Immunity & Sanctions

Last verified on Sunday 24th May 2020

Immunity & Sanctions: Hong Kong

Philip Monaghan, Scott Schaeffer and Charles Paillard

O'Melveny & Myers

Immunity or a 100 per cent reduction in sanctions

1. What benefits are available to the first applicant to qualify?

Hong Kong

Pursuant to its Leniency Policy for Undertakings Engaged in Cartel Conduct (Leniency Policy for Undertakings) – as updated on 16 April 202 – the Hong Kong Competition Commission (HKCC) will not seek a pecuniary penalty against the first qualifying cartel member to self-report. This represents 100 per cent immunity from pecuniary penalties. Leniency is also available for individuals under the Leniency Policy for Individuals Involved in Cartel Conduct (Leniency Policy for Individuals), published by the HKCC on 16 April 2020 (see questions 42-44).

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

2. Do the protections extend to current and former officers, directors and employees?

Hong Kong

A leniency agreement concluded with an undertaking ordinarily extends leniency (immunity from pecuniary penalties) to any current  employees, officers, and partners (in the case of a partnership) of that undertaking, on condition that they provide complete, truthful and continuous cooperation to the HKCC. The Leniency Policy for Undertakings states that leniency will also extend to any agent, former officer, former employee or former partner of the applicant provided the leniency agreement mentions them by name or otherwise identifies them and they cooperate with the HKCC.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

3. Is immunity available after an investigation begins?

Hong Kong

Yes. The HKCC may enter into a leniency agreement even after opening an investigation (including where the HKCC has already used its formal investigative powers). While the Leniency Policy explicitly provides that leniency ‘may be available’ in this context, the suggestion is, however, that the HKCC may determine that leniency is not available unless the leniency applicant is in a position to bring some new facts or material to the attention of the HKCC. Leniency also remains technically available after the initiation of proceedings, but the circumstances would need to be exceptional.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

4. What are the eligibility requirements before an investigation begins?

Hong Kong

Known as Type 1 Leniency, an undertaking engaged in economic activity can apply for leniency before the HKCC has opened an initial assessment or an investigation. Full immunity is available to the first undertaking to report its participation in cartel conduct contravening the First Conduct Rule (FCR) in the Competition Ordinance (CO). Individuals may apply for leniency under the Leniency Policy for Individuals (see questions 42-44). The applicant must offer its continuing full and truthful cooperation in the investigation and subsequent prosecution of the other parties to the cartel. This includes preserving and producing all non-privileged information related to the cartel conduct (see question 29).

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

5. What are the eligibility requirements after an investigation begins?

Hong Kong

Known as Type 2 Leniency, undertakings can also apply for leniency after the HKCC has begun an investigation.  The eligibility criteria in this context are the same as those that apply in the case of Type 1 Leniency, although the leniency applicant must be in a position to provide substantial assistance to the HKCC’s investigation and subsequent enforcement action.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

6. Will the applicant have to admit to a violation of law?

Hong Kong

Type 1 Leniency applicants need not admit to a contravention of the FCR.  Type 2 Leniency applicants (see question 5), on the other hand, may be required to make an admission of a contravention of the FCR if a third launches a follow-on action for damages.  

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

7. Is immunity available to an applicant that admits exchanging commercially sensitive information with a competitor but does not admit entering into an agreement to fix prices or allocate markets?

Hong Kong

Yes. The Leniency Policy for Undertakings applies to any cartel-related conduct, including cartel agreements, concerted practices and anti-competitive practices used to give effect to cartel conduct. 

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

8. Is immunity available to an applicant that admits entering into a vertical price-fixing agreement if that agreement does not also include horizontal collusion?

Hong Kong

The Leniency Policy for Undertakings only applies to horizontal cartel agreements contravening the FCR. In theory, the HKCC may enter into a leniency agreement with an undertaking for any alleged contravention of a conduct rule even if not explicitly covered by the Leniency Policy for Undertakings (including potentially, vertical price-fixing).

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

9. Is immunity available to an applicant that admits entering into an agreement not to solicit or hire another company's employees ("no-poach" agreements)?

