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Competition guide assists GBA firms

By John Zhou

Hong Kong, 2 February 2024: Competition regulators in Hong Kong and Guangdong have stepped up their co-operation with publication of a legal guide designed to assist firms in understanding their rights and obligations in the neighbouring jurisdictions.

The manual – a joint effort from Hong Kong’s Competition Commission and the Guangdong Administration for Market Regulation – will help businesses in the Greater Bay Area (GBA), especially small and medium-sized enterprises, to become familiar with the two competition law regimes, take corresponding measures to enhance their internal risk assessments and strengthen their ability to comply with the law.

Publication of the 96-page booklet – available in English, traditional Chinese and simplified Chinese – comes after the two parties signed a Memorandum of Understanding last July, pledging to hold regular meetings to share key developments regarding competition policy, legislation and enforcement.

The booklet highlights in an easy-to-understand format the similarities and key differences between Hong Kong’s Competition Ordinance (Cap 619), which came into full force in 2015, and the Mainland’s Anti-monopoly Law, which has been in effect since 2008.

The Competition Ordinance prohibits conduct that prevents, restricts or distorts competition in Hong Kong, which is primarily manifested in three rules: the First Conduct Rule, which covers anti-competitive agreements; the Second Conduct Rule, which applies to abuses of market power; and the Merger Rule (which currently only applies to the telecommunications sector), dealing with mergers that substantially lessen competition.

The guide notes that conduct prohibited by the three competition rules are “substantially the same” as those under the first three requirements of the Anti-monopoly Law, which are also the three kinds of anti-competitive conduct expressly prohibited in most competition law regimes in the world. However, in contrast to the Mainland law, the Hong Kong legislation does not cover the conduct and policy initiatives of the government and most statutory bodies.

Apart from explaining key elements of the laws, their enforcement mechanisms and consequences of contraventions, the manual also features case studies and provides recommendations to businesses to facilitate compliance strategies. It advocates “a culture of competition compliance” for all enterprises.

Calling the manual “a significant step forward in our collaboration”, Competition Commission Chairman Samual Chan says his organisation and its Mainland counterpart are seeking to “level the playing field for businesses and help bring ample development opportunities to the ultimate benefit of all businesses, consumers and society as a whole”.

The co-operation between the two regulatory bodies mirrors that of other authorities across the GBA as development of the giant business hub gathers pace. Just this week, we have entered a new era in cross-border legal co-operation with implementation of the long-awaited Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance.

This new law widens the scope of previous legislation which applied only to some monetary judgments. While the legislation is relevant to the entire Mainland, it is particularly important in the context of Hong Kong’s growing connectivity with the GBA.

Co-operation between Hong Kong, Guangdong and Macau is increasing as the GBA evolves at a rapid pace, hence we can expect a raft of legal developments in the coming year. Here at Boase Cohen & Collins, we have an accomplished team, many of them fluent in Putonghua, ready to offer assistance to clients seeking cross-border advice and solutions.

A Consultant for BC&C, John Zhou is admitted to practice law in Hong Kong, the Mainland and the New York State. He has dedicated his career to cross-border dispute resolution and has vast experience in complex commercial arbitration, litigation and compliance matters. He can be contacted at john@boasecohencollins.com.

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