Hong Kong Competition Law - Investigation Series: Part 12

Author:Ms Hannah Ha and John M. Hickin
Profession:Mayer Brown JSM
 
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Exclusions and Exemptions - Application for a Block Exemption Order

Undertakings or associations of undertakings may apply for Block Exemption Orders in order to secure the benefit of an exemption to a category of agreements.

Where similar agreements are commonly used by undertakings throughout a market, it may indeed be more appropriate for undertakings or associations of undertakings to consider seeking a Block Exemption Order for such agreements rather than to apply separately for an individual Decision1 regarding their specific agreement.

What is a Block Exemption Order and When Should you Consider Applying for One?

The Competition Commission (the "Commission") may issue Block Exemption Orders where it is satisfied that a category of agreements enhances overall economic efficiency (the "Efficiency Exclusion"). The category of agreements covered by a Block Exemption Order will then be excluded from the First Conduct Rule (which prohibits anti-competitive agreements). However, a Block Exemption Order does not provide any exemption from the Second Conduct Rule (which prohibits abuses of substantial market power).

The Commission may issue Block Exemption Orders on its own initiative or in response to an application and can subject Block Exemption Orders to any time limit, conditions or limitations it deems appropriate.

There is no requirement for the Commission to issue a Block Exemption Order in order to rely on the Efficiency Exclusion. Undertakings and associations of undertakings can self-assess whether they meet the terms of the exemption. In deciding whether to consider an application, the Commission will take into account whether the resources required for issuing a Block Exemption Order are likely to be proportionate to the expected public benefit brought by the Order.

In that respect, the information provided by the applicants should demonstrate that the category of agreements in question is in wider use in one or more industries. Alternatively, if the application is sectorspecific, the Commission expects the information provided to show that there is a greater need for cooperation between undertakings in the relevant sector compared with other sectors.

If undertakings or associations of undertakings wish to make an application for a Block Exemption Order, the Commission generally expects the cooperation of all undertakings that are parties to the agreements.

How to Apply for a Block Exemption Order?

The Ordinance does not provide...

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