Hong Kong Enacts New Competition Law

n June 2012 the Hong Kong Legislative Council passed the Competition Ordinance (“Ordinance”), introducing a competition law which applies to all sectors of the Hong Kong economy. The substantive provisions of the Ordinance, however, are not expected to come into force until sometime in 2014. The Ordinance comprises three main rules. The First Conduct Rule prohibits anti-competitive agreements, concerted practices and decisions which prevent, restrict or distort competition. This Rule distinguishes between “serious anti-competitive conduct“ (i.e. price fixing, bid rigging, market allocation and output control) and less serious conduct. The Second Conduct Rule prevents an undertaking that has a substantial degree of market power from abusing that power by engaging in conduct with the object or effect of preventing, restricting or distorting competition. In addition to the First and Second Conduct Rules, which apply to all industry sectors, the Merger Rule prohibits mergers or acquisitions involving telecommunications licensees which have, or are likely to have, the effect of substantially lessening competition. Merger activities outside the telecommunications sector are currently excluded from the scope of the Ordinance. Anti-competitive activities outside Hong Kong are subject to the Ordinance if they have an effect on competition in any market in Hong Kong. There are various exceptions to the three Rules and de minimis exemptions from the First and Second Conduct Rules. A Competition Commission is being established to investigate and bring proceedings in respect of anti-competitive conduct, which will be adjudicated by a new Competition Tribunal with the power to apply a full range of remedies and penalties. More…