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Hong Kong Competition Commission takes bid-rigging case to tribunal

The Hong Kong Competition Commission (HKCC) has started proceedings before the Hong Kong Competition Tribunal against five information technology companies accused of bid-rigging in relation to a tender issued by the Hong Kong Young Women's Christian Association (YWCA).24 Mar 2017

The tender for an IT server was won by Nutanix Hong Kong, against bids submitted by BT Hong Kong, SiS International, Innovix Distribution and Tech-21 Systems.

The HKCC has alleged that some of these bids were "dummy bids", and is asking for pecuniary penalties to be imposed and a declaration that each party has contravened the first conduct rule of the Hong Kong Competition Ordinance. The first conduct rule prohibits businesses from making or giving effect to an agreement, engaging in a concerted practice, or making or giving effect to a decision of an association, if the object or effect is to harm competition in Hong Kong. In particular, it prohibits price fixing, market sharing, bid rigging and output restrictions.

This is the first case that the HKCC has taken to the Tribunal under the Competition Ordinance, and is notable because it targets alleged bid-rigging in relation to a tender by a social services organisation, said competition law expert Mohammed Talib of Pinsent Masons, the law firm behind Out-Law.com.

"The Commission is targeting bid-rigging as a form of conduct that it considers to be a clear contravention of the First Conduct Rule", Talib said.

Guy Lougher, also of Pinsent Masons said: "Competition authorities will often take the view that anti-competitive agreements that cause harm to such social services organisations or those funded by taxpayers are particularly serious breaches of competition law."

"This will be the first opportunity for businesses to see what approach is taken by the HKCC and Competition Tribunal in terms of the conduct of the proceedings as well as the assessment of any penalties in the event of an infringement decision," he said.

Anna Wu, chairperson of the HKCC said: "Today the Commission has commenced proceedings before the Tribunal for the first time in what is a significant milestone for the enforcement of competition law in Hong Kong. Bid-rigging can occur in any market where tender processes are used. It is one of the most blatant and harmful forms of anti-competitive conduct. The Commission takes this type of conduct very seriously because of its potential to cause significant harm to consumers and the economy as a whole."