Globally there has been a much more vigorous enforcement of competition legislation. International case decisions highlight that certain established industry practices are now being classed as anti-competitive activities such as price fixing; market allocation in supply chain management; quantitative restrictions on the output of goods or services in distribution networks; and bid-rigging in procurement. We have also seen the globalisation of investigations, huge monetary penalties and the increased use of disqualification orders imposed against individual officers. Compliance with competition legislation has therefore become all the more imperative for businesses globally. Hong Kong's new competition law is certainly part of this international trend. Many well-established industry practices and commercial agreements or understandings will come under close scrutiny once the law has been implemented. Particular attention needs to be paid to the first and second conduct rules of the new law which deal with anti-competitive agreements or concerted practices and abuse of substantial market power.

Hong Kong's new competition law should be regarded as both a sword and a shield – while it poses a compliance risk it also defends companies against anti-competitive practices. It is uncertain which industry or sector will be targeted first for investigation or enforcement. Some argue that Hong Kong business practices have unique family-dominated business features and overseas lessons cannot be directly borrowed or used locally. As such, the new rules will provide a good opportunity for business leaders and company secretaries to review their current practices and competition policies. A competition compliance programme (CCP) can be fully and effectually used by business units so as to ensure they have a sound compliance framework and strategy.

Why implement a CCP?

Hong Kong's new competition law presents a new compliance challenge to company secretaries in Hong Kong and there are uncertainties as to how the Competition Commission will enforce the law. The Hong Kong Institute of Chartered Secretaries has issued detailed guidelines on the new law to assist members in their compliance programmes. Equipped with professional skills in corporate compliance and administration, chartered secretaries are well positioned to work as corporate caretakers of the new law. They can identify the high-risk areas in compliance and recommend frontline staff training to ensure staff are familiar with the law. Implementation of a CCP will help mitigate your business risks and reduce compliance costs. Moreover, management participation in a CCP can be a mitigating factor which may substantially reduce any penalties imposed by competition authorities. This is certainly borne out by overseas case experiences. If an undertaking does not qualify for total immunity because the corporation sought leniency after the competition authorities commenced investigations, it may still benefit from a reduction in financial penalties if it can prove it adopted a CCP. Overseas competition case decisions reveal that offenders are often required to take the first available opportunity to apply for leniency with competition authorities and reduction in financial penalties often depends on an assessment of the use of a CCP against the facts of each case and various other factors including and not limited to: