As has been widely reported in the media, the Competition Commission (CC) announced yesterday that it has, for the first time, commenced proceedings in the Competition Tribunal (CT). In a long-awaited development, the CC has filed an application under section 92(1) of the Competition Ordinance (CO), seeking the imposition of pecuniary penalties against five information technology companies – Nutanix Hong Kong Limited, BT Hong Kong Limited, SiS International Limited, Innovix Distribution Limited and Tech-21 Systems Limited.
The proceedings concern the alleged rigging of bids made in response to a tender issued in July 2016 by the Hong Kong Young Women’s Christian Association. The contract in question was for the supply and installation of a new IT server. According to press reports, the investigation was launched after the CC received a complaint in July last year. If made out, the allegations would amount to an infringement of the First Conduct Rule set out in section 6(1) of the CO, which prohibits anti-competitive agreements.
Bid rigging is specifically identified in the CO as “serious anti-competitive conduct”, entitling the CC to issue proceedings in the CT, without issuing a “warning notice” to the parties. The CT has the power to impose fines on any person it finds has contravened or been involved in a contravention of the First Conduct Rule, up to a maximum of 10% of the Hong Kong revenues of the companies involved, multiplied by the number of years (subject to a maximum of three years) in which the contravention occurred.
As the CC’s Chairperson Anna Wu has said, this step marks a significant milestone for the enforcement of competition law in Hong Kong and underlines the CC’s stated focus on cartel-like conduct, such as bid rigging, market sharing and price fixing. It comes hot on the heels of its CEO’s warning that the “honeymoon period”, in which there was no hard enforcement of the law, was drawing to an end. The fact that this case appears to have been launched in response to a complaint (rather than from an immunity application) indicates that the CC has been successful in its campaign to make customers aware of potential bid rigging and businesses in Hong Kong are prepared to bring potential infringements to the attention of the authorities. As noted in our earlier briefings there are other investigations in the pipeline and the CC’s announcement is a timely reminder for companies of the need to ensure their business practices comply with the law.