Hong Kong

Yes, as the HKCC explained in its Advisory Bulletin on competition concerns in the employment marketplace in relation to hiring and terms and conditions of employment.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

10. Are ringleaders or initiators of the conduct eligible?

Hong Kong

As a general matter, no. In practice, however, in the case of ringleaders, the HKCC will disqualify a leniency applicant only if the applicant is the clear “single ringleader” of the cartel conduct.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

11. When must the applicant terminate its involvement in the conduct?

Hong Kong

On entering into a leniency agreement, the applicant is required to confirm it has taken prompt and effective action to terminate its involvement in the cartel. However, the HKCC may consent to continued participation for operational reasons.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

12. What constitutes termination of the conduct?

Hong Kong

The Leniency Policy for Undertakings is silent in this respect.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

13. Will the applicant be required to make restitution to victims?

Hong Kong

Type 1 Leniency applicants effectively have an immunity from damages. Type 2 leniency applicants may be required to make an admission to facilitate a damages action. The HKCC leniency policies do not otherwise provide for restitution.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

14. Can more than one applicant qualify for immunity?

Hong Kong

In principle, yes. The HKCC retains the discretion to grant full immunity to any number of parties under exceptional circumstances. Only the first leniency applicant can typically expect full immunity, however. Other undertakings party to the same cartel may secure a cooperation benefit if the HKCC recommends to the CT a reduced pecuniary penalty.

The HKCC can grant leniency under the Leniency Policy for Undertakings even where an individual has already secured leniency under the Leniency Policy for Individuals. In the event that an individual seeks leniency after an undertaking has come forward, the HKCC retains discretion not to initiate proceedings before the CT against that individual in return for his cooperation.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

15. Can an applicant qualify if one of its employees reports the conduct to the authority first?

Hong Kong

Yes, see question 4.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

16. Does the afforded protection extend to any non-antitrust infringements?

Hong Kong

No.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

Immunity application and marker process

17. What confidentiality assurances are given to the first applicant to report?

Hong Kong

A general obligation of confidentiality binds the HKCC (subject to certain exceptions).  And while the HKCC reserves the right to use and disclose “Leniency Material” with “appropriate confidentiality protections in its investigations and any proceedings it has brought under the CO”, the HKCC generally refuses to release Leniency Material and will firmly resist, on public interest or other applicable grounds, all requests for such material.

‘Leniency Material’ includes information provided to the HKCC by the leniency applicant for the purposes of a leniency application and/or pursuant to a leniency agreement; and the HKCC’s records of the leniency application process, including the leniency agreement.

There are exceptions to the confidentiality obligation where:

(i) the HKCC is compelled to make a disclosure by order of the CT or any other Hong Kong court, by law or any requirement made by or under a law (in particular following a successful request by a third party to compel disclosure);

(ii) the HKCC has the consent of the leniency applicant to disclose; or

(iii) the relevant information is already in the public domain.

Subject to certain limited exceptions, leniency applicants must also keep all ‘Leniency Material” confidential, including the fact that they have applied for leniency.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

18. Does the authority publish guidance regarding the application of the programme?

Hong Kong

The Leniency Policy for Undertakings is available on the HKCC’s website at:

https://www.compcomm.hk/en/legislation_guidance/policy_doc/files/Leniency_Policy_Undertakings_E.pdf

The Leniency Policy for Individuals is available at:

https://www.compcomm.hk/en/legislation_guidance/policy_doc/files/Leniency_Policy_Individuals_E.pdf

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

19. Do the rules for obtaining immunity in your jurisdiction conflict with the immunity rules in other jurisdictions?

Hong Kong

The Leniency Policy for Undertakings is consistent with international best practices. The Leniency Policy for Undertakings states that leniency applicants are expected to provide the HKCC with details of the other jurisdictions where they have sought or will seek immunity or leniency. In appropriate cases, the HKCC may require a leniency applicant to authorise the HKCC to exchange confidential information with competition authorities in other jurisdictions to facilitate cross-border cooperation and to avoid conflicting regulatory outcomes.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

20. What is the initial process for making an application?

Hong Kong

A leniency applicant or its legal representative may apply to the HKCC for a marker by calling the HKCC’s Leniency Hotline (+852 3996 8010) or by sending an email to: [email protected]. It may also enquire whether a marker is available prior to requesting a marker. Enquiries of this kind may be made on an anonymous or hypothetical basis. However, the HKCC will not grant a marker on the basis of anonymous or hypothetical enquiries.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

21. What information is required to secure a marker?

Hong Kong

To check whether a marker is available, an undertaking must provide sufficient information to identify the conduct for which leniency is sought. This includes, at a minimum: the nature of the cartel, including the industry, the products and services involved, the relevant period.

Once the HKCC confirms a marker is available, it will ask the leniency applicant to confirm whether it intends to apply for the marker. If an applicant chooses to proceed, it must provide or make known:

  • the identity of the applicant;
  • the identities of the any other undertakings participating in the cartel;
  • the identities of the key individuals involved in the cartel;
  • the time period for the cartel conduct;
  • the geographic scope for the cartel conduct;
  • a general description of the cartel conduct, including any information or evidence uncovered by the applicant and why they consider the reported conducted may amount to cartel conduct; and
  • in the context of cartels covering multiple jurisdictions, which other agencies have or will be approached by the applicant.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

22. How much time will an applicant have to perfect its marker?

Hong Kong

If leniency is available, an applicant must perfect its marker by way of a “proffer” (see question 24). The HKCC requires the applicant to complete its proffer within a specified period (ordinarily 30 calendar days after the HKCC grants a marker).

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

23. Can the deadline for perfecting the marker be extended?

Hong Kong

Yes. The HKCC is less likely to grant an extension if the delay risks impeding its investigation.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

24. What is required to perfect the marker?

Hong Kong

A proffer.  The proffer can be made orally or in writing, and on a ‘without prejudice basis’, but it cannot be made on hypothetical terms. The HKCC requires that the proffer include a detailed description of the cartel and its functioning, including information about its duration and participants, the products or services affected, the names of persons involved in the conduct including those involved on the applicant’s behalf, and a description of the evidence it can provide about the cartel. After considering the initial proffer, the HKCC may ask the leniency applicant to provide access to evidence or to witnesses in support of the proffer.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

25. Can the scope of the marker be expanded if additional information is discovered by the applicant?

Hong Kong

Yes, although the position may need to be considered case by case.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

Immunity cooperation obligations

26. Can an applicant lose its marker if a second applicant comes forward with better information?

Hong Kong

No. If, however, the leniency applicant fails to complete its proffer within the timeframe specified by the HKCC, or any extension to it as might be agreed by the HKCC, the marker will lapse. The HKCC will then invite the next undertaking in the marker queue to make an application for leniency.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

27. What if the applicant’s investigation reveals that no violation exists?

Hong Kong

A leniency applicant can withdraw its application at any time prior to entering into a leniency agreement with the HKCC. If an applicant decides not to pursue an application at the proffer stage, the HKCC will return any information previously provided by the applicant. However, the HKCC may later require production of the same information using its statutory powers. 

If an applicant concludes a leniency agreement, and absent an agreed termination with the HKCC, it is likely that a unilateral withdrawal would be a breach of the leniency agreement, triggering a right on the part of the HKCC to terminate. If the leniency agreement is terminated, the HKCC may retain whatever information has been provided by the applicant and later use that information in evidence against the leniency applicant or any other undertakings “to facilitate the performance of its functions insofar as is permitted by law”.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

28. What if the authority decides not to investigate?

Hong Kong

If the HKCC decides not to investigate, it will advise the leniency applicant. Where no leniency agreement exists, the HKCC will return information provided by that party at the proffer stage. When a leniency agreement exists, the HKCC and the applicant may agree to terminate the leniency agreement. The HKCC may still use any information or documents provided by the leniency applicant for the purpose of any investigation and proceedings under the CO (although not against the leniency applicant).

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

29. What is the applicant required to produce?

Hong Kong

If the HKCC determines that the applicant meets the conditions for leniency following the proffer, the HKCC will consider whether to make an offer to the applicant to enter into a leniency agreement (see question 41). The leniency agreement requires the applicant to confirm that it has provided and will continue to provide full and truthful cooperation and disclosures to the HKCC at its own cost, including by preserving and providing the HKCC with all non-privileged information in respect of the cartel conduct, providing access to its IT infrastructure, and providing cooperation during proceedings against other cartel participants. The applicant must also confirm that it has not coerced cartel participants or acted as the clear single ringleader of the cartel. It must terminate its participation in the cartel, unless instructed otherwise by the HKCC. And the applicant must keep all aspects of the leniency application confidential. Finally, the applicant must commit that it is prepared to implement a compliance programme to the satisfaction of the HKCC.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

30. Will the applicant be required to make a written confession?

Hong Kong

See question 6.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

31. Can third parties obtain access to the materials provided by the applicant?

Hong Kong

The HKCC will use its best endeavours to protect all ‘Leniency Material’. It is the HKCC’s policy not to release ‘Leniency Material’ and to resist, on public interest or other applicable grounds, all requests for ‘Leniency Material’ unless certain conditions apply. See question 17.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

Granting immunity

32. Will the applicant lose its protection if one or more of its employees refuses to cooperate?

Hong Kong

If a party to a leniency agreement is still able to comply with its obligations under the leniency agreement (or the conditions for leniency in the event a leniency agreement has not been concluded), the HKCC may exclude the non-cooperating employees from the benefits of leniency. Non-cooperation on the part of the leniency undertaking itself is, however, a ground for termination of the leniency agreement. Difficult questions may therefore arise as to when non-cooperation by employees can be equated with non-cooperation by the applicant itself.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

33. Will the applicant lose its protection if one of its employees engages in obstructive conduct before or after the application?

