With its revised policy, the Commission opens the possibility of leniency to the first person to report collusive behaviour, even if a company has already shown leniency in the same case under the Commission`s separate Leniency Notice (28 pages / 318KB PDF). The above-mentioned confidentiality decision is particularly important because private parties may wish to seek disclosure of documents under a leniency programme in order to pursue private complaints against cartel members. Is exclusion from public procurement procedures possible automatically, whether or not as a discretionary sanction in response to cartel infringements? A Type 1 claimant is protected from possible follow-up, while a Type 2 claimant must admit a breach of the first conduct rule if the victims of the cartel initiate follow-up actions. So far, the Communications Authority has not put in place a leniency program. The Regulation provides for a number of exclusions and exceptions aimed at ignoring market behaviour that benefits consumers and the general public, activities that are not likely to significantly harm competition or where legal or political considerations outweigh the relevant anti-competitive effects. The most important of these are as described now. Since the entry into force of the Competition Regulation, enforcement actions taken by the Competition Commission before the Competition Tribunal have focused on cartels and tenders. The Commission has also recently stepped up its enforcement efforts and imposed individual liability on company representatives and intermediaries for anti-competitive activities. BVG applies to confidential communications between lawyers and clients for the primary purpose of legal advice. The privilege also extends to communicating with in-house counsel when providing independent legal services. The Regulation does not provide for any criminal sanctions against cartel members. The company is obliged to provide documents and information by means of an offer procedure “without prejudice”.
This includes a detailed description of the cartel behaviour and operation, as well as the granting of access to evidence. The cooperation policy also provides for a leniency plus programme: if a company discloses the existence of another cartel, it can benefit from an additional rebate of up to 10% of the recommended fine for the first cartel in which it participated.32 There are no antitrust offences in Hong Kong. However, failure to cooperate with the Competition Commission or obstruction of an investigation may result in a criminal offence. Violators may be subject to imprisonment or fines. Therefore, given that the Leniency Notice is only possible for the first cartel member to report the cartel conduct to the Commission and that it satisfies all the stated requirements, there is a strong incentive for a cartel member to be the first leniency applicant under the Commission`s marker system (see below). Like Article 101 TFEU, the RFC is broadly interpreted as covering agreements and concerted practices. Written and oral agreements, whether or not intended to be legally binding, informal agreements and gentlemen`s agreements are also covered. Collusion behind an actual agreement (i.e.
, a meeting of chiefs) may be considered a “concerted practice”. Therefore, discussions on competition information between competitors (e.g. at association meetings) may conflict with the TEN, even if competitors do not coordinate their behaviour afterwards. In addition, the indirect exchange of this information through a common customer or supplier (hub-and-spoke agreements) may also be covered. A judicial search warrant authorizes the Commission to seize and copy documents, computers and other relevant electronic devices found on the premises. Both the Regulation51 and the Commission`s Investigation Directive52 contain provisions to protect solicitor-client privilege (BVG), which is enshrined in Hong Kong law.53 The Commission has also issued guidance on the Competition Commission`s investigative powers and solicitor-client privilege (the BVG Guidelines) regarding the handling of requests for privilege during dawn searches. The Commission also published four strategy papers setting out its enforcement policy (enforcement policy and recommended fine policy) and leniency applications (leniency policy and cooperation policy), as well as guidelines on the Commission`s investigative powers and solicitor-client privilege. As set out in Section I.iv, the Commission has broad powers to investigate alleged cartel activities and other alleged breaches of the Regulation, including: Leniency exists only in respect of collusive conduct that infringes the first conduct rule. The essential elements are as follows.
The Competition Commission of the Hong Kong Special Administrative Region (SAR) has published its revised leniency programme for persons involved in cartels with effect from 8 September. On 22 January 2020, the Commission opened proceedings before the General Court against a company and its directors for their involvement in collusive conduct in the context of a call for tenders for the award of IT services contracts (Quadr case). The newly revised policy (23 pages / 208KB PDF) distinguishes between leniency applications received before and after the opening of an initial assessment or investigation into the Commission`s behaviour. The revised policy aims to provide clearer guidance and provide greater incentives for individuals to cease involvement in cartels and to inform the Commission in order to further strengthen the Commission`s efforts to detect and enforce cartels. Under the current Leniency Notice, the Leniency Notice will cover current and former agents, managers and employees of cartel members who cooperate with the Commission. The Leniency Notice for persons involved in cartels also allows persons involved in cartels, such as: workers of a company to apply to the Commission for leniency independent of the company. Another notable feature is that, unlike the United States and the United Kingdom, Hong Kong has not criminalized cartel offences. Cartel activities are economically harmful, but difficult to detect due to their secretive and organized nature. Leniency is an important investigative tool used by competition authorities around the world to combat cartels and promote cooperation in investigations. In 2019, the General Court delivered its judgment in the first two competition cases concerning bidding, market sharing and price fixing brought by the Commission.
The arbitral tribunal relied heavily on EU precedents (the VCF was modelled on EU law) and ruled in favour of the Commission in both cases. In 2020, the Commission continued its studies in the third and fourth cases, both in terms of market sharing and pricing in the area of renovation of social housing projects and in a fifth case concerning bidding in the IT sector. A sixth case against an alleged textbook cartel is also pending in court. Persons who act as leaders of the cartel or who have compelled other parties to adopt the agreement are not entitled to apply for leniency. However, applicants in such situations are invited to cooperate with the Commission`s investigation. The Commission will take this cooperation into account when considering a proportionate enforcement measure in respect of that person. If the company fulfils the leniency conditions, the Commission will reach an agreement with the company not to initiate proceedings against the company against a fine in exchange for its cooperation in the investigation into the cartel conduct. However, Type 2 applicants may be informed of the infringement if victims of anti-competitive behaviour take follow-up action against them.26 10 Article 2 of the Regulation defines `undertaking` as `any entity, irrespective of its legal status or method of financing, which carries out an economic activity and includes a natural person engaged in an economic activity`. The Regulation also defines certain core activities as “serious anti-competitive behaviour” under the first conduct rule, which consists of classic antitrust behaviour between competitors, such as price fixing, bidding, market sharing and production control.8 These infringements are considered more serious infringements and will be subject to stricter enforcement measures. For example, the de minimis exclusion9 does not apply to serious anti-competitive behaviour.
As cartels can operate in more than one jurisdiction, leniency applicants in Hong Kong are expected to provide the Commission with details of other leniency applications they have submitted to competition authorities in other jurisdictions. In appropriate cases, the Commission may require a leniency applicant to authorise it to exchange confidential information with those foreign authorities. If possible sanctions for cartel activities include criminal, civil or administrative penalties, can they be prosecuted for the same conduct? If not, when and how will the choice be made as to the sanction to be taken? The Commission has introduced a Leniency Notice which allows companies and individuals to obtain immunity from prosecution from the Commission in exchange for cooperating in a cartel investigation, thus avoiding the risk of financial penalties.