Hong Kong: Competition Commission
The Competition Commission (Commission) in Hong Kong has had a very busy and fruitful third year of full operations in 2018, achieving a number of important milestones across the spectrum of its enforcement, policy and advocacy work. As a result, the past year has seen the Commission take important strides toward maturing as an agency and benefiting Hong Kong's consumers. This article outlines some of the Commission's activities in the past year.
In 2018, the Commission received over 700 complaints and enquiries about potentially anticompetitive conduct. Over 70 per cent related to the First Conduct Rule (anticompetitive agreements), with cartel conduct being the major concern; and over 20 per cent related to the Second Conduct Rule, which prohibits abuse of substantial market power.
In September 2018, the Commission commenced proceedings in the Competition Tribunal (Tribunal) against three renovation companies and two individuals for alleged customer allocation and coordinated pricing in the provision of renovation services in a residential housing estate. This was the third case brought before the Tribunal, but it was the first time the Commission brought direct enforcement action against individuals who were involved in the conduct, driving home a deterrent message that both companies and individuals engaged in cartels may expect to face the full force of the law. Additionally, the liability-stage hearing (trial) of the Commission's first two cartel cases were completed in 2018, and it is expected that judgments will be handed down by the Tribunal in 2019. These initial cases will play an important role in establishing precedent on several key issues, such as the standard of proof applicable to the Commission's enforcement actions, and will provide guidance for the Commission and businesses alike.
Publication of decision regarding Code of Banking Practice
The Commission published a Decision in October 2018 finding that the Code of Banking Practice (Code) is not excluded from the First Conduct Rule by the legal requirements exclusion in the Competition Ordinance (Ordinance). Recognising that the Code is intended to promote good banking practices that may benefit service users in particular ways, the Commission at the same time confirmed that it has no current intention to pursue further investigative or enforcement action in respect of the present version of the Code.
The Decision was made in response to an application received in December 2017 from 14 institutions authorised under the Banking Ordinance (AIs). Stated to be voluntary and non-statutory, the Code is an industry code of practice relating to AIs' provision of banking services to private individuals in Hong Kong. In reaching its Decision, the Commission has carefully considered the application as well as all of the representations and submissions received in response to public consultation on the application.
Advocacy and outreach
Advisory Bulletin on certain practices in the employment marketplace
Since the commencement of the Ordinance, the Commission has encountered situations where businesses have engaged in employment-related practices that may give rise to competition concerns. In response, the Commission published an Advisory Bulletin in April 2018 to alert employers, employees and human resources professionals of the potential competition risks with regard to employment-related practices, in particular in the determination of employment terms and conditions as well as the hiring of employees.
The advisory bulletin successfully raised awareness of relevant stakeholders and contributed to the promotion of compliance in the labour market.
Engagement with the public sector
To further incorporate competition policy into public policies and regulations, the Commission has been stepping up its initiatives to advise the public sector and policymakers, and facilitate their recognition and assessment of competition issues. The Commission published a handy Guide to Competition Ordinance in May 2018 as a first step to assist them in identifying and assessing the competition risks and impacts of public policies and initiatives. A series of training sessions followed in September 2018 as a further initiative to engage the public sector. Led by international competition law experts Richard Whish and William Kovacic, the training was well attended by over 200 senior officials from the government, public bodies, law enforcement agencies and regulators.
During the year, the Commission continued its efforts in liaising with the government and public bodies, providing advice on around 30 issues that may affect the city's business environment and the daily lives of Hong Kong people.
Youth education campaign
Engaging the younger generation has been an important part of the Commission's advocacy work. In December 2017, the Commission rolled out the 'Post to Compete' Social Media Advocacy Challenge, inviting all local tertiary students to team up and formulate creative and strategic social media advocacy campaigns to promote the Ordinance. Concluding in May, the campaign received an overwhelming response, and the posts generated on various social media platforms recorded a total of 1.6 million views.
To further the impact of the campaign, the Commission launched its debut short movie A Conspiracy of Love in November 2018, which was adapted from the campaign's winning piece. The movie was widely publicised on online platforms as well as cinemas, metro stations and on outdoor video walls to reach out to a wider audience. The short movie and its trailer have had more than 1.8 million online views to date and have achieved the goal of enhancing public awareness of two types of anticompetitive conduct, market sharing and price fixing, in a novel way.
The Commission has been actively engaging its stakeholders through meetings and seminars, educational materials and special projects since inception. In the past year, the Commission has conducted and participated in more than 90 events, and won numerous local and international awards for its outreach and publicity activities including the Competition Advocacy Contest co-organised by the International Competition Network and the World Bank Group.
Although still young, the Commission is emerging as an up-and-coming agency and is starting to take a leadership role in the international arena, especially in the sharing of its experience with other young jurisdictions.
In 2018, the Commission was appointed as co-chair of the International Competition Network Advocacy Working Group, with a view to promoting a competition culture through non-enforcement means. Towards the third anniversary of the full implementation of the Ordinance, the Commission organised its inaugural international conference, the Hong Kong Competition Exchange, in November 2018. Over 300 representatives from the business sector, the legal community, government departments, academic institutions and overseas competition agencies participated in the event where they shared best practices, insights and experiences on competition law and policy. To sustain the exchange and sharing, the Commission launched a brand new online portal, the Competition Exchange (www.compex.org), a dedicated website aiming to host a pool of practical tools and resources from different jurisdictions on various competition topics.
Going forward, the Commission will continue to work efficiently and effectively in enforcement, policy and advocacy. On the enforcement front, the Commission is reviewing its framework on leniency and cooperation with a view to providing more clarity, and getting more people to come forward and cooperate with Commission investigations. To enhance the deterrent effect of its work, the Commission will continue to pursue the liability not only of culpable businesses but also individuals involved in contraventions of the Ordinance, including by application to the Tribunal for individual fines as well as disqualification of directors. Where appropriate, the Commission will also seek to bring action against a parent company for a contravention committed by its subsidiary. Internally, the Commission is looking to further improve its investigative capabilities by continued capacity and expertise building, as well as developing its in-house forensic IT capabilities.
As for policy and advocacy, the Commission will continue to play an active advisory role and coordinate more closely with the public sector during the early stages of policy making and public schemes formulation. The Commission will also carry on its creative approach to public education while seeking to further its outreach to businesses with a particular emphasis on small and medium-sized enterprises (SME) and SME law firms in 2019.
There was much to be proud of over the past year and we look forward to accomplishing more in bringing everyone in Hong Kong the many benefits that flow from competition.