Hong Kong

If the applicant is still able to comply with the conditions for leniency (notably as regards cooperation) or its obligations under the leniency agreement (if one has been agreed), the HKCC may exclude the particular employees from the grant of leniency for obstructing or attempting to obstruct investigations or proceedings. The CO does not provide for the termination of a leniency agreement for obstruction by a single employee unless that employee’s conduct can be attributed to the applicant.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

34. Will the applicant be required to provide materials protected by attorney-client privilege or work-product doctrine?

Hong Kong

Only non-privileged information relating to the cartel must be provided to the HKCC. Communications covered by legal professional privilege, which in Hong Kong includes advice of an in-house lawyer, are therefore excluded. The work-product doctrine, however, is not part of Hong Kong law.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

Individual immunity or leniency

35. Does the existence of an effective compliance programme affect whether an applicant meets the eligibility requirements?

Hong Kong

No.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

36. Does the authority consider the existence of an effective compliance programme at the time it becomes aware of an infringement when determining the leniency benefits granted?

Hong Kong

No.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

37. Will the applicant be required to implement or enhance a compliance programme to obtain leniency benefits?

Hong Kong

Yes. The leniency agreement requires the applicant to confirm it is prepared to continue with, or adopt and implement, at its own cost, a corporate compliance programme, to the satisfaction of the HKCC.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

38. How does the authority announce its promise not to charge or sanction?

Hong Kong

By entering into a leniency agreement with the leniency applicant, the HKCC agrees not to bring or continue proceedings before the CT for a pecuniary penalty or to bring proceedings before any other tribunal.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

39. Does the authority put its commitment in writing?

Hong Kong

Yes. The HKCC will conclude a written leniency agreement with the successful leniency applicant. The HKCC will also confirm that all conditions of leniency are fulfilled in a final letter that it typically issues at the end of any proceedings before the CT or other courts.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

40. Who is given access to the document?

Hong Kong

See question 31.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

41. Does the authority publish a model letter for conferring immunity?

Hong Kong

The HKCC has published a template leniency agreement for both an undertaking and for individuals engaged in cartel conduct, attached at Annex A (see p.11) to the Leniency Policy for Undertakings and to the Leniency Policy for Individuals. These are available at:

https://www.compcomm.hk/en/legislation_guidance/policy_doc/files/Leniency_Policy_Undertakings_E.pdf

and at:

https://www.compcomm.hk/en/legislation_guidance/policy_doc/files/Leniency_Policy_Individuals_E.pdf

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

42. Is there an individual immunity programme?

Hong Kong

Yes. Under the Leniency Policy for Individuals, the HKCC can grant leniency to an individual who (i) first reports cartel conduct to the HKCC, (ii) is willing to terminate his participation in the cartel and (iii) cooperates with the HKCC in bringing proceedings against other parties to the cartel conduct. In exchange for his cooperation, the HKCC will commit not to commence any proceedings (including proceedings for a pecuniary penalty) against the individual in relation to the reported cartel conduct.

The regime for leniency available to individuals is similar to the one available to undertakings.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

43. What is the process for applying?

Hong Kong

See question 20.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

44. What are the criteria for qualifying?

Hong Kong

See question 21 et seq in particular.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

Revocation of immunity

45. On what basis can corporate immunity be revoked?

Hong Kong

Under the CO, the HKCC can terminate a leniency agreement if:

  • the other party to the agreement agrees to the termination;
  • the HKCC has reasonable grounds to suspect that the information on which it based its decision to enter into the leniency agreement was “knowingly” incomplete, false or misleading in a material particular;
  • the other party to the agreement has been convicted of an offence under Part 3 of the CO (for example, because it destroyed or falsified documents or obstructed a search by the HKCC); or  
  • the HKCC is satisfied that the other party to the agreement has failed to comply with the terms of the leniency agreement.

