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Hong Kong
On 28 June, officials briefed the Legislative Council Panel on Economic Development on the draft Competition Bill, which is proposed to be introduced shortly to LegCo. Key features of the draft cross-sectoral competition law were summarised, including the following:
- Conduct rules will prohibit decisions and concerted practices and, second, abuses of a substantial degree of power in a market which, in either case, have the object or effect of preventing, restricting or distorting competition in Hong Kong.
- A “merger rule” requiring review of the effects on competition of mergers between undertakings would initially apply only to telecommunications licensees. The possible merits of extending the application of the merger rule might be examined at a later date.
- A new Competition Commission (of not less than five members) will promote public understanding of competition law, advise the Government on competition matters, investigate suspected abuses and prosecute infringements.
- A new Competition Tribunal will be established as a superior court of record to adjudicate cases brought by the Commission, review decisions of the Commission and determine private actions for breach of the competition laws. Tribunal decisions will be reviewable on appeal by the Court of Appeal.
- Private actions in damages may be brought by persons who have suffered loss as a result of contravention of the conduct rules, in addition to public enforcement by the Commission.
- The competition law will not apply to the Government or statutory bodies except for those statutory bodies (or their activities) specified by regulation by the Chief Executive-in-Council.
It appears that the Bill remains on track to be introduced before LegCo rises in mid-July. If Members’ questions during the briefing are indicative, further debate is likely on the procedure and criteria for exemption of statutory bodies, together with possible compliance costs for SMEs. |
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Singapore
The Competition Commission of Singapore has issued its first Infringement Decision on abuse of dominance under s 47 of the Competition Act. The Infringement Decision was issued on June 4th against ticketing services provider, SISTIC.com Pte Ltd. SISTIC was found to control 85 - 95 per cent of “the market for the provision of open ticketing services in Singapore to both event promoters and ticket buyers” and therefore in a dominant position. The Commission found that SISTIC entered into nineteen exclusivity agreements with various events and venue promoters, which contained exclusive clauses designed to make SISTIC the sole ticketing services provider for the duration of those agreements. The exclusivity agreements paved the way for unilateral changes of pricing strategies by SISTIC, which raised booking fee charges against consumers first in 2004 and more recently in 2008. The Commission found such practices to be an abuse of SISTIC’s position of dominance and imposed a financial penalty of SGD989,000 on SISTIC, together with directions to amend the agreements to remove the offending exclusivity clauses.
On the same day, the CCS issued a separate Infringement Decision fining fourteen electrical and building works contractors for price fixing through collusive tendering or bid-rigging in the provision of electrical and building works for properties in Singapore. |
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China
The European Commission has approved the acquisition by Cathay Pacific of a minority stake in the air cargo business Air China Cargo, previously wholly owned by Air China. The two airlines, which are the flag carriers of China and Hong Kong respectively, will jointly control Air China Cargo. Air China is the venture's controlling stakeholder, with a 51 per cent shareholding, while Cathay Pacific owns 25 per cent directly and 24 per cent indirectly through its subsidiary Fine Star. As the two airlines’ turnovers met the EU’s merger review thresholds, the venture was filed for approval to the European Commission. The Commission gave its approval on the basis that the joint venture would not have significant anti-competitive effects in the Asia-Europe air cargo market, due to Air China Cargo’s relatively small market share and the presence of other large competitors.
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New Zealand
The New Zealand Commerce Commission recently entered into a settlement with ING (NZ) Limited and ANZ National Bank Limited, under which ING and ANZ agreed to establish a NZD45 million fund to compensate customers. This is the largest sum ever agreed by the Commission for consumer compensation. The settlement is the result of an investigation into alleged breaches by ING and ANZ of New Zealand’s Fair Trading Act 1986 in relation to the promotion and marketing of the ING Diversified Yield Fund (DYF) and the ING Regular Income Fund (RIF). The funds were frozen in March 2008, affecting around 15,000 investors. “In the Commission’s view, representations made by ANZN and ING concerning the degree of investment risk in the funds were likely to be misleading, in that the actual risk was understated”, said Commerce Commission Chair Dr. Mark Berry. The Commission agreed not to institute legal proceedings against ING and ANZ. |
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European Union
Fines totaling EUR622 million have been imposed by the European Commission on seventeen bathroom equipment manufacturers, for their involvement in a cartel fixing the prices of sinks, baths, taps and fittings over a period of twelve years. US-based Masco blew the whistle on the cartel, in return for immunity from prosecution. Unusually, the Commission halved the fines on three of the companies, and reduced the penalty on two others by 25 per cent. The Commission is able to impose fines of up to 10 percent of defendant undertakings’ annual turnover but was concerned that maximal penalties could drive some of the undertakings out of business. The quantum of these fines has nevertheless attracted criticism from some European competition commentators, concerned as to the appropriateness of the European Commission’s fining policy during times of economic recession. |
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Bangladesh
Bangladesh is poised to become the latest developing country in Asia to adopt a comprehensive competition regime. The Competition Bill, which is said to be in the final drafting stages, reportedly is modeled on India’s Competition Act 2002. The Bill would prohibit cartel agreements, abuse of dominance, engaging in restrictive business practices such as collusive agreements, and mergers and acquisitions which would adversely affect competition. The Bill also provides for the establishment of a competition agency to be known as the Bangladesh Competition Commission. Bangladesh’s Commerce Minister has stated that the Bill will be ready for submission to the Parliament by the next budget session. |
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