Court of Appeal refuses to determine the Competition Commission’s challenge to the criminal standard of proof in competition proceedings for a pecuniary penalty

In Competition Commission v W. Hing Construction Co Ltd & Ors [2021] HKCA 877, the Court of Appeal refused to determine whether the standard of proof in competition proceedings for a pecuniary penalty should be lowered from the criminal standard of proof to the civil standard of proof, after concluding that the present case was not an appropriate avenue for such issue to be argued.

This is the first occasion on which the question of the standard of proof in competition proceedings has been addressed by a Hong Kong appellate court.

Criminal standard of proof

In Competition Commission v Nutanix & Ors [2019] HKCT 2, the first competition case in Hong Kong, Godfrey Lam J (as he then was) sitting as the President of the Competition Tribunal (Tribunal) held that the standard of proof in competition proceedings is proof beyond reasonable doubt, i.e. the criminal standard, when the Competition Commission (Commission) seeks to impose a fine.

In essence, the Tribunal considered that it was bound by the Court of Final Appeal’s decision in Koon Wing Yee v Insider Dealing Tribunal (2008) 11 HKCFAR 170, in which it was held that once proceedings for a pecuniary penalty are properly regarded as involving the determination of a criminal charge for the purposes of Article 11 of the Bill of Rights, in order to be compliant with Article 11, proof beyond reasonable doubt is applicable as the norm, unless such standard is modified by proportionate legislation by express provision or necessary implication. As the Competition Ordinance (Cap. 619) (Ordinance) does not expressly or implicitly mandate a different standard, the Tribunal considered that the standard of proof beyond reasonable doubt should be applied.

The Tribunal’s approach to the standard of proof in Nutanix was endorsed by the Court of Appeal.

The Commission’s contention in W Hing

In Competition Commission v W. Hing Construction Co Ltd & Ors [2019] HKCT 3, the Tribunal concluded that contravention of the first conduct rule under the Ordinance was proved on the criminal standard. In the present appeal, the Court of Appeal dismissed the appeal against liability by two individual partners named in the title of the proceedings as the partners of a partnership.

The Court of Appeal then dealt with the Commission’s cross-appeal seeking to challenge the application of the criminal standard of proofand arguing that the standard of proof in competition proceedings for a pecuniary penalty should be the balance of probabilities, i.e. the civil standard, with cogent evidence being required commensurably with the seriousness of the allegations.

The Commission suggested that the criminal standard of proof would potentially frustrate the enforcement of the Ordinance. The Commission invited the Court of Appeal to address the issue of standard of proof, notwithstanding the dismissal of the appeal against liability, since it considered such as a recurrent issue with great public importance in relation to the development of competition law in Hong Kong.

Court of Appeal’s refusal to determine the Commission’s contention

Hon Lam VP took the view that while there is a reasonably arguable basis (and the Court of Appeal put it no higher than that) for suggesting that the Tribunal in Nutanix might not have given sufficient consideration to the potential frustration of effective enforcement, in assessing if there is derogation from the criminal standard by necessary implication, the Court of Appeal found it very difficult to assess the validity of the Commission’s contention based on consideration of potential frustration on a high level of abstraction. This is because there was nothing in the evidence that had been adduced in the trial which could give rise to potential frustration of the enforcement objective as a result of the application of the criminal standard of proof.

The Court of Appeal concluded that it would be much better for the Commission’s argument to be tested in an actual case, where the application of the criminal standard of proof would have a real impact and where the Tribunal has had the opportunity of dealing with such issue squarely and fairly with regard to actual (instead of conceptual or notional) evidential assessment in regard to specific pieces of evidence on a particular competition issue, before the point is considered by an appellate court.

Takeaway

As things stand, the standard of proof in competition proceedings for a pecuniary penalty remains as proof beyond reasonable doubt, i.e. the criminal standard.