Taylor Wessing met with senior representatives of the Hong Kong Competition Commission and German Chambers of Commerce for exchange of experience with new Hong Kong competition law.

Almost one year after the Hong Kong competition law came into force in December 2015, many companies doing business with Hong Kong are still not aware of or have little experience with the new competition rules even though they might affect their business. This also applies to German companies active in Hong Kong, even if they do not engage in sales of products or services, but only in (joint) purchasing activities in Hong Kong.

New competition law regime

The Hong Kong Competition Ordinance came into effect on 14 December 2015. For the first time, companies doing business with Hong Kong are subject to a competition law regime applying to all industries / sectors (previously, there had only been a competition regime for the telecommunications sector). Now, the competition rules in Hong Kong apply to all types of goods and services and to all levels of trade.

The Ordinance prohibits three types of anti-competitive conduct: anti-competitive agreements, abuse of market power and anti-competitive mergers and acquisitions (the latter still limited to the telecommunications sector).

As regards the prohibition of anti-competitive agreements, especially those companies having ongoing business relations with Hong Kong should be aware that certain business practices which were legitimate prior to the introduction of the new Ordinance might now violate Hong Kong competition law. Such practices may inter alia comprise certain types of exclusive distribution and customer allocation, vertical price restrictions or joint purchasing. The same applies to the prohibition of abuse of market power. Conduct which may be considered as an abuse of market power under the new Competition Ordinance includes inter alia predatory pricing, tying and bundling or exclusive dealing.

Even though there are obvious similarities with European competition law, which has very much influenced the new Hong Kong Competition Ordinance, there are also several differences (e.g. as regards possible efficiency justifications for certain vertical price restrictions).

Enforcement activities

The Competition Commission, established in 2013, had a period of about two years to prepare the enforcement of the Competition Ordinance before it came into effect in December 2015. During this period, the Competition Commission conducted a number of publicity campaigns (even including TV advertisement) and has been actively engaged in educational materials (including several guidelines) and seminars to create a new public awareness for competition law compliance in Hong Kong. In addition, the Competition Commission has conducted a number of proactive initiatives in sectors it considers particularly at risk of anti-competitive conduct (such as trade associations) and targeted conduct it thinks likely to be prevalent in Hong Kong (such as bid-rigging). The Competition Commission also has received numerous complaints and leniency applications and has started several investigations in this regard.

Exchange of experience with Hong Kong Competition Commission and German Chambers of Commerce

As with many new things, the introduction of the new Competition Ordinance comes along with several uncertainties and open questions concerning all stakeholders, in particular companies doing business in Hong Kong. In order to provide its clients with comprehensive advice, Taylor Wessing is actively engaged in debates on competition policy issues. In this context, Manuel Nagel (partner in our Düsseldorf office), Dr. Jakob Riemenschneider (partner in our Hong Kong office) and Gerard Pang (Senior Associate of our associated law firm HM Chan & Co) recently met with Philip Monaghan (Executive Director at the Hong Kong Competition Commission), Jing-jing Zhao (Of Counsel at the Hong Kong Competition Commission) and Wolfgang Ehmann (Executive Director at the German Chambers of Commerce in Hong Kong) for an exchange of experience with the new Hong Kong competition law. With a new competition law regime evolving in Hong Kong and precedents or case-law yet to come, the meeting provided valuable insights. Taylor Wessing deems close contact with the competition authority as important and a benefit for our clients.