The Competition Ordinance imposes potentially severe sanctions on companies and individuals who engage in anti-competitive conduct. For example, companies can be fined up to 10% of their Hong Kong turnover, and directors involved in such conduct can be disqualified from holding management positions for up to five years.
At present, Hong Kong law does not allow for the imprisonment of persons for engaging in serious anti-competitive conduct. This contrasts with the position in some other jurisdictions, such as Australia, Canada, the United States and the United Kingdom, where such conduct (price fixing, market sharing, bid rigging and output restriction) can result in imprisonment for the individuals who are involved.
Nevertheless, it should not be overlooked that there are criminal offences under the Competition Ordinance which can result in potential imprisonment, or serious financial penalties. These offences mostly concern how businesses, and their staff, conduct themselves when they are subject to a Commission investigation into suspected anti-competitive conduct. This article summarises the main offences.
Obstruction of Commission Search
The Commission can, in certain circumstances, obtain a court warrant to enter and search any premises, if there are reasonable grounds to suspect that there are any documents in such premises that are relevant to the Commission’s investigation. It is a criminal offence, punishable by possible imprisonment, to obstruct such a search.
Such obstruction can take numerous forms. In December 2021, for example, the Commission announced that it had referred to the police the fact that one or more personnel in the companies subject to a Commission investigation had tried to delete documents that may have been relevant to the investigation. (There is also a self-standing offence of destroying or falsifying documents which may also catch such conduct – see below.)
Obstruction can also take the form of preventing, or unduly delaying, Commission officers from conducting their search. There can sometimes be a fine balance between making a reasonable request to safeguard the business’s interests in an on-site investigation – such as insisting on the presence of the company’s legal advisers before a search is commenced – and obstruction. It is therefore highly recommended that businesses, and their management and staff, obtain proper training from their legal advisers on how to react if they are subject to an unexpected and unannounced visit by the Commission, commonly referred to as a dawn raid.
Destroying or falsifying documents
It is an offence if, having been required to produce a document in a Commission investigation, a person destroys or falsifies it. Documents include electronic ones, including emails.
Providing false or misleading information
If a person provides any document or information to the Commission which is false or misleading, this is likely to constitute a criminal offence. It is not necessary for the person to know that the document or information is false or misleading for an offence to be committed. It is sufficient that the person supplies the false or misleading document or information recklessly.
To protect themselves, and their management and staff, from inadvertently committing an offence when supplying documents or information to the Commission in an investigation, it is therefore recommended that businesses seek legal advice before doing so.
Punishing employees for assisting the Commission
It is an offence for an employer to punish an employee for assisting the Commission in the performance of its functions. The assistance could take various forms. For example, the employee might supply information to the Commission voluntarily about the company’s conduct (so-called whistle-blowing). Or the employee could comply with a request by the Commission for information, or to give evidence in proceedings before the Competition Tribunal.
The punishment could also take various forms, such as terminating the employee’s employment contract, discriminating against the employee, or intimidating or harassing the employee.
Conclusion
Being involved in a Commission investigation, even if you are not suspected of anti-competitive conduct, is fraught with legal risk. It is recommended that you seek legal advice and assistance in handling the investigation.