The Government is currently looking into introducing a cross-sector competition law of general application in Hong Kong (please note that sector-specific competition rules and regulations already exist in the telecommunications and broadcasting industries). Such a law, if enacted, will have a fundamental impact on the way businesses, big or small and regardless of industry, will be conducted in Hong Kong. All business relationships, whether vertical (such as supplier/buyer) or horizontal (such as competitors within the same industry), will fall within the scope of this new law if enacted.

A public discussion document - "Promoting Competition - Maintaining Our Economic Drive" (available from the Economic Development and Labour Bureau's website was published in November 2006 in which the Government sets out what it considers to be the main issues for consideration in determining the direction for Hong Kong's competition policy. In this document, the Government put forward 20 "key questions" on which it is inviting public comment. Please note that no draft legislation has been tabled for discussion at this stage.

Full Update

These 20 key questions cover a wide range of issues in relation to competition law and can broadly be divided into 3 categories:

(a) The Need for a New Competition Law - Considerations (Questions 1 - 7)

A key question for consideration is whether Hong Kong needs an all embracing competition law or whether a sector-specific approach should be adopted. The inclusion in any competition law of specific practices which should be prohibited as opposed to a general prohibition against anti-competitive behaviour is also likely to be a key issue.

(b) The Regulatory Framework for Competition Law - Options (Questions 8 and 9)

Some form of regulatory authority with power to investigate and enforce would need to be established in the event a competition law is enacted in Hong Kong. The structure and powers of such regulatory authority are also important issues to be considered.

(c) Enforcement and Other Related Issues (Questions 10 - 20)

In addition to the sanctions to be imposed by the regulator (including fines and possibly custodial sentences), the ability of private parties to seek damages based on a finding of competition law infringement and whether this is likely to encourage frivolous actions in the courts are also issues to be considered.

Please note the public consultation period will end on 5 February 2007. If you would like to make your views known to the Government, we shall be more than happy to assist. For example, you may wish us to work with you to prepare a formal submission to the Government or, alternatively, you might wish us to communicate your views more informally through an appropriate professional or trade association (e.g. the Law Society and the British Chamber of Commerce) for inclusion in the submissions which it makes.    

Once the Government has collected and analysed views from the public, a report will be compiled and published in due course. This report will help the Government in formulating an appropriate competition policy for Hong Kong. At this stage, no firm timetable for further action has been set.

If you would like to obtain further information on this subject or be kept informed about any future development, please feel free to contact our John M. Hickin and Hannah C.L. Ha.

For further information, please contact:

Name: John M. Hickin
Position: Partner
Phone: +852 2843 2576
Fax: +852 2103 5169

Name: Hannah C.L. Ha
Position: Partner
Phone: +852 2843 4378
Fax: +852 2103 5968