The Hong Kong Court of Appeal issues a judgement which finds housing contractors fully liable for price fixing and market sharing

On 2 June 2022, the Hong Kong Court of Appeal (“Court”) handed down a judgment almost doubling the financial penalties imposed by the Competition Tribunal (“Tribunal”) on five respondents in two decisions. The Tribunal had earlier found the respondents to have contravened the Competition Ordinance (“Ordinance”) by engaging in market sharing and price-fixing in providing renovation services to tenants in two new public housing estates. In determining the financial penalties, the Tribunal had given the respondents a reduction on the basis that it was the respondents’ subcontractors that had entered into the anti-competitive agreements and the respondents did not participate directly in such conduct. The Hong Kong Competition Commission (“HKCC”) appealed, and the Court ruled that the subcontracting arrangements could not be considered as a mitigating factor. 

This decision [1] sends a clear message to businesses that the reach of the Ordinance might be far wider than what some may think, and that businesses will be jointly and severally liable with their subcontractors forming the same undertaking (i.e. economic unit) that has contravened competition law. This alert discusses the Tribunal’s decisions, the Court’s reasoning on appeal and the practical steps that businesses can take to minimise being caught by the Ordinance as a result of the conduct of their business partners. Competition Tribunal decisions and the HKCC’s appeal The first decision appealed was the landmark decision on penalties in the W Hing case. [2] In that decision, the Tribunal for the first time laid down the four-step approach in determining financial penalties under the

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