2020: Another year of “firsts” for Hong Kong’s competition watchdog

2020 has been the most active year yet for the Hong Kong Competition Commission: so far it has filed two enforcement actions before the Competition Tribunal involving IT services and text books (bringing the total number of actions brought by the Commission to six), issued its first infringement notice and accepted its first set of commitments.  The Commission has also (after nearly two years) concluded one of its most high-profile investigations to date, into the Hong Kong Seaport Alliance, resulting in a second commitments decision.

The Commission has focused to date on conduct falling under the First Conduct Rule (which governs anti-competitive agreements and concerted practices) and has yet to take any formal enforcement action relating to the Second Conduct Rule (which applies to abuses by companies with a “substantial degree of market power” or “SDMP”). 

However, the Commission has recently referred in its Annual Report to the existence of a number of initial assessments or investigations into potential abuses of SDMP. It is therefore to be hoped that we might soon receive some much-needed guidance on what amounts to SDMP and how the Commission will approach these kinds of cases going forward.

On the policy front, this year saw the publication of an updated leniency policy for undertakings (which provides greater protection for applicants that come forward before the Commission has begun its own assessment of the conduct) and the introduction of a new leniency policy for individuals, both of which seek to increase the incentives for companies and employees to bring anti-competitive conduct to light as early as possible. The Commission has also issued welcome guidance on its methodology for determining recommended pecuniary penalties for anti-competitive conduct, following its approach earlier in the year in the first case in which such penalties were ordered by the Competition Tribunal. Finally, the Commission issued an early and balanced response to the Covid-19 pandemic, in which it reminded businesses not to exploit the outbreak for anti-competitive gain while recognising that increased co-operation may be required. The Commission stated that it intends to take a “pragmatic approach” and offer quick and informal guidance in respect of co-operative measures genuinely necessitated by the health crisis.

Where to next?

It is expected that the Commission’s enforcement activities will continue to be focused predominantly on cartel conduct and driven by cases brought to its attention, rather than a proactive and sector-specific approach.  The future will likely also see the Commission broadening its horizons into other areas of the law, such as the Second Conduct Rule. In line with the approach taken in the recent online travel agents case, it is further possible that the Commission will consider following regulatory interventions in larger jurisdictions, where the activities of foreign multi-nationals are seen to have a direct impact on Hong Kong markets and consumers. 

For further insights into the Commission’s recent high-profile decision relating to the Hong Kong Seaport Alliance and assessment of what lies ahead, please read our client briefing.