Reed Smith Client Alerts

On 16 April 2020, the Hong Kong Competition Commission (the Commission) published a revised Leniency Policy for Undertakings Engaged in Cartel Conduct1 (the Leniency Policy for Undertakings) and a new Leniency Policy for Individuals Involved in Cartel Conduct2 (the Leniency Policy for Individuals).3 Following on from our recent client alert (“A tale of two programs: how Hong Kong leniency compares to the U.S.”) , this update highlights the significant changes made to the leniency policy for undertakings and the key features of the new policy for individuals.

Authors: Asha Sharma Peter Glover Steve Tam

This client alert is the second of a two-part series on the Hong Kong leniency program. 

Background

Leniency policies are an important and effective investigative tool used by authorities in a number of jurisdictions to combat cartel behaviour. In Hong Kong, entering into an agreement or practice, or being a member of an association which makes or gives effect to decisions of the association, in either case with the object of preventing, restricting or distorting competition (cartel conduct) contravenes the First Conduct Rule of part 2 of the Competition Ordinance (the Ordinance). Notwithstanding any contravention, section 80 of the Ordinance provides that the Commission may, in exchange for a person’s (which includes any public body and any body of persons, corporate or unincorporated) cooperation in an investigation or in proceedings under the Ordinance, make an agreement, referred to as a ‘leniency agreement’, with the person on terms it considers appropriate. While the leniency agreement is in place, the Commission cannot bring or continue proceedings in the Hong Kong Competition Tribunal with a view to imposing a fine as this would be in breach of that leniency agreement.

In November 2015, the Commission released its first Leniency Policy for Undertakings Engaged in Cartel Conduct. It has been four years since the Ordinance and the first Leniency Policy for Undertakings came into effect. With the passage of time and experience following the introduction of the Ordinance, the Commission has now reviewed and revised its leniency framework “with a view to strengthening its efficacy and comprehensiveness, providing stronger and clearer incentives for a cartel member to stop the cartel conduct and report it to the Commission, thereby strengthening enforcement and furthering victim recovery”.