The new sheriff in town: Hong Kong’s new competition law regime
After several years of debate, Hong Kong’s new Competition Ordinance was published in the official gazette in June this year. The obligations contained in the Ordinance are outlined in terms that will be familiar to Australian and European practitioners. The Ordinance essentially prohibits anti-competitive arrangements and agreements or cartel conduct (referred to as the “First Conduct Rule”) and abuses of market power (referred to as the “Second Conduct Rule”), subject to a range of exemptions, block exemptions and minimum turnover thresholds. There is no cross-sector merger control regime (similar to the position adopted in Malaysia), with merger control to continue to be limited to the telecommunications sector.
The Ordinance follows the global trend towards internationalisation of competition law, by extending the obligations beyond national borders. In particular, the Ordinance potentially applies to agreements or conduct engaged in both inside and outside of Hong Kong, and to firms located both inside and outside Hong Kong. The Ordinance therefore has a potentially broader impact across the Asia Pacific region, particularly given Hong Kong’s role as the hub of the financial services sector.
With a recent change in Government in Hong Kong, and a number of measures required before the Ordinance can take effect, the Ordinance is not likely to come into force until 2014 (or later). However, firms should take the opportunity now to assess the likely impact of the Ordinance on their business and start to develop a compliance strategy. Attention is also turning to the steps being taken by the authorities to prepare for the introduction of the Ordinance.