Competition Litigation Comparative Guide

• Law Firm: Haldanes Solicitors & Notaries
• Subject Matter: ntitrust/Competition Law, Antitrust, EU Competition
• Author: Mr Felix Ng and Christina Ma
• Published date: 17 January 2023

1 Legal framework

1.1 Which laws regulate competition in your jurisdiction?

Enacted in June 2012, the Competition Ordinance (Cap 619) came into full force on 14 December 2015, establishing the first cross-sector competition law regime in Hong Kong.

The ordinance prohibits three major forms of anti-competitive practices:

• The First Conduct Rule prohibits anti-competitive agreements and cartel activities (Section 6 of the ordinance);
• The Second Conduct Rule regulates the abuse of a substantial degree of market power (Section 21 of the ordinance); and
• The Merger Rule concerns the control of any merger that has or is likely to have the effect of substantially lessening competition. Unlike regimes in other major jurisdictions, this is not an economy-wide merger control regime and the application of the Merger Rule is limited to the telecommunications sector only.

This Q&A focuses on the First Conduct Rule and the Second Conduct Rule.

1.2 Which authorities are responsible for enforcing the competition legislation? What is their general approach to enforcement?

The Competition Ordinance established two specialist bodies for competition enforcement: the Competition Commission and the Competition Tribunal.

The commission is vested with a broad range of powers to investigate and prosecute suspected breaches, including the power:

• to require the production of documents and information;
• to require individuals to attend interviews before the commission;
• to enter and search premises with warrants issued by the Court of First Instance; and
• to commence enforcement action and apply to the tribunal for a pecuniary penalty if it has reasonable cause to believe that the First Conduct Rule has been contravened.

The tribunal is an independent adjudicating body that hears competition matters, including:

• applications made by the commission regarding any alleged contravention of the ordinance;
• applications for the review of determinations by the commission, including decisions relating to exemptions, exclusions, commitments and leniency;
• follow-on private actions after a violation of the ordinance has been established; and
• appeals against any interlocutory decisions, determinations or orders.

The commission currently prioritises enforcement against conduct that is clearly harmful to competition and consumers in Hong Kong. In the context of the First Conduct Rule, the commission has commenced a number of enforcement proceedings before the tribunal since the inception of the ordinance, covering various forms of cartel conduct and anti-competitive practices such as price fixing, market sharing and resale price maintenance. In December 2020, the commission commenced its first enforcement action on the Second Conduct Rule concerning an abuse of substantial market power in the medical gases market in Hong Kong.

2 Private claims

2.1 What types of private claim may be brought for breach of competition law in your jurisdiction?

Unlike the regimes in many other jurisdictions, the Competition Ordinance does not permit private standalone actions for the contravention of competition rules (Section 108 of the ordinance).

In other words, in the absence of a tribunal determination on an alleged infringement of the ordinance, victims cannot commence court action to pursue damages. This leaves only one realistic remedy for parties that suffer loss or damage from a breach of the ordinance - lodging a complaint before the Competition Commission.

Once a contravention has been established by the Competition Tribunal, the victim can bring a follow-on action under Section 110 of the Competition Ordinance against the offender or any party involved in that contravention and claim compensation for loss or damage suffered as a result of the contravention.

2.2 What is the legal basis for bringing a claim for breach of competition law?

If the Competition Tribunal determines there has been an infringement of the Competition Ordinance, victims can commence court action to pursue damages pursuant to Section 110(1) of the ordinance. The tribunal's ruling as to liability will be binding in any follow-on actions and the claimant is only required to prove causation and quantum.

3 Parties

3.1 Who has standing to bring a claim for breach of competition law?

Enforcement action: The Competition Ordinance empowers the Competition Commission to bring proceedings before the Competition Tribunal where it has reasonable cause to believe that there is a breach of the ordinance.

Private action: Parties suffering loss or damage from a breach of the ordinance can lodge a complaint before the commission and bring a follow-on claim before the tribunal.

3.2 Can a claim for breach of competition law be brought against parties outside the jurisdiction?

Section 8 of the Competition Ordinance provides for the far-reaching extraterritorial application of the First Conduct Rule. As long as the anti-competitive conduct may affect competition in Hong Kong (either by its 'object' or 'effect'), it may be caught by the ordinance regardless of where:

• the conduct takes place;
• the agreement is entered into; or
• the undertakings are located or incorporated.

Section 23 is the equivalent provision on extra jurisdictional application with respect to the Second Conduct Rule.

Hence, if the Competition Tribunal determines that a party outside the jurisdiction is in breach of the ordinance, parties suffering loss or damage can bring a follow-on claim in the tribunal thereafter, with the need to additionally apply for service out of jurisdiction under Order 11 of the Rules of the High Court.

3.3 Can a claim for breach of competition law be brought against individuals, or only companies?

Legal proceedings for breach of the Competition Ordinance can be brought against individuals and/or companies.

4 Collective actions

4.1 Is it possible to bring a collective action for breach of competition law in your jurisdiction? If so, what is the applicable regime?

At present, no class action procedure is available in Hong Kong generally and with respect to competition claims.

4.2 Do collective actions proceed on an 'opt-in' or an 'opt-out' basis?

See question 4.1.

4.3 Do collective actions require certification? If so, what requirements must be met to obtain certification?

See question 4.1.

5 Forum

5.1 In what forum(s) are claims for breach of competition law heard in your jurisdiction?

The Competition Tribunal is a specialist court which has primary jurisdiction to hear and adjudicate...