2 December, 2016
Architects and planners in Hong Kong are prevented from setting their own fees and offering discounts due to provisions in their professional associations' codes of conduct and this prevents them from competing on the basis of price, the Hong Kong Competition Commission has said.
The Commission has called on the Hong Kong Institute of Architects (HKIA) and the Hong Kong Institute of Planners (HKIP) to remove or change these provisions in their codes of conduct as they "raise competition concerns".
"The Commission considers these restrictions to be highly problematic," it said.
"To the extent that these restrictions would prevent any price competition among [architects or planners] their effects could be akin to those of price fixing implemented by cartels. Observance of such restrictions could therefore result in significant harm to competition in the relevant markets," the Commission said.
The Commission has reviewed the practices of 350 associations and identified over 20 whose practices were considered to be at high risk of contravening the competition ordinance, it said. It has worked with these associations, and most have taken the necessary steps including removing price restrictions and fee scales.
"However, despite continuing contacts by the Commission, to date, the HKIA and the HKIP have yet to remove or amend the problematic provisions in their codes of conduct," it said.
If the Commission does not receive a clear indication that "genuine action is underway to rectify the situation" by the end of January it will refer the two bodies to the Competition Policy Advisory Group, it said.
The HKIA and HKIP themselves are 'exempt statutory bodies' under the competition ordinance, but members themselves are at risk of falling foul of the rules, the Commission said.
"Where the Commission has reasonable cause to suspect that any undertakings have given effect
to provisions in the codes of conduct that are anti-competitive, for example, by following the price restrictions set out in the codes of conduct, the Commission will consider appropriate enforcement action in accordance with the ordinance," it said.
Hong Kong-based competition expert Mohammed Talib of Pinsent Masons, said that companies who are members of either association should take active steps to distance themselves from the fee scales set out in the respective codes of conduct or risk prosecution. However, "members of these associations may also face disciplinary action from the associations if they fail to comply with the code of conduct" he said.
"After a year of inaction, the Commission is trying to use publicity to pressure the two institutions and warning their members of the risk they face," he said. "This is again another confirmation that the Commission is focused on the construction and infrastructure sectors, which remains their priority area of concern."
For further information, please contact:
Ian Laing, Partner, Pinsent Masons
ian.laing@pinsentmasons.com
