8 March 2021
On 26 January 2021, Hong Kong's Competition Commission (HKCC) issued infringement notices to six hotel groups and a tour operator for facilitating a cartel arrangement between two competing travel service providers, which fixed the prices of tourist attractions and transportation tickets in Hong Kong.
The hotel groups and the tour operator admitted to a contravention of Section 6(1) of the Competition Ordinance (which prohibits anticompetitive agreements) and made commitments to address competition compliance within their organisations. An investigation into the conduct of the competing travel service providers is ongoing.
What you need to know key takeaways
Infringement notices may be issued by the HKCC where it has reasonable cause to believe that there has been a contravention of cartel rules.
The HKCC will not bring proceedings against a person or business that has been issued with an infringement notice, unless the person/business has not complied with the notice within the compliance period (or the HKCC has otherwise withdrawn the infringement notice).
The HKCC has a wide discretion to determine the actions required by an infringement notice, which may include (but is not limited to) requiring a person or business to refrain from specified conduct, or to take actions that the HKCC considers appropriate, or to admit to a contravention of the Competition Ordinance.
Businesses should be mindful that even "mediums" or "facilitators" of cartel arrangements can fall foul of competition law.
The HKCC's investigation revealed that between March 2016 and May 2017, competing travel service providers Gray Line Tours of Hong Kong Limited and Tink Labs Limited agreed to fix the prices of tourist attractions and transportation tickets in Hong Kong, which were sold by various hotel groups across Hong Kong.
The hotel groups themselves did not directly sell tourist attraction and transportation tickets to customers. However, it was held that they acted as facilitators by passing on pricing information requests and communications between these two competing travel service providers, which actively contributed to the implementation of the price fixing arrangements. The HKCC had reasonable cause to believe that the arrangements had the object of harming competition in the travel services industry, to the detriment of other tourist operators and consumers.
This is the first time that the HKCC has taken enforcement action against parties for the facilitation of cartel conduct. The HKCC issued infringement notices to obtain commitments from the parties in lieu of initiating proceedings before the Competition Tribunal. The HKCC considered this to be a proportionate approach having regard to the parties' role as "facilitators" and their active cooperation during the HKCC's investigation.
With thanks to Adelle Elhosni, Associate (Abu Dhabi) and Sheenae LeCornu, Associate (Sydney) for their contribution.
For further information, please contact:
Angie Ng, Partner, Ashurst
Angie.Ng@Ashurst.com
