The Competition Tribunal recently dismissed an application by the Hong Kong competition watchdog against a hotel and its management company for declaring them liable of violating the First Conduct Rule as facilitators of a price fixing arrangement. In Competition Commission v Gray Line Tours of Hong Kong Limited & Ors [2026] HKCT 1, although the Tribunal found that the hotel did facilitate the arrangement, Mr. Justice Harris, sitting as the President of the Tribunal, dismissed the Competition Commission’s application on technical grounds. The dismissal resulted from the Commission not pleading and relying on what the Tribunal determined to be the proper and applicable statutory provision under the Competition Ordinance (Cap. 619) (Ordinance).In addition, the Tribunal clarified that in “object” infringement cases, the Commission is still required to prove beyond all reasonable doubt that the object of the agreement at issue harms competition, which may be done by demonstrating that the agreement at issue falls within the type of agreements that are unambivalently anti-competitive based on experience and well-understood economic analysis, even though it is not necessary to consider whether or not the agreement at issue itself has anti-competitive effects.
Background
Gray Line and Tink Labs were competitors in the business of selling tourist attraction tickets at various Hong Kong hotels. Gray Line operated physical tour counters at hotel lobbies, while Tink Labs provided in-room smartphones that sold tickets to hotel guests. The Commission alleged that several hotels, including Harbour Plaza 8 Degrees Limited, facilitated a price-fixing arrangement between these two competitors.
The issue arose after Gray Line complained to the hotels (including Harbour Plaza 8 Degrees) that Tink Labs was selling certain tourist attraction tickets on its smartphones to the hotel guests at lower prices than those charged by Gray Line. The hotels relayed Gray Line’s complaints to Tink Labs, and a series of communications between the hotel and Gray Line, and between the hotel and Tink Labs took place, which resulted in Gray Line and Tink Labs agreeing to an arrangement by which Tink Labs would raise its ticket prices to match Gray Line’s prices. Gray Line then passed along its pricing information to the hotel, while the hotel relayed Gray Line’s prices to Tink Labs, and Tink Labs raised its prices to the same prices charged by Gray Line.
Tink Labs later abandoned the price-fixing arrangement and reported the matter to the Commission as a whistleblower and applied for leniency. While several other hotels admitted liability, Harbour Plaza 8 Degrees and its management company (Hotel Respondents) contested the allegations, leading to a trial between the Commission and the Hotel Respondents.
The Section 6 vs Section 91 Debate
Section 6 of the Ordinance is the statutory provision relied upon by the Commission in enforcement proceedings before the Tribunal concerning the First Conduct Rule. This section essentially prohibits undertakings from making or giving effect to anti-competitive agreements. In contrast, s.91 outlines liability for “persons involved in a contravention,” which includes anyone who aids, abets, counsels, procures, induces, or conspires with any other person to contravene the competition rules.
The Commission argued that a facilitator could be held directly liable under s.6. It contended that s.91 merely defines who can be targeted for remedies, rather than creating a separate class of liability that restricts the scope of s.6. The Commission also cited EU and UK case law, where the European and English courts have interpreted primary competition rules expansively to cover facilitators.
Conversely, the Hotel Respondents argued it could not be held liable solely under s.6 because its actions were strictly facilitative. Since s.91 is a standalone provision designed for aiding and abetting scenarios, the Hotel Respondents argued that basic principles of statutory interpretation require facilitators to be prosecuted under s.91, not s.6. This would have compelled the Commission to prove the hotel’s specific knowledge and intent in regard to the alleged anti-competitive agreement to the criminal standard of proof. The Hotel Respondents argued that the Commission had used s.6 as a shortcut to bypass this heavier evidentiary burden.
Although the President concluded that the Hotel Respondents’ actions did facilitate an anti-competitive arrangement that would have been in violation of the First Conduct Rule, he held that failing to plead s.91 as an alternative to s.6 was fatal to the Commission’s case for the following reasons:
(i) Unlike the Ordinance, the EU and UK statutory regimes lack a specific equivalent to s.91, making the jurisprudential value of those foreign cases limited in this context;
(ii) Section 91(b) establishes liability for aiding and abetting (including facilitating) an undertaking in its violation of the First Conduct Rule;
(iii) Thus, stretching s.6 to cover aiding and abetting was inconsistent with statutory purposes, when s.91 was explicitly designed for that exact purpose (including facilitating); and
(iv) The Commission cannot prosecute facilitators without proving the requisite knowledge and intent required by s.91 to the criminal standard of proof.
