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Otto Poon, husband of Hong Kong’s justice secretary Teresa Cheng. Photo: Sam Tsang

Company owned by Hong Kong justice chief Teresa Cheng’s husband sued for price fixing over air-conditioning works potentially worth HK$2 billion

  • Competition Commission begins legal action against ATAL Building Services Engineering, set up by Cheng’s husband Otto Poon, and Shun Hing Engineering Contracting Company
  • Both firms accused of having ‘fixed prices, shared market and/or rigged bids’ in relation to air-conditioning works in Hong Kong over four-year period

Hong Kong’s competition watchdog has sued a company set up by the husband of justice secretary Teresa Cheng Yeuk-wah for price fixing, market-sharing and bid-rigging in relation to air-conditioning works potentially worth about HK$2 billion (US$254.7 million).

The air-conditioning works cartel case involved ATAL Building Services Engineering of Analogue Holdings, set up by Otto Poon Lok-to, Cheng’s husband, and Shun Hing Engineering Contracting Company under Shun Hing Holdings.

Both are leading electrical and mechanical engineering service providers in Hong Kong.

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The Competition Commission on Thursday said it had commenced legal action against the two companies, following an investigation during which officers scoured through some 1 million documents for evidence.

In a notice filed to the Hong Kong Stock Exchange later, Analogue Holdings said it was “in the course of seeking legal advice on the proceedings”.

The two companies were accused of having “fixed prices, shared market and/or rigged bids” in relation to the supply of air-conditioning works in Hong Kong over a period of four years from December 14, 2015 to December 4, 2019.

The commission’s chief executive officer Rasul Butt said: “[The] enforcement action exposes and tackles a multi-year cartel formed between two established companies in the provision of air-conditioning services in Hong Kong.

“With air conditioning being a modern necessity, the cartel affected many members of the public residing and working in residential and commercial buildings.”

Two senior engineers from ATAL and a senior manager at Shun Hing had communicated frequently during the period “through emails and phone texting when responding to requests for tender or quotation from customers”, the commission alleged.

“In those communications they sought and agreed to provide cover bids, shared information about their intentions to bid, and/or disclosed commercially sensitive information on their intended bidding price or other parameters of the bid such as the number of days required to complete the works that were tendered for,” the commission alleged.

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The watchdog added it had reasonable cause to believe that the conduct amounted to serious anti-competitive conduct in contravention of the First Conduct Rule of the Competition Ordinance.

It also said it believed the two parties had done so for more than four years, “which potentially impacted their sales of a wide range of air-conditioning works such as the installation of central air conditioners, replacement of components such as pipes and chillers, as well as their day-to-day maintenance with an overall value of around HK$2 billion”.

Affected clients included Towngas, JLL, and the Electrical and Mechanical Services Department, according to the writ filed by the Competition Commission.

The Competition Tribunal can impose a penalty of up to 10 per cent of the turnover of each undertaking for each year, up to three years, in which the contravention took place.

The tribunal may also issue orders requiring individuals to pay a pecuniary penalty or disqualifying them from serving as director of a company for a period of up to five years.

The Post has contacted ATAL and Shun Hing for comment.

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Butt added that “disrupting hardcore cartels that affect people’s livelihood, especially when the companies involved are major players in the relevant market” would continue to be one of the commission’s top priorities.

“The case also highlights the need for parent companies to ensure all members of their group abide by the Competition Ordinance,” he said.

“Parent companies should be aware of their potential legal liabilities should their subsidiaries carry out anti-competitive activities and actively take measures to ensure full compliance with the ordinance within their corporate groups.”