The enactment of the Competition Ordinance (Cap. 619) is of great concern to the Hong Kong construction industry in which some of the common practices accepted widely as the norm for doing business may now be regarded as anti-competitive.
With reference to the Draft Guidelines recently published by the Competition Commission, some of the following practices and arrangements may be regarded as conduct which (i) typically has the object of harming competition or (ii) may have the effect of harming competition under the First Conduct Rule:-
In light of the above possible breaches of the First Conduct Rule, representatives of the construction sectors have submitted their comments on the draft Guidelines and the Competition Commission is in the course of reviewing them. It is likely that the Commission will look at them on a case by case basis to see if any of these practices or arrangements will give rise to an overall economic efficiency under section 1 of Schedule 1 of the Ordinance as a block exemption.
We have been advising our construction clients to take immediate action to review the established practices and arrangements which have been accepted by the construction sector to see if they will be caught by the Ordinance, and to bring them to an end before the full implementation of the Ordinance. Most importantly, all companies should have their own compliance systems in place for the purpose of preventing any infringement of the Ordinance upon its full implementation.