Before terminating a leniency agreement, and after informing the party to the agreement of its concerns, the HKCC must afford the other party an opportunity to address the HKCC’s concerns.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

46. When can it be revoked?

Hong Kong

At any time provided the conditions for revocation are met.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

47. What notice is required to revoke?

Hong Kong

The HKCC will first inform the party to the leniency agreement of its concerns and give it the opportunity to address these concerns. Thereafter, the process under the CO is as follows:

  • First, the HKCC will give notice in writing to the other party to the agreement, and to any other person who appears to the HKCC to be likely to benefit from the agreement, stating the proposed date of termination and the reasons for termination.  
  • The notice will specify a period (not less than 30 days) within which both the other party and third parties likely to benefit from the agreement can make representations to the HKCC about the proposed termination.
  • Before terminating the agreement, the HKCC must consider any representations about the proposed termination.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

48. Can the applicant file a judicial challenge to a decision to revoke?

Hong Kong

Yes. A decision to terminate a leniency agreement is a reviewable determination.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

Reduction in sanctions

49. Does the leniency programme allow for reductions in sanctions?

Hong Kong

Under the Leniency Policy for Undertakings, leniency (in the sense of full immunity) is only available in principle to the first applicant. The Cooperation Policy, however, provides a framework for other undertakings to cooperate and potentially secure reductions in pecuniary penalties. The Cooperation Policy complements and should be read alongside the Leniency Policy for Undertakings. The Cooperation Policy only applies to cartel conduct and to undertakings (not individuals).

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

50. What is the process for seeking a reduction in sanctions?

Hong Kong

The Cooperation Policy provides a four-step process.

First, an undertaking subject to an ongoing investigation can approach the HKCC and indicate its willingness to cooperate (orally or in writing). Separately, the HKCC can approach an undertaking to propose cooperation. Cooperation agreements are possible even after the HKCC has initiated enforcement proceedings before the CT, although the maximum available discount is reduced.

Second, the applicant must complete a proffer of documents and information detailing the cartel conduct (participants, duration, relevant products, services, and individuals involved), on a “without prejudice” basis. The applicant must also make its employees, officers, partners (in the case of a partnership) and agents available for interviews. The HKCC will then share a draft agreed factual summary of the investigated cartel conduct and a draft cooperation agreement. At the same time, the HKCC will disclose a selection of key documents supporting the draft agreed factual summary. 

Third, after agreeing in principle to the content of the draft agreed factual summary and the draft cooperation agreement, the HKCC will disclose the maximum pecuniary penalty it would recommend to the CT, which will reflect a cooperation discount. The HKCC will also indicate whether it intends to apply for any other orders. The applicant has 10 days to confirm its continued cooperation by signing the Cooperation Agreement (including the agreed factual summary). In so doing, the applicant agrees to provide full and truthful cooperation throughout all enforcement proceedings and (generally) to terminate its participation in the cartel conduct. The applicant also commits to make a joint application with the HKCC for a consent order under Rule 39 of the CT Rules (Cap. 619D). 

Fourth, at the end of any judicial proceedings, the HKCC will issue a final letter confirming that the applicant has complied with the terms of the cooperation agreement.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

51. Is there a marker process similar to immunity applications?

Hong Kong

The HKCC will typically award the largest recommended discount to “the first undertaking to express its interest to cooperate”. Other undertakings are treated according to the order in which they contact the HKCC. In determining the amount of a discount, the HKCC will take into account whether an undertaking approached the HKCC in a timely manner. 

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

52. Are the reductions in sanctions fixed or discretionary?

Hong Kong

The Cooperation Policy provides three bands of recommended discounts:

  • Band 1 (first undertaking willing to cooperate): between 35 and 50 per cent;  
  • Band 2 (next undertakings): between 20 and 40 per cent;  
  • Band 3 (subsequent undertakings): up to 25 per cent.

The HKCC retains discretion to include more than one undertaking in a band and to determine the actual cooperation discount for undertakings within each band. If an undertaking seeks to cooperate after the HKCC has initiated enforcement proceedings before the CT, the HKCC may recommend a discount of up to 20 per cent. Recommended discounts are not binding on the CT.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

53. How are the reductions in sanctions calculated?

Hong Kong

Within each band, the HKCC will determine the actual cooperation discount with reference to the timing, nature, value, and extent of cooperation offered by the relevant undertaking. The HKCC will also consider whether the applicant coerced any other person to participate in the cartel; whether it provided significant evidence; and whether it acted in good faith in dealings with the HKCC.

