Hong Kong competition law may hit firms' 'cosy links' with trade groups

PUBLISHED : Saturday, 15 September, 2012, 12:00am
UPDATED : Saturday, 15 September, 2012, 3:16am

Many businesses are not aware that exchanges of certain information among trade association members could breach the new competition law, a legal expert says.

Dave Poddar, a partner at international law firm Allen & Overy who has worked on competition regulations worldwide for the past two decades, said many companies had become too "cosy" with fellow trade association members.

"Trade associations and people participating in them have to be very careful from now on," he said, pointing out that passing information that is confidential and affects competition is prohibited under the new law.

The mentioning of pricing strategies is especially sensitive, he said: "If you talk about your pricing, there is a risk that you are entering an agreement."

In general, he would advise businesses against sharing controversial information with competitors, as it could be regarded as a practice against competition. He cited overseas banks that were investigated for their e-mail exchanges.

Companies could be taken by surprise by the speedy actions of watchdogs. The competition law in Malaysia took effect on January 1. Three days later, the Malaysian press reported that the regulator would investigate a share swap deal between Air Asia and Malaysia Airlines.

Several sectors have to get ready, including financial services, retail and grocery, petrol, construction and tourism, which had been the usual suspects overseas, Poddar said.

Companies criticised by consumers, watchdogs and media should prepare themselves, such as having documents ready in case they are deemed necessary for regulators' checks, he said.

They should undergo "health checks" in advance to see if they have entered into any problematic contracts or agreements, or conducted trade association meetings in the wrong way, he advised.