Private Actions Relating To Alleged Contraventions Of The Competition Ordinance Of Hong Kong: The First Reported Hong Kong Judgments - Part One

• Published date: 10 January 2022
• Subject Matter: orporate/Commercial Law, Anti-trust/Competition Law, Corporate and Company Law, Contracts and Commercial Law, Antitrust, EU Competition
• Law Firm: Bryan Cave Leighton Paisner LLP
• Author: Mr Horace Pang and Glenn Haley

Summary

On 12 October 2021, the Competition Tribunal ("Tribunal") handed down its judgment on the merits of the first private action in Hong Kong seeking remedies against the contravening party for a contravention of a competition rule.

This case concerns an alleged contravention which was raised as a defence in two High Court actions. The Court of First Instance ("CFI") transferred the allegation to the Tribunal for determination. In the 12 judgments published over the course of three years, the CFI, the Tribunal and the Court of Appeal ruled on many important substantive and procedural issues.

We will divide our post into two parts. (i) This present post provides an overview of the substantive issues. (ii) Our next post will discuss the procedural issues relating to the nature of the case as proceedings transferred from the CFI to the Tribunal, and the approach taken by the Tribunal in respect of confidential documents and information.

Background

The parties' relationships

In brief, Meyer Aluminium Limited ("Meyer") purchased industrial oil from Taching Petroleum Company Limited ("Taching") and Shell Hong Kong Limited ("Shell") under separate fixed-term contracts with the two companies. Under the contracts, the price for the industrial oil was calculated on the basis of a List Price less a Discount. Taching and Shell as suppliers were able to adjust the List Price from time to time by issuing Price Adjustment Notices. The Discount was to remain fixed throughout the term of the contract.

Taching and Shell sued Meyer in the CFI for the price of the industrial oil delivered to Meyer, and Meyer argued in defence that Taching and Shell had contravened the First Conduct Rule by agreeing or engaging in a concerted practice to fix, manage or control the price of the industrial oil sold to it. Meyer raised two defences. First, Meyer contended that, as a result of the contravention, the contracts were unenforceable due to their illegality ("illegality defence"). Secondly, Meyer argues that it was entitled to damages, which could be used to set off against the price claimed by Taching and Shell ("defence of set-off").

Transfer to the Tribunal

In the competition regime of Hong Kong, there is very limited scope for private actions. Section 108 of the Competition Ordinance ("Ordinance") prohibits private parties from bringing "independent proceedings" in any Hong Kong court for a cause of action against any person for the contravention of a conduct rule or the involvement in such contravention ("contravention"). While there is a statutory right under section 110 for compensation for loss or damage suffered as a result of a contravention, it is available only after a judicial finding of contravention has been made by the Tribunal. As the Court of Appeal observed in its judgment of 11 March 2021¹, there is clear legislative policy in general to preclude private parties from bringing claims for contraventions.

However, section 142(1)(d) of the Ordinance provides that the Tribunal has jurisdiction to hear and determine an allegation of a...