Competition Ordinance Commences

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Competition Commission (Hong Kong)

Hong Kong anti-trust regulator takes first legal action since competition law came into effect in late 2015

Competition Commission takes five IT companies, including Hong Kong office of British telecoms giant, to tribunal over alleged bid rigging

PUBLISHED : Thursday, 23 March, 2017, 7:46pm
UPDATED : Thursday, 23 March, 2017, 10:58pm

Hong Kong’s anti-trust regulator has taken five information technology companies to a tribunal for alleged bid rigging, the first legal action since the city’s competition law came into effect in December 2015.

The case involves a tender issued by a social services organisation, the Hong Kong Young Women’s Christian Association (YWCA), in July last year for the installation of a new server system based on technology by Nutanix Hong Kong Limited.

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The YWCA received bids from four IT companies – BT Hong Kong, which is the Hong Kong office of the British telecoms giant BT, SiS International, Innovix Distribution and Tech-21 Systems.

The Competition Commission is alleging that all five companies – including Nutanix Hong Kong – were involved in bid-rigging.

It alleges that the IT companies breached the first conduct rule in the ordinance – in which companies engage in cartel conduct which prevents, restricts or distorts competition.

The regulator is seeking remedies including financial penalties and a declaration that each firm contravened the rule.

Competition Commission chairwoman Anna Wu Hung-yuk said: “The commission has commenced proceedings before the tribunal for the first time in what is a significant milestone for the enforcement of the competition law in Hong Kong.”

“[Bid-rigging] is one of the most blatant and harmful forms of anti-competitive conduct.”

In the first round of tenders, the YWCA only received one bid, but its tender rules stated that at least five were required.

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In the writ filed with the Competition Tribunal, the commission claimed that a representative from BT Hong Kong and Nutanix colluded to obtain four “dummy” bids from “friends” in the other IT companies to secure the contract and meet tender requirements.

The commission is also alleging that the BT employee submitted a rate card and “pricing template” to be filled in by “friends” in the other IT companies.

It said BT would then submit the lowest bid in order to win the contract.

The commission received a complaint on July 21, 2016 after “a high degree of consistency in the substance and format of the bids submitted” by the four companies was found.

The independent statutory body was accused last year of dragging its feet in bringing cases to the tribunal since its establishment in December 2015.

Wu defended the commission’s investigative pace saying the process was intense and time-consuming.