Several key provisions of the new Hong Kong Competition Ordinance ("Ordinance") came into force on 18 January 2013, including the provisions relating to the establishment, functions and powers of the Competition Commission ("Commission"). This step marks the commencement of the phased implementation of the Ordinance, which was passed on 14 June last year after lengthy debate. The focus of this implementation phase includes the Commission's preparation of guidelines regarding the competition rules, block exemption orders, lodging of complaints, investigations and the merger rule. Companies are well advised to review their practices and prepare for the new regime. Mark Jephcott and Peggy Leung provide further details below.
On 14 June 2012 the Legislative Council ("LegCo") passed the Competition Ordinance (the "Ordinance"), which introduced a cross-sector competition law regime. The Ordinance prohibits agreements, concerted practices or conduct which have the object or effect of preventing, restricting or distorting competition in Hong Kong. The government has vested the Commission with investigatory powers and certain enforcement powers in respect of anti-competitive conduct.
A Commencement Notice in relation to several significant provisions of the Ordinance was issued in November 2012, providing that provisions concerning the establishment of the Commission would come into operation on 18 January 2013. This first phase implementation will be followed by the provisions establishing the Competition Tribunal coming into force on 1 August 2013.
Specifically, the following provisions of the Ordinance became effective today:
- sections 1, 2, 35, 38, 40 and 59 (relating to short title, commencement, interpretation, and guidelines);
- Parts 8 and 9 (relating to disclosure of information and the establishment, functions and powers of the Commission);
- Divisions 1 and 2 of Part 12 (relating to miscellaneous general provisions and provisions on service of documents);
- section 176 (relating to consequential and related amendments);
- Schedule 5 (relating to the Commission);
- Part 6 of Schedule 7 (relating to guidelines on the merger rule);
- Parts 5 and 7 and section 32 of Schedule 8 (relating to consequential and related amendments)
According to the Report of LegCo Subcommittee on Competition Ordinance (Commencement) Notice 2012 (the "Subcommittee Report"), during this first preparatory phase, the Commission will carry out crucial rulemaking steps by preparing guidelines regarding the complaint and investigation mechanisms, block exemption orders and merger rules. The Commission will also consult with various stakeholders and promote public awareness of the new regime. The consultation process will hopefully provide Hong Kong businesses with the opportunity to enter into a constructive dialogue with the Commission regarding the anticipated enforcement of the Ordinance.
According to the Subcommittee Report, the Chairperson and members of the Commission will first be appointed by the Chief Executive and then the Commission will proceed with the recruitment of its CEO and staff. The preparatory stage is expected to last for at least a year and the Government has advised that the Ordinance will come into full operation to enable the Commission to consider and investigate competition-related complaints after the preparatory work on relevant guidelines and procedures has been completed. This transitional period is a key opportunity for businesses to familiarize themselves with the new legal requirements, review their practices and make necessary adjustments.
Key contacts
Simon Chapman KC
Managing Partner, Dispute Resolution and Global Co-Head – International Arbitration, Hong Kong
Kathryn Sanger
Partner, Head of China and Japan, Dispute Resolution, Co-Head of Private Capital, Asia, Hong Kong
Disclaimer
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