At Long Last: Draft Hong Kong Competition Law Guidelines Published

Author:Mr John Hickin and Hannah C. L. Ha
Profession:Mayer Brown JSM
 
FREE EXCERPT

Keywords: Hong Kong, Competition Law Guidelines, CO, FCR, SCR

The Hong Kong Competition Commission (the "Commission") today published long-awaited draft implementation guidelines (the "Guidelines") to the Competition Ordinance (Cap. 619) (the "CO").

A total of six draft Guidelines have been published, namely:

Draft Guideline on the First Conduct Rule ("FCR") Draft Guideline on the Second Conduct Rule ("SCR") Draft Guideline on the Merger Rule Draft Guideline on Complaints Draft Guideline on Investigations Draft Guideline on Applications for a Decision under Sections 9 and 24 (Exclusions and Exemptions) and Section 15 Block Exemption Orders

This legal update is the first in a series of updates on the draft Guidelines. In this update we provide a snapshot of what the draft Guidelines say on the key issues, what they don't say, and how they may affect business in Hong Kong.

What do the draft Guidelines say?

FIRST CONDUCT RULE

The FCR captures both horizontal and vertical arrangements where they have an anti-competitive object or effect. With respect to vertical arrangements, the draft Guideline does not introduce a block exemption. The draft Guideline also indicates that as a general rule, the Commission will consider Resale Price Maintenance ("RPM")1 by its nature harmful to competition and in the absence of efficiency justifications (without consideration of its effect on competition) be taken to contravene the CO. Further, in some cases, RPM may amount to serious anti-competitive conduct. For trade associations and professional bodies, the draft Guideline helpfully provides a number of examples where information exchange, price recommendations and fees scales are not likely to contravene the FCR.

SECOND CONDUCT RULE

The draft Guideline confirms that market definition will be determined in line with international best practice, taking into account product and geographic scopes. To address the concerns expressed by stakeholders regarding geographic boundaries of markets, the draft Guideline confirms that the realities and characteristics of the Hong Kong market will be taken into account with the Commission acknowledging that markets may be global, regional, limited or smaller than Hong Kong. The draft Guideline does not include a market share threshold for substantial market power with the Commission confirming that it will adopt an economic approach to defining substantial market power on a case by case basis.

EXCLUSIONS AND EXEMPTIONS

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