The implementation of the new Competition Ordinance (Chapter 619 of the Laws of Hong Kong) (the Competition Ordinance) on 14 December 2015 will mark the first time that Hong Kong has a general and cross-sector competition law.

Background

The Competition Ordinance was enacted on 14 June 2012 as a general and cross-sector competition law to curb anti-competitive conduct, and will come into full effect on 14 December 2015. In this issue, we will provide some practical tips to assist you with ensuring compliance with the Competition Ordinance.

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Risk Identification

Companies must first conduct a thorough review of its existing operations, business practices, business arrangements and contracts to identify aspects of the Competition Ordinance that are of particular relevance. Such a review will assist with the determination of an appropriate compliance strategy and the priority of compliance measures to be undertaken.

As a starting point, companies should be wary of and avoid “high risk” conduct as set out below:

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If a company has a substantial degree of market power, it should also be wary of and avoid further “high risk” conduct as follows:

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For companies that are holders of carrier licenses under the Telecommunications Ordinance (Chapter 106 of the Laws of Hong Kong), they should be alert whenever they are in a “dominant position1 and/or considering a merger transaction.

Risk Mitigation

Given the difference in nature and size of each business, companies will need to consider the actual impact of the Competition Ordinance on its practices and formulate a compliance strategy suitable to the size and risk profile of its business.  

For reference purposes, we set out below a list of non-exhaustive measures that companies can adopt in order to mitigate and manage potential or identified risks:

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Competition compliance is an on-going process. Companies should regularly review its policies and practices (which, in light of changing market conditions or new legal developments, may change from time to time) and where necessary, update and refine its compliance measures to ensure continuing compliance with the Competition Ordinance.

Regular Reviews

Competition compliance is an on-going process. Companies should regularly review its policies and practices (which, in light of changing market conditions or new legal developments, may change from time to time) and where necessary, update and refine its compliance measures to ensure continuing compliance with the Competition Ordinance.

Outlook

This imminent implementation of the Competition Ordinance marks a significant step in the evolution of Hong Kong’s fledgling antitrust regime. Multinational enterprises doing business in Hong Kong can no longer afford to dismiss the Special Administrative Region as a jurisdiction that has no competition regime or antitrust enforcement.

Understanding and complying with competition law principles is therefore more important than ever.