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Legal Update

What Do Employers Need to Know about Competition Law? (Episode 9 – group boycotts)

3 December 2014
Mayer Brown Legal Update

In the previous episode of this series, Mayer Brown discussed how a non-solicitation agreement between competitors differs from the typical restrictive covenants in an employment contract. Colin, now feeling quite learned, is ready to learn more…

Colin: You mentioned that “group boycotts” could pose problems too? So, what are “group boycotts”?

Mayer Brown: There are various forms of “group boycotts”. A boycott may be aimed at preventing a new potential competitor from entering the market. It may also take the form of eliminating an existing competitor.

In an employment context, group boycotts may take the form of a group of competitors ganging up to poach a competitor or a potential competitor’s key employees in order to cripple that competitor’s ability to compete. Such conduct may violate competition law.

Colin: I heard people talking about “cartel agreement” when they discussed competition law issues. What is a “cartel agreement”?

Mayer Brown: A “cartel agreement” is basically an agreement between competitors which has the objective of reducing or eliminating competition among cartel members. For example, if a boycott is intended to facilitate a cartel agreement to eliminate a competitor, the boycott will be considered an essential part of the cartel. A “cartel agreement” will be a clear and serious violation of the Competition Ordinance.

Colin: So this only applies where the competitors gang up and target an outside member?

Mayer Brown: No. It would also be anti-competitive if a group takes action against one of its own members. It is not uncommon for cartels to take action against a “rogue” member as “punishment” for adopting a different course of conduct than what has been agreed amongst the cartel members, which then undermines the cartel arrangement.

Colin: Okay, I get it.


  • Hannah C. L. Ha
    T +852 2843 4378
  • John M. Hickin
    T +852 2843 2576
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