Hong Kong’s New Competition Ordinance – Commencement Notice issued in Government Gazette

As reported in our August 2012 newsletter, the Competition Bill was passed on 14 June 2012 and will come into effect on a day to be appointed by the Secretary for Commerce and Economic Development.

On 23 November 2012, a commencement notice was published in the Government Gazette, stating that certain sections and parts of the new Competition Ordinance will come into effect on 18 January 2013 and others on 1 August 2013. The sections and parts in question mostly relate to guidelines to be issued by the Competition Commission, its constitution, powers and procedures.

The following is a brief summary of those provisions to come into effect on 18 January 2013 and 1 August 2013.

Provisions to come into effect on 18 January 2013

Section 1: Short Title and Commencement.

Section 2: Interpretation.

Section 35: Guidelines: These are guidelines issued by the Competition Commission (i) indicating the manner in which it expects to interpret and give effect to the conduct rules; (ii) the manner and form in which it will receive applications for a decision or block exemption order; and (iii) indicating how it expects to exercise its power to make a decision or grant block exemption orders.
Section 38: Guidelines regarding complaints: These are guidelines issued by the Competition Commission indicating the manner and form in which complaints are to be made. Under section 37, any person can lodge a complaint with the Commission (in accordance with the guidelines) alleging that an undertaking has contravened, is contravening or is about to contravene a competition rule.

Section 40: Guidelines regarding investigations: These are guidelines issued by the Competition Commission indicating (i) the procedure it will follow in deciding whether or not to conduct an investigation; and (ii) the procedures it will follow in conducting an investigation.

Section 59: Guidelines: This section relates to the Competition Commission’s power to amend any guidelines and publication of the amendments.
Part 8: Disclosure of Information: This Part covers the disclosure of confidential information provided or obtained by the Competition Commission in the course of or in connection with the performance of its functions under the Ordinance, including the Competition Commission’s duty to establish and maintain safeguards to prevent unauthorized disclosure, the circumstances in which it can be disclosed and obligations of third parties not to disclose.

Part 9: This part deals with the establishment, functions and powers of the Competition Commission and its relationship to the Government, the latter provisions stating that the Commission is not a servant or agent of the Government and does not enjoy any status, immunity or privilege of the Government. It also provides for personal immunity for members of the Competition Commission for anything done or omitted to be done, in good faith, in performance of the Commission’s functions.

Divisions 1 and 2 of Part 12: Division 1 deals with miscellaneous provisions including (i) Mergers (this simply states “Schedule 7 (Mergers) has effect”; (ii) Determination of turnover of an undertaking; (iii) the Competition Commission’s fees; and (iv) Personal immunity of public officers. Division 2 deals with the service of documents on and by the Competition Commission.
Section 176: This relates to consequential and related amendments to other enactments, which are set out in Schedule 8  and includes amendments to the Companies (Disqualification Orders) Regulations, Judicial Officers Recommendation Commission Ordinance, Telecommunications Ordinance, Prevention of Bribery Ordinance, Broadcasting (Miscellaneous provisions) Ordinance, Ombudsman Ordinance, Broadcasting Ordinance and Communications Authority Ordinance.

Schedule 5: This relates to the Competition Commission-its composition, terms of appointment, resignation of members, removal from office, etc, procedures for its meetings, financial provisions and keeping of accounts by the Commission, disclosure of interest by its members, delegation of the Commission’s functions, and its seal.
Part 6 of Schedule 7: This provides that the Competition Commission must issue guidelines indicating the manner in which it expects to interpret and give effect to the provisions in Schedule 7 (Schedule 7 relates to Mergers).

Parts 5 & 7 and section 32 of Schedule 8: Schedule 8 contains the consequential and related amendments to other Ordinances (as referred to above under Section 176). Part 5 relates to amendments to the Prevention of Bribery Ordinance and Part 7 to Amendments to the Ombudsman Ordinance. Section 32 of Schedule 8 relates to “confidential matter to be safeguarded” under the Broadcasting Ordinance.

Provisions to come into effect on 1 August 2013

Part 10: Competition Tribunal: This part relates to the constitution of the Competition Tribunal, its jurisdiction and powers, its practice and procedure and the rules.

Part 3 of Schedule 8: This relates to the amendments to the Judicial Officers Recommendation Commission Ordinance.

The provisions coming into effect on 18 January and 1 August 2013 relate to the ground work that needs to be done before the main provisions of the Ordinance can come into effect and full implementation of the Ordinance will follow. It is therefore very important for businesses to :-

1. familiarize themselves with the provisions of the Competition Ordinance and identify any potential areas of risk in respect of their current activities;
2. promote in-house awareness and training to ensure that key decision-makers know what:-
   • types of agreements and practices may breach the Ordinance;
   • types of agreements and practices are exempt from the Ordinance, or could be exempt, upon application to the Commission;
   • the extra-territorial reach of the Ordinance and implications of such;
3. devise and implement internal policies and procedures to ensure compliance with the Ordinance.