Hong Kong Enacts Competition Law: Hong Kong Prohibits Anti-Competitive Collusion and Abuse of Market Power But Does Not Expand Pre-Merger Review Beyond Telecommunications Industry

Sullivan & Cromwell LLP - July 18, 2012

Hong Kong’s first generally applicable competition law, the Competition Ordinance (the “Ordinance”), was enacted on June 14, 2012. The law brings about a major change to the legal landscape in Hong Kong by introducing a broad prohibition against agreements and abuse of market power that prevents, restricts or distorts competition in Hong Kong. Merger control under the new law will continue to be limited to the telecommunications sector. Any contravention of the law may attract significant penalties including pecuniary penalties of up to 10% of the offender’s Hong Kong local turnover for up to three years of the period of infringement, directors’ disqualification order for up to five years, and criminal liability for obstructing enforcement.

The Ordinance has extra-territorial reach and applies regardless of where the relevant agreement, conduct or merger takes place, and regardless of where the parties to the agreement, conduct or merger are located.

This alert provides an overview of the new law and describes its principal consequences for businesses operating in Hong Kong. We also identify potential areas of uncertainty where the competition regimes of the other jurisdictions on which the Ordinance is based may be instructive.