tribunal therefore summarized the principles from the case authorities that:

1.       there is the strong presumption that all evidence should be available to a person, who has to defend a criminal charge;

 

2.       rendering evidence anonymous whether by hiding the identity of a witness from a defendant (or in the present case a respondent) is exceptional; and

 

3.       a party seeking anonymity must adduce evidence that establishes that it is necessary, not that it is probably necessary.

 

In this case, the Tribunal held that applications to keep information confidential must be supported by evidence capable of demonstrating that the restrictions sought are necessary but the Commission’s evidence fell far short of satisfying this criterion. The Tribunal has the impression that the Commission has erroneously assumed that obtaining confidentiality orders is routine and easy. In particular, the Commission proposes that the names of all the individuals mentioned in the Originating Notice other than the Respondents are redacted with no attempt to distinguish between them. This approach is held to be wrong and needs to be reconsidered.

Takeaway

This case shed light on the factors that the Tribunal would take into account in ordering a confidentiality ring in the context of an action by a regulatory body against respondents involving a criminal charge. Credible evidence must be adduced to justify inclusion/exclusion in a confidentiality ring. The Tribunal also clarified that seeking confidentiality orders is not routine and easy as in particular, a party seeking redaction of information has to satisfy the Tribunal to the high standard of necessity.

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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.

Published by ONC Lawyers © 2022