With the Hong Kong Competition Ordinance set to take effect in 2015, a key question is: Who is the Competition Commission and what might business expect from the new regulator?
We answer that question in this article and will continue to explore the new competition regime in future articles as its introduction approaches. For more information about the Ordinance, see our previous alert, Hong Kong’s new competition law: get ready for the antitrust revolution.
Size of the Commission
Under the Competition Ordinance, the Competition Commission is to consist of between 5 and 16 members. 14 members have been appointed, with the key member being Annu Wu, the Chairperson.
Ms Wu, the Commission’s Chairperson
Ms Wu is an experienced public official. She is currently a member of Hong Kong’s Executive Council. Besides being the Chairperson of the Competition Commission, she is also the Chair of the Mandatory Provident Fund Schemes Authority and was the Chair of the Equal Opportunities Commission, the Consumer Council and the Operations Review Committee of the Independent Commission Against Corruption. She has also been a member of the Legislative Council.
The Commission’s members
The other 13 members of the Competition Commission are:
- The Hon Andrew LEUNG Kwan-yuen, GBS, JP
- Ms Agnes CHAN Sui-kuen
- Mr CHAN Kwok-wai, MH, JP
- Mr Thomas CHENG Kin-hon
- Prof Leonard CHENG Kwok-hon, JP
- Mr Michael HUI Wah-kit, MH
- Mr KWOK Kwok-chuen, BBS, JP
- Ms Miranda KWOK Pui-fong
- Dr Anthony William SEETO Yiu-wai
- Prof TSANG Shu-ki
- Ms Gilly WONG Fung-han
- Mr Simon WONG Kit-lung
- Mr Albert WONG Kwai-huen.
Commission members have a range of backgrounds. About half are currently active in business and there are several from academia. Most of the Commission members hold or have held positions in other public institutions.
The Commission’s decisions
Decisions of the Commission are by majority vote with each member having an equal vote. The Chairperson, however, will naturally take on a leadership role.
The Commission’s staff
Also influential will be the staff at the Commission who will be responsible for much of the day-to-day work of the Commission as well as developing policy and strategy. In particular, the Commission staff will be primarily responsible for conducting investigations and will provide recommendations to the Commissioners on issues such as whether to take court action.
Several key staff members have already been appointed including:
- Ms Rose WEBB, Senior Executive Director;
- Mr Timothy LEAR, Executive Director (Operations);
- Ms Daisy CHAN, Executive Director (Public Affairs and Corporate Services).
Ms Webb and Mr Lear were recruited from the Australian Competition and Consumer Commission (ACCC). While at the ACCC, Ms Webb was the head of the group which conducted merger reviews and examined applications for exemptions. Mr Lear was the Director of International Affairs and represented the ACCC at the International Competition Network of competition regulators as well as at ASEAN and the OECD.
Relationships with other regulators will be important in developing the Commission’s expertise in investigating and analysing suspected anti-competitive conduct. The Commission will also look to overseas experience and cases to identify issues in particular industries and in prioritising its enforcement strategy.
The next step for the Commission is to recruit the Chief Executive Officer and Chief Economist. The Commission is expected to have about 50 people when fully staffed.
The Commission’s work
The Commission has been vocal leading up to the implementation of the Competition Ordinance. Ms Wu has been particularly busy speaking to the media and business and the Commission is very focused on raising awareness of the new laws and warning business of the potential penalties for breaking them.
Ms Wu has tried to reassure small and medium businesses that the new laws will benefit them by lowering costs and observing that the Ordinance contains certain thresholds which mean that some of its provisions will not apply to smaller businesses.
Price cartels and the ‘Big Tigers’
Ms Wu has said that price cartels will be among the first targets and that she is determined to tackle the “Big Tigers” of Hong Kong.
Ms Webb has said that trade associations were investigated when Australia introduced its competition laws and media reports have also drawn attention to the new laws with recent articles alleging price fixing by trade unions of gold retailers and chicken sellers.
Although Ms Wu has refused to state publicly specific sectors or industry the Commission might target, she has referred to the construction industry and building maintenance contracts as being areas where bid-rigging and market allocation might be common and where small and medium business might feel the effects of the new laws.1
At the moment, the most important task for Commission and its staff is to prepare draft guidelines on how the Commission will apply and enforce the Ordinance. The Commission appears to be eager to start enforcing the laws and believes that the guidelines and other preparations will be complete in early 2015 and that the new laws could come into effect in the first half of 2015. However, the implementation of the Ordinance might take longer depending on the issues arising from the draft guidelines and in the Legislative Council.
The Commission’s budget
Ms Wu has also emphasised that proper funding is required for the Commission to be effective. She informed the Legislative Council recently that the bringing court cases will not be cheap and that it will be difficult for the Commission to carry out its work if it did not have enough financial resources. The Commission's budget for this financial year is HK$83.9 million.
Bringing court cases and obtaining penalties against companies will be an important strategy for the Commission to increase awareness and deter anti-competitive conduct. Business should also expect high-profile investigations into particular industries which will increase the chance of complaints and information of illegal conduct being received by the Commission.