Competition Concerns over Employers' Joint Negotiation with Employee Bodies in Hong Kong

The Competition Commission (the Commission) recently published an advisory bulletin (the Advisory Bulletin) regarding competition concerns over the sharing of information on employment conditions among employers in the context of joint negotiations. 

The Advisory Bulletin addressed the situation where a group of employers jointly negotiate with employee bodies to determine employees' compensation and other employment conditions. While the purpose of joint negotiations may improve employment conditions for employees, the process may involve the sharing of competitively sensitive information regarding employment conditions between employers and may give rise to issues under the Competition Ordinance.

Where members of groups of employers share information among themselves about their intentions on employment conditions, this may be considered a concerted practice with the object of harming competition in contravention of the First Conduct Rule under the Competition Ordinance. This risk may be mitigated where the group of employers use an independent third party to collect the information from individual members, and that third party then aggregates and anonymises the data before it is shared among the members of the group of employers.

The Advisory Bulletin clarifies that the Commission has no current intention to pursue an investigation or enforcement action in respect of conduct by employers in the context of joint negotiations. However, the need for the employers to jointly negotiate with employee bodies must be justified given the industry they operate in, and:

1. the conduct is, both in nature and purpose, aimed at improving relevant employment conditions; and
2. an employee body is a genuine participant in the joint negotiation process.

This will cover:

1. compensation recommendations, including recommendations to increase or decrease compensation by a particular percentage which incorporate the results of joint negotiations with employee bodies and are issued by groups of employers to their members, or
2. sharing of expectations about future compensation between employers in preparation for joint negotiations, if necessary for that purpose, and where possible complying with the process mentioned above to engage an independent third party to collect, aggregate and anonymise the data.

Employers are reminded that the Competition Ordinance does apply to the employment context and they need to be careful to comply with the obligations under that Ordinance. See here for our previous update on the areas to watch out for.