Hong Kong’s Court of Appeal allowed an appeal by the Hong Kong Competition Commission (HKCC), increasing pecuniary penalties imposed against various respondents in two separate price-fixing cases on 2 June 2022.
In the Competition Tribunal’s earlier decisions, the respondents (along with their respective subcontractors) were found to have contravened Hong Kong competition law by engaging in market-sharing and price-fixing arrangements in renovation projects in Hong Kong.
The respondents did not participate in the cartels directly, but their subcontractors participated, and the tribunal found that the subcontractors and respondents formed a single undertaking for competition law purposes.
Yet despite finding the respondents liable, the tribunal granted a reduction in fine calculation given their indirect participation.
The HKCC contested the reduction, arguing that all entities within the undertaking should be equally liable for the infringement.
The Court of Appeal confirmed that the concept of an “undertaking” lies at the heart of Hong Kong competition law, modelled on EU jurisprudence, and agreed with the HKCC that pecuniary penalties should remain determined with reference to the economic activities and conduct of the undertaking as a single economic unit.
There should be no separate infringement by each of the entities within the undertaking; instead, each entity should be jointly and severally liable for the pecuniary penalties.
Hence, there should be no reduction in penalty to reflect a particular entity’s role as only part of an undertaking.
Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Howard Wu (Shanghai) at howard.wu@bakermckenzie.com
