Competition Commission v Fungs E&M Engineering Company Limited and others  HKCT 9
This case also involves anti-competitive price fixing and customer allocation conduct in relation to renovation work at a housing estate. Utilizing the Carecraft procedure approved for use in competition law proceedings in the case of Kam Kwong Engineering Company, the Tribunal imposed pecuniary penalties of more than HK$200,000 on each of the contractors and individuals involved, applying the four-step approach adopted in W Hing Construction Company.
A director of one of the contractors was also disqualified for 22 months, reduced by 2 months because on his early admission of liability, for failing to take steps to prevent the anti-competitive conduct even though he had reasonable grounds to suspect that his company was taking part in such conduct. While the director did not know of or participate in the contravention, the Commission had already commenced investigating the company at the time when the alleged conduct took place. The Tribunal found him to be unfit for the management of the company.
Directors and senior management of companies should take heed of this case as it illustrates the importance of staying vigilant and taking pro-active steps to ensure that their companies do not engage in anti-competitive conduct.
Competition Commission v Quantr Limited & Cheung Man Kit  HKCT 10
The Commission issued its first infringement notices to Quantr Limited and Nintex Proprietary Limited for exchanging future price sensitive information in a bidding exercise and acting on this information, in breach of the first conduct rule. Proceedings were brought against Quantr Limited and its director who was involved in the contravention, and following agreement with the Commission, the proceedings were disposed of using the Carecraft procedure. They were ordered to pay a pecuniary penalty and costs of the proceedings. Following the approach in W Hing Construction Company, the Tribunal considered that the proposed penalty of HK$37,702.26 against Quantr Limited was appropriate. Owing to the special circumstance of the case where the director was the sole director and shareholder of Quantr Limited, the Tribunal agreed to stay its proceedings against him for a pecuniary penalty.
The cartel conduct in question was brought to the Commission’s attention by a co-bidder, who successfully applied for leniency for the first time,  and Nintex, which made commitments to comply with the requirements imposed by the Commission, was not prosecuted.
This case illustrates the Commission’s commitment to granting immunity to businesses that voluntarily report cartel conduct, and cooperate in the bringing of proceedings against other parties to the cartel and leniency to businesses that cooperate with its investigations.
Enforcement of the second conduct rule has begun
In December 2020, the Commission filed its first case in the Tribunal involving contravention of the second conduct rule against a substantial medical gases supply company for abusing its substantial degree of market power in Hong Kong. It is alleged that the company ceased or limited supply of medical gases to the only other potential medical gas pipeline system maintenance service provider for public hospitals between 2015 and 2018 by various exclusionary acts such as unjustifiably denying supply and imposing unreasonable trading terms. The case is still pending, but this marks a milestone for Hong Kong’s competition regime and demonstrates the Commission’s ongoing commitment to take enforcement action against all types of anti-competition conduct that harm competition in Hong Kong.
As can be seen from the above, the Commission has initiated enforcement action against companies across different sectors, ranging from information technology (IT), construction, publishing and medical.
The first enforcement action under the Ordinance was brought against IT equipment suppliers, distributors and resellers for bid-rigging, and in January 2020 the Commission filed the Quantr case involving IT cartel conduct with the Tribunal. The Commission has also taken enforcement action against companies in the construction sector, evident in the cases of W Hing Construction Company, Kam Kwong Engineering Company and Fungs E&M Engineering Company mentioned above, and the sanctions imposed were not only limited to companies but also individuals involved in their management.
In early 2020, the Commission conducted an investigation in relation to suspected anti-competitive conduct by online travel agents relating to certain terms of the agreements with Hong Kong accommodation providers. In February 2021, infringement notices were issued against six hotel groups and a tour counter operator for facilitating a price-fixing cartel. This was the first time the Commission pursued facilitators of cartel conduct, sending a warning to third parties facilitating anti-competitive conduct that they (and not only the cartelist) will also be held accountable and liable for breaching the Competition Rules.
The Commission has also commenced proceedings in the Tribunal against three companies in the publishing sector, alleging that they have contravened the first conduct rule by engaging in cartel conduct in the sale of textbooks to primary and secondary school students in Hong Kong. These arrangements were made prior to the implementation of the Ordinance, but continued after the Ordinance came into effect in December 2015. This case shows that the Commission will investigate and take action in relation to any agreements that breach the Competition Rules, as long as they continued after the Ordinance came into force.
As mentioned above, the Commission has commenced enforcement action under the second conduct rule in relation to anti-competitive conduct in the medical sector. It remains to be seen whether the Commission will further look out for businesses in the medical sector which may have contravened other Competition Rules.
Below is a table setting out the known investigations and enforcement actions to date: