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Legal Update

What Do Employers Need to Know about Competition Law? (Episode 3 - wage fixing)

25 November 2014
Mayer Brown JSM Legal Update

In the previous episode of this series, Mayer Brown JSM gave an outline of the First and Second Conduct Rules. Colin (a senior HR professional) is interested in learning more about the implications of the competition law on employment practices …

Colin: You explained in our first conversation that wage-fixing is a problem. Could you tell me more about this please?

Mayer Brown JSM: Wage-fixing is a form of price-fixing.

If two or more competitors in the market have agreed to fix the wages for a particular type of staff at the same level, this would be wage-fixing. In some industries, staff remuneration forms a major component of costs and it therefore affects the price of the services offered.

Wage-fixing agreement restricts competition in the labour market and potentially in the market for goods or services in which the competitors operate. For this reason, wage-fixing will likely violate the Competition Ordinance when it comes into force.

Colin: So what happens if two companies within the same group enter into a wage-fixing agreement?

Mayer Brown JSM: The First Conduct Rule will not apply if the companies in the same company group are considered a "single economic unit". This will depend on the facts of the situation. Generally, if one company in the group has decisive influence or control over the commercial policy of another, then they will be considered a "single economic unit". The same considerations apply to a parent company which has decisive influence or control over its subsidiaries.

Colin: Okay, no wage-fixing. That’s simple!


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

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