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Hong Kong Competition Commission accuses construction firms of market sharing and price fixing

Ten construction companies in Hong Kong have been accused of breaching competition law by fixing prices and sharing the market for interior decoration in a new public housing estate.16 Aug 2017

The Commission alleges that the firms contravened the first conduct rule of Hong Kong's Competition Ordinance through a market sharing agreement and a price fixing agreement relating to a public rental housing estate in Kwun Tong, Kowloon.

The first conduct rule prohibits agreements, concerted practices or decisions of associations that have the object or effect of preventing, restricting or distorting competition.

Anna Wu, chairperson of the Commission said: "Market sharing and price fixing are serious anti-competitive practices which lead to reduced consumer choices and uncompetitively high prices, hurting consumers, other businesses and the economy as a whole. The Commission accords priority to combating such conduct which are particularly egregious when the people directly affected belong to low income groups such as the residents of the relevant public housing estate in the present case."

This is the second case the Commission has brought before the Tribunal since full commencement of the Ordinance in December 2015.

Hong Kong-based competition expert Mohammed Talib of Pinsent Masons, the law firm behind Out-Law.com said: "The HKCC continues to focus on bid rigging and cartel conduct in the construction industry especially where it affects the public sector. Systematic cartel conduct is considered to be a real risk and this latest prosecution is a significant signal of how seriously the HKCC takes such conduct."

"It is important for all contractors to review their tendering arrangements and bidding procedures to ensure that they have adequate safeguards against such arrangements," Talib said.

The companies involved are W Hing Construction, Sun Spark Construction, Mau Hang Painting & Decoration, Tai Dou Building Contractor, Kam Kee Machine Electrical Iron Works, Hip Yick Construction, Tai Wah Civil Engineering, Wai Sun Iron & Decoration, Wide Project Engineering & Construction and Luen Hop Decoration Engineering.