Companies increasingly understand they must take into account competition laws in their business planning or face potentially significant risks. Some may have a higher awareness of competition law issues because of past investigations, successful prosecutions and/or onerous settlements in other jurisdictions that involve their industry. Hong Kong might have a brand new competition law system but firms should be very mindful of the Competition Commission’s clear enforcement focus on cartels, global enforcement trends and topical issues in the local business environment.
Directors, management and in-house lawyers alike should take note of the lessons from other jurisdictions to ensure competition law compliance is (and stays) high on the business agenda:
In-house counsel are primarily responsible for controlling legal risks, as well as building the business case for compliance. Ultimately however it is up to the drivers of commercial strategy – the board and other senior management – to implement this advice.
Internal lawyers can help push the competition compliance message by advising not only on the costs of efficient and effective compliance but also the opportunities to implement (or protect) highly profitable commercial strategies.
Directors should have plenty of incentives to take competition law risks seriously and keep it on the board agenda. After all, they bear the responsibility for the actions of their companies, including personal liability for fines under the Competition Ordinance. Overseas studies have shown that director disqualification is seen by businesses as a very effective deterrent – after even the criminal penalties.
Both executive and independent directors can influence the direction of commercial activities as well as embed values for a compliant corporate culture.
- Management (and some employees) can get caught up in competition investigations as potential witnesses – even if they leave the business.
Staff working in higher risk areas of the business can work closely with legal advisers to help optimise practices and create a competitive advantage, rather than focusing only on compliance.
Protecting your business from enforcement actions under competition laws takes more than a once-off legal risk assessment and some compliance training. Every company should have a tailored strategy but risk awareness is always the starting point.