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July 28, 2015

Hong Kong competition law: advice for companies on staying within the new rules

EDDIE LEEeddie.lee@scmp.com

PUBLISHED : Tuesday, 28 July, 2015, 3:38am

UPDATED : Tuesday, 28 July, 2015, 3:38am

Stanley Wong said the watchdog was ready to start operation and implement the law on December 14, a date set by the government. Photo: May Tse

Companies now have the benefit of guidelines on how the competition watchdog plans to investigate anti-competitive conduct after a new law takes effect in December.

The guidelines, released yesterday, are to help businesses understand what type of commercial practices may breach the new regulatory framework.

The specifications outline how the Competition Commission expects to interpret and implement rules set out in the Competition Ordinance, as well as procedures for handling complaints and investigations.

"The guidelines … will help businesses understand how the commission will enforce the law," the watchdog's chief executive, Dr Stanley Wong, said yesterday. "We hope businesses in Hong Kong will review their business conduct and practices and make any necessary changes to ensure they will be in compliance with the new law upon its full implementation."

Wong said the watchdog was ready to start operation and implement the law on December 14, a date set by the government.

The commission is an independent statutory body established to enforce the ordinance. Before its release of the guidelines, stakeholders including trade associations had expressed concerns over thresholds for statutory intervention.

For example, the General Chamber of Commerce had urged the commission to clarify whether measures taken by dominant firms to increase efficiency would be seen as possibly harming competition.

The Real Estate Developers Association had also said it was disappointed that draft guidelines issued in March did not state any market-share threshold to assist assessment of what constituted a "substantial degree of market power".

A commission spokeswoman said there was minimal change between the draft and final versions of the guidelines.

But in response to other issues raised by stakeholders, the commission had provided elaborations in the final version. For instance, the commission fleshed out its stance on "below-cost pricing", saying the widely used promotional tool was unlikely to be abused "where it is pursued in the context of genuine promotional offer of limited duration or with a view to minimising losses for deteriorating stocks".

Dr Zhu Jingwen, a partner at Winston & Strawn, said such clarifications were "helpful" as these scenarios were commonplace among retailers. She urged firms and trade groups to start making necessary changes to their practices as the law would take effect in less than five months.

http://m.scmp.com/news/hong-kong/law-crime/article/1844077/hong-kong-competition-law-advice-companies-staying-within