Consequently, the Tribunal held that s.6 does not extend to facilitation conduct, and accessory liability for aiding and abetting must be pursued under s.91.
Contravention by Object
Under s.6, an agreement is unlawful if either its “object” or its “effect” harms competition. The Commission relied exclusively on the object limb in this case. This approach was generally favoured by the Commission because it would not be required to prove the “effect” of the agreement on competition, which would generally have been more complicated as it requires more factual evidential support and sophisticated economic analysis.
The Commission argued that the horizontal nature of the price-fixing arrangement such as that between Gray Line and Tink Labs, inherently possessed an anti-competitive object, thereby obviating the need to prove an actual anti-competitive effect. The Hotel Respondents disagreed, arguing that automatically treating all horizontal price-fixing arrangements as having an anti-competitive object effectively reversed the criminal burden of proof, as it would require an undertaking disputing an allegation of an agreement having an anti-competitive object to prove that the object is not anti-competitive. The Hotel Respondents criticised this reversal as a violation of the presumption of innocence under Hong Kong law.
Citing European case law, the Hotel Respondents suggested that even serious restrictions of competition, such as horizontal price-fixing, need not inevitably be deemed a by object contravention if, for example, the undertakings account for a very small share of the market. This is because despite falling into a category which would normally be regarded as anti-competitive, because of the market circumstances, the specific arrangement is clearly incapable of rendering an anti-competitive effect.
The Tribunal rejected the Hotel Respondents’ argument, as it would suggest that the Commission is required to demonstrate that the object of the price-fixing arrangement had an anti-competitive effect on the market in which Gray Line and Tink Labs participated. The Tribunal ruled that although assessing an “object” restriction requires examining the agreement’s nature, terms and context, it remains fundamentally different from a full “effect” analysis.
The Tribunal commented that because every element must be proved beyond all reasonable doubt, the Commission is still required to prove that the object of the agreement at issue harms competition. The Tribunal is permitted to draw an inference that the agreement at issue has an anti-competitive object if the inference is grounded on clear findings of facts, a logical consequence of those facts and irresistible. Ultimately, the Tribunal concluded that an agreement is anti-competitive by object if it falls within the type of agreements that are unambivalently anti-competitive based on experience and well-understood economic analysis. The Tribunal also commented that it is always open to the defence to contest the drawing of inference by adducing evidence to the contrary.
In the current case, the Tribunal found that the arrangement between Gray Line and Tink Labs was anti-competitive as it purported to fix the prices they both charged customers rather than allowing Link Tabs to independently set its own, lower prices. As such, the arrangement had the object of preventing, restricting or distorting competition in Hong Kong.
The Tribunal also found that the Hotel Respondents played a central role in addressing Gray Line’s complaints and the evidence proved beyond all reasonable doubt that the Hotel Respondents had facilitated the price-matching arrangement between Gray Line and Tink Labs. It is worth noting that although the Tribunal dismissed the Commission’s case, the President noted that had he accepted the Commission’s case that s.6 covered facilitation, he would have found that the Hotel Respondents had contravened the First Conduct Rule.
Commentary
As this case marks only the fifth competition liability trial in Hong Kong since the regime’s inception a decade ago, the legal principles laid down by the Tribunal are important to the development of the competition law jurisprudence in Hong Kong.
Notably, the Tribunal clarified several key aspects of the current law:
(i) The Tribunal will proceed on the basis that the criminal standard of proof continues to apply to enforcement proceedings, unless the Court of Appeal re-examines this issue again and rules otherwise.
(ii) Prosecutions of facilitators of anti-competitive conduct must be brought under s.91 of the Ordinance, requiring the Commission to prove specific knowledge and intent of the aider and abettor.
(iii) The Tribunal clarified that in “object” infringement cases, the Commission is still required to prove beyond all reasonable doubt that the object of the agreement at issue harms competition, which may be done by demonstrating that the agreement at issue falls within the type of agreements that are unambivalently anti-competitive based on experience and well-understood economic analysis, even though it is not necessary to consider whether or not the agreement at issue itself has anti-competitive effects.
For further information, please contact:
Peter So, Partner, Deacons
peter.so@deacons.com