The CT, however, retains ultimate discretion on the level of any pecuniary penalty imposed.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

54. Are there sentencing guidelines?

Hong Kong

No.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

Cooperation obligations for sentencing reductions

55. If an applicant's cooperation reveals self-incriminating information that expands the scope of the conduct known to the authority, will that conduct be factored into the fine calculation?

Hong Kong

No. But the Cooperation Policy has introduced a leniency plus scheme (see questions 59 and 60). 

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

56. Are there fixed or discretionary discounts for the first applicant to cooperate after the immunity applicant (assuming there is an immunity applicant)?

Hong Kong

See question 52.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

57. Other than fine reductions, are there additional incentives offered to an applicant that is the first non-immunity applicant?

Hong Kong

Undertakings may also obtain commitments from the HKCC that it will not bring proceedings against any current and former employees, officers, partners (in the case of a partnership) and agents (subject to their cooperation during the investigation). 

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

58. Does the competition authority publish guidance regarding sentencing reductions?

Hong Kong

Yes. The Cooperation Policy is available at: https://www.compcomm.hk/en/legislation_guidance/policy_doc/files/Cooperation_Policy_Eng.pdf.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

59. Does the authority provide for "Leniency Plus" benefits?

Hong Kong

Yes. The HKCC applies an additional discount of up to 10% to the recommended pecuniary penalty imposed on an undertaking involved in one cartel if that undertaking reports a second cartel. 

Leniency Plus is available to undertakings that:

  • have entered into a leniency agreement with respect to the second cartel;
  • the second cartel is completely separate from the first cartel; and
  • the applicant fully and truthfully cooperates with the HKCC with respect to both cartels.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

60. How is the Leniency Plus discount calculated?

Hong Kong

The HKCC considers the following factors when determining a Leniency Plus discount:

  • the strength of the evidence provided about the second cartel;
  • the significance of the second cartel, including the value of sales affected, the number and size of the undertakings involved, and the geographic scope; and
  • the likelihood that the second cartel would have been uncovered without the applicant’s cooperation.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

61. Are the cooperation obligations similar to those for immunity applicants?

Hong Kong

Yes. In particular, the applicant must provide full and truthful disclosure, terminate its participation in the cartel conduct (unless directed otherwise by the HKCC), keep confidential all aspects of the cooperation process, and cooperate fully and truthfully on a continuing basis (at its own expense) throughout the HKCC’s investigation and court proceedings. There are also requirements that the applicant act in good faith in its dealings with the HKCC and that it adopt and implement a corporate compliance programme. 

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

62. Will the applicant be required to make a written confession?

Hong Kong

Yes. The cooperation agreement will include an agreed factual summary that will serve as the basis for the joint application for a consent order. 

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

63. Can third parties obtain access to the materials provided by the applicant?

Hong Kong

Without prejudice privilege applies to documents, information, communications and representations provided to the HKCC within the cooperation proffer process. However, pre-existing documents provided to the HKCC may have to be disclosed in proceedings, if relevant. 

HKCC is otherwise bound by a general obligation of confidentiality with respect to any confidential information provided.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

64. Will an applicant qualify for sentencing reductions if one or more of its employees refuse to cooperate?

Hong Kong

This will depend on the circumstances of the case and, in particular, on whether the non-cooperation amounts to a failure to comply with the cooperation agreement. The applicant is required to make available its employees, officers, partners (in the case of a partnership) and agents for interviews. A failure to fulfil that obligation could lead the HKCC to discontinue cooperation with the applicant if the cooperation agreement has not yet been signed or to terminate the cooperation agreement if it has already been signed. The HKCC may also commence enforcement proceedings against employees who refuse to cooperate.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

65. Will the applicant lose its protections if one of its employees engages in obstructive conduct before or after the application?

Hong Kong

See answer to question 64.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

66. Will the applicant be required to provide materials protected by attorney-client privilege or work-product doctrine?

Hong Kong

No. See generally the answer to question 34. 

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

67. Can an applicant challenge the amount of the reduction of sanctions?

Hong Kong

No. The applicant and the HKCC jointly recommend to the CT the pecuniary penalties in a single application (subject to the maximum discount applicable — see questions 50 and 52). The level of the pecuniary penalty ultimately set by the CT may be subject to appeal.

Answer contributed by Philip Monaghan, Scott Schaeffer and Charles Paillard

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