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Construction companies ‘made turf deal’ on subsidised housing estate, according to Hong Kong’s competition watchdog

Competition Commission has accused Kam Kwong Engineering Company, Goldfield N & W Construction Company and Pacific View Engineering as well as two directors of distorting fair competition in a way that amounted to ‘serious anti-competitive conduct’

PUBLISHED : Thursday, 06 September, 2018, 11:02pm
UPDATED : Friday, 07 September, 2018, 11:17am

Hong Kong’s competition watchdog on Thursday filed a court action against three construction companies and two directors over a market-rigging scheme on a government-subsidised estate in San Po Kong.

It was the first time the Competition Commission had sued individuals rather than the companies involved, and the second time it had targeted under-the-table behaviour at residential projects.

According to the court writ filed on Thursday, Kam Kwong Engineering Company, Goldfield N & W Construction Company, and Pacific View Engineering split the renovation work in 857 units at King Tai Court among themselves. At least 178 units were said to be involved to date.

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The three companies marked their territory by claiming floors, so when residents on a different floor approached them, they turned them down.

They provided similar quotations, and listed the same services, in packages they tried to sell to residents who had bought homes from the Housing Authority, the court document showed.

They also used the same layout, and included an identical 10 decoration items they would provide, in leaflets prepared by Chan Kam-shui, the director of Kam Kwong. Their quotations were a few hundred dollars apart.

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Chan and Lam Po-wong, from Pacific View, aided and abetted the companies in the anti-competition bid, the writ said.

The commission accused the companies, and directors, of market sharing and price-fixing, and distorting fair competition in a way that amounted to “serious anti-competitive conduct”.

It is asking the Competition Tribunal to declare the move by the firms and directors to be contrary to competition laws and to fine them. It also asked for Chan to be disqualified as director.

The firms could face fines of up to 10 per cent of their total sales in 2017 if convicted.

“I have just come to know the case, but I can’t say too much as this is beyond me,” Lam said.

He declined to comment on how long he had been involved in the industry, or how long he had known his co-defendants. The other defendants could not be reached for comment.

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Goldfield stood out as the more established contractor in the case. Founded in 1985, it has previously served as a contractor and supplier for public works, including in a HK$235 million (refurbishment of Ping Shek Estate. It also took up renovation work in the highly populated Tsim Sha Tsui railway station for HK$97 million.

District councillor Wendy Lui Kai-lin said she was surprised to hear that hundreds of tenants had been affected.

“Tenants started moving in last July or August and they have yet to establish an owners’ corporation even till now,” Lui said. “This may explain why tenants were unaware of the situation.”

In August last year, the watchdog also sued 10 companies in a separate cartel complaint about renovation work on On Tat Estate, that trial will begin in November.