Competition Tribunal lays down principles for restricting use and disclosure of confidential information in competition proceedings

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Authored by: Peter So and Victor Wong

In two recent decisions made after  a joint hearing of two sets of proceedings, Mr Justice Harris, President of the Competition Tribunal (Tribunal), laid down the principles that guide the Tribunal in determining applications for orders restricting use and disclosure of confidential information (confidentiality orders) of whatever nature. Parties should note that the Tribunal is only prepared to allow redaction of confidential information in limited circumstances and with justifications, going forward.

Confidentiality Treatment

The Commission is empowered with the right to require persons to provide it with confidential information, as defined in section 123 of the Competition Ordinance, Cap. 619 (Ordinance), in the course of performance of its functions under the Ordinance. In proceedings before the Tribunal, there might be information which the information provider legitimately considers confidential or that the disclosure of such to the public may lead to an anti-competitive effect.  For instance, competitors may adjust their prices with reference to price information disclosed in the proceedings in a manner which distorts competition, thereby going against the objectives of the Ordinance.

With a view to addressing these potential issues, the Competition Tribunal Rules, Cap. 619D and Competition Tribunal Practice Direction No.2 (Confidential Information) prescribe procedures for parties to apply to the Tribunal for confidentiality orders.  The Tribunal’s power to place restrictions on the use and disclosure of confidential information is confirmed in Competition Commission v ATAL Building Services Engineering Limited & Ors CTEA 2/2022 [2022] HKCT 4.

Restrictive Approach

Proceedings before the Tribunal involve determination of matters similar to a criminal charge, thereby engaging Articles 10 and 11 of the Hong Kong Bill of Rights Ordinance, which have constitutional force by virtue of Article 39 of the Basic Law.  As such, in Competition Commission v Quadient Technologies Hong Kong Limited & Ors CTEA 1/2021 [2023] HKCT 1, Harris J held that it was clear from Article 10 that redaction of information would be exceptional and it needs to be demonstrated by a party seeking redaction that it is necessary in order either to protect their personal privacy or is necessary in the interests of justice.  In other words, there is little room for restricting information on the grounds of confidentiality.

Open Justice Principle and its restrictions

In Asia Television Ltd v Communications Authority [2013] 2 HKLRD 354, Cheung CJHC (as he then was) held that any restriction on open administration of justice necessarily represents a compromise between interests, rights and freedoms, and must be justified by considering and balancing all pertinent interests, rights and freedoms.  Further, the following considerations or matters do not by themselves justify any restriction on open administration of justice:

(i) Publicity of litigation leading to embarrassment and inconvenience;

(ii) Publicity leading to economic damage, even very severe economic damage; or

(iii) Professional embarrassment and possible damage to professional reputation.

Nevertheless, where open administration of justice in a case would frustrate the t ultimate aim of doing justice, such as jeopardising some right or interest of one or both of the parties outside of the case, a balancing exercise must be conducted to assess whether open justice should be restricted and if so, the manner and extent of restriction.  An example of circumstances which are capable of justifying departure from the open justice principle in the competition law enforcement context is a case in which it can be demonstrated that disclosure of information would harm competition and frustrate the purpose of the legislation and the proceedings.

In Quadient,Harris J held that in order for the Tribunal to undertake the balancing exercise Cheung CJHC explained in Asia Television Ltd, it must have something more than conjecture to work with in deciding whether the open justice principle should be moderated in a particular case.

Application

In these two cases, the Commission had reached a settlement with some or all of the Respondents.  In such circumstances, the practice is for the Commission to file consent summonses and Statements of Agreed Facts.  The Statement of Agreed Facts will be appendices to the judgment which will be published to members of the general public.  In both cases, the Commission, with the support of the Respondents, applied for redaction of certain information in the version of the Statements of Agreed Facts to be attached to the judgment.

Competition Commission v Quadient Technologies Hong Kong Limited & Ors CTEA 1/2021

Amongst others, the Commission initially asked for redaction of the value of sales which was  related to the Respondents’ contravention and turnover of the Respondents in the financial year ending  31 January 2019, on the grounds that (i) that was  commercial information relating to the business interests of the Respondents; (ii) even if they were no longer particularly current, it was desirable to avoid any potential harm of publishing such information to the wider world; and (iii) the publication of such information did not appear necessary for third parties to understand the substance of the Commission’s proposed calculation of the recommended pecuniary penalty and investigation costs, and the orders to be made by the Tribunal.

Nevertheless, Harris J disagreed that making the above information public might frustrate the purpose of the Ordinance or that revealing such information would be prejudicial to the legitimate interests of the Respondents and outweigh the conventional application of the open justice principle.  It was subsequently conceded that the above information would not allow the relevant Respondent’s profit to be calculated.  The Commission subsequently abandoned redaction of the sales figures and turnover.

The Commission also applied for redaction of identities of employees not pursued and certain non-parties.  In this regard, the Tribunal accepted that there may be cases in which there is potential prejudice to individuals interviewed by the Commission, which is sufficiently serious to justify moderating the application of the open justice principle.  If it becomes generally known that the identity of witnesses has been made public, this may impact the cooperation the Commission obtains from individuals it seeks information from in regard to future investigations.

Accordingly, Harris J allowed the individual names in the Statements of Agreed Facts to be replaced with the description “an employee of X Limited or X Respondent” or similar appropriate wording.

Competition Commission v Gray Line Tours of Hong Kong Limited & Ors CTEA 1/2022

The Commission applied for redaction of certain financial information and names of individuals.

As to financial information, Harris J only granted redaction of figures and sums from 1 June 2021, i.e. approximately two years before his decision on 14 June 2023.  The judge considered that this period was sufficient, in the absence of any detailed explanation why any older information needed to be kept confidential.

By adopting the same principles held in Quardiant, Harris J allowed the individual names in the Statements of Agreed Facts to be replaced with the description “an employee of X Limited or X Respondent” or similar appropriate wording.

Implications

In view of these two decisions, it is clear that the Tribunal is only prepared to exercise its power to allow redaction of confidential information in limited circumstances and with justification.

The starting point is that pricing information which is more than two years old (unlike the EU Courts which adopt 5 years) will not be redacted in the Originating Notice of Application nor Statements of Agreed Facts to be attached to the Tribunal’s judgments, l in the absence of any evidence suggesting why any older information needs to be kept confidential.  On the contrary, the Tribunal is prepared to redact names of individuals who are not parties to the proceedings provided that such names are replaced by an appropriate description, as illustrated above. 

Accordingly, those investigated should be prepared for the fact that confidential information disclosed to the Commission in the course of the investigation might be disclosed to the general public, if the matter proceeds to an enforcement action before the Tribunal.

Deacons act for the 1^st and 2^nd Respondents in CTEA 2/2022 and the 5^th Respondent in CTEA 1/2022.

Key Contacts

Peter So

Partner | Litigation and Dispute Resolution

Email or call +852 2825 9247