Hong Kong’s Most Inefficient Competition Law Investigation

HONG KONG COMPETITION LAW – There have been many competition law court cases that have lasted years, even decades when appeal cases are taken into account. But in Hong Kong, just a preliminary investigation by competition officials – that is, a purely administrative review to determine if a full investigation should be undertaken – can take up to 21 months as we noted yesterday, or as we’ll discuss today in relation to another case, 9 months – with a further three years of formal investigations.

This record is held by the Communications Authority (CA) and its predecessor, the Broadcasting Authority, which took a total of 45 months to determine that contracts which the dominant free-to-air television service provider had with its acting and singing artistes, were materially anti-competitive within the “all TV viewing market” and the “TV advertising market” in Hong Kong.

We’re not going to discuss the merits of this case, although just the definitions of the above markets (ie the “all TV viewing market” and the “TV advertising market” in Hong Kong), would make any experienced competition lawyer or economist curious to know more.

What we want to cover in this post is the timeline for this investigation.  In doing so, we want to extend our previous discussion concerning how the CA took 21 months just to confirm its decision that no formal investigation was justified into allegations that Apple, operating alone or with others, had prevented purchasers of its iPhones and iPads from using these products on some Hong Kong mobile operators’ 4G/LTE network services.   Continue reading

Failed Complaint a Timely Reminder for the Competition Commission

HONG KONG COMPETITION LAW – On 30 June this year, the Hong Kong Communications Authority (CA) confirmed that it would not formally investigate a claim that Apple, either unilaterally or in a conspiracy with three mobile phone operators, had restricted the number of local mobile phone networks on which its newly-released iPhone and iPad devices would operate.

HKT, the major telecommunications operator in Hong Kong which we discussed previously in relation to its acquisition of CSL earlier this year, complained to the CA that because of Apple’s arrangements, its customers were unable to connect their new Apple products to HKT’s 4G/LTE mobile network.  It was alleged that this contravened the competition law provisions of the Telecommunications Ordinance (TO).

Ultimately, the case went nowhere.  But it took the CA more than 21 months to confirm its refusal to formally investigate HKT’s complaint, during which time there were countless letters, meetings and even court cases to spur the CA to act.

In our view, this apparent waste of time and resources – not to mention the frustration evident in the complainant’s efforts to move this case forward – could have been avoided had HKT had the right to initiate its own private legal action under the competition provisions of the TO.  But no such right exists under the TO, and nor does it exist under Hong Kong’s newly enacted general competition law.   Continue reading

What the Competition Commission is Getting Exactly Right

HONG KONG COMPETITION LAW – Yesterday we explained our concerns over the Competition Commission’s approach of asking questions to which it should already know the answers.  The fact that it asked these questions may reflect a desire to generate discussion or to appear more consultative. But the risk is that this approach will undermine the Commission’s advocacy of Hong Kong’s new competition laws.

Today we focus on how we believe the Commission should be preparing for its public consultation on its enforcement guidelines.  These guidelines, which must be published before the Competition Ordinance (CO) can take full effect, cover a wide range of legal and economic concepts, many of which are completely foreign to ordinary Hong Kong business people and consumers.  How the Commission presents these concepts is vital to the success of the consultation process and the effective enforcement of the CO.

Having identified areas in its pre-public consultation discussion document where we think the Commission has taken the wrong approach (see yesterday’s post), in this post we’ll highlight instances where we believe the Commission has struck just the right tone in this same document, and how it should be taking this approach more often.   Continue reading

The Competition Commission is Asking Too Many Questions

HONG KONG COMPETITION LAW – On 6 November 2006, the Hong Kong Government initiated its first public consultation on a general competition law covering all sectors of the economy.  This was a memorable event not just as a milestone in the two-decades’ long process that ended with the June 2012 enactment of the Competition Ordinance (CO).  It also relied on a consultation document that was drafted in a peculiar – and disconcerting – fashion.

The main peculiarity was that the Government appeared to be looking to the public for its policy direction, rather than explaining and advocating its preferred approach.  Being open minded is of course no bad thing.  But there comes a time when those charged with certain responsibilities (like the staff of the Competition Commission now preparing guidelines for their enforcement of the CO) must stop asking questions and start exercising those special skills and expertise we assume them to possess.   Continue reading

Professor Tsang Shu-ki

Professor Tsang Shu-ki, whom some of us knew personally and whom all of us respected as a first-rate economist and one of the pioneers of competition law in Hong Kong, passed away earlier this month.

We join with many others in Hong Kong and around the world in expressing our sadness at this time, and offer our sincere condolences to his family.

Professor Tsang was a Member of the Hong Kong Competition Commission.

Exclusions and Exemptions from the Competition Ordinance’s Merger Rule

HONG KONG COMPETITION LAW – Yesterday we discussed how easy (in a technical legal sense) it would be amend the Competition Ordinance (CO) and broaden the application of the Merger Rule to cover all businesses, not just telecommunications licensees which is the situation at present.

We noted the political headwinds that such an amendment would inevitably face in the near term, although we concluded that it’s not inconceivable that these could be overcome if public sentiment were to turn against anti-competitive mergers and acquisitions in the wider economy, for instance if the two major supermarket chains in Hong Kong decided to merge.

Not all would be lost, however, for those businesses who might then find themselves at risk under the Merger Rule.  That’s because there would still exist two levels of protection  that could potentially shield their transactions from being opposed by the Competition Commission.  The first requires a successful economic efficiency claim. The second a compelling argument on public policy grounds.

This post provides an overview of the Merger Rule and these further aspects of the merger regime established under the CO.  The discussion gets a little technical, but it’s not too complicated. Continue reading

Broadening the Merger Rule in Due Course

HONG KONG COMPETITION LAW – One of the more controversial aspects of the the Competition Ordinance (CO) is the restricted application of the Merger Rule.  This rule, which prohibits mergers and acquisitions that are likely to substantially lessen competition, currently only applies to mergers involving telecommunications licensees.  But the repeal of just one section of the CO could instantly extend this rule to all sectors.   Continue reading