Hong Kong regulator revises leniency policy for cartel conduct

Cartel conduct arises when two or more competitors breach competition law by entering into an agreement and/or concerted practice involving price fixing, output limitation, market sharing (e.g. allocating customers, suppliers or territories), or bid-rigging/collusive tendering. The Commission previously granted leniency to the first member of a cartel to report cartel conduct to the Commission, provided other requirements were met.

The newly revised policy (23-page / 208KB PDF) distinguishes between applications for leniency received before and after the Commission starts an initial assessment or investigation into the conduct. The revised policy is intended to offer clearer guidance and enhanced incentives for individuals to cease their involvement in cartel conduct and report it to the Commission, to further strengthen the Commission’s cartel detection and enforcement efforts.

Leniency is available to the first individual that either discloses their involvement in cartel conduct where the Commission has not started an investigation (Type 1 leniency); or who provides substantial assistance to the investigation and subsequent enforcement action of cartel conduct being assessed or investigated by the Commission (Type 2 leniency); and who meets all the requirements for leniency.

For a successful leniency applicant, the Commission will not start proceedings before the Competition Tribunal against the applicant for the conduct covered by the leniency agreement. Under the leniency agreement, the Commission will refrain from seeking an order declaring that the successful leniency applicant (under Type 1 or Type 2 leniency) is involved in a violation of a competition rule under the Competition Ordinance.

With its revised policy, the Commission opens up the possibility of leniency to the first individual who reports cartel conduct, even if leniency has already been provided to an undertaking in the same case under the Commission’s separate leniency policy for undertakings (28-page / 318KB PDF).

Individual applicants should be able to provide practical assistance to the Commission to qualify for leniency, either by exposing a case which is unknown to the Commission or by providing substantial assistance on a case that is already being assessed or investigated by the Commission.

Individuals who act as leaders in cartel conduct or who have coerced other parties to engage in the cartel conduct are not entitled to apply for leniency. However, applicants in such situations are encouraged to cooperate with the Commission’s investigation. The Commission will take this cooperation into account when considering a proportionate enforcement response in relation to that individual.