8 February, 2018
The Hong Kong Competition Commission (HKCC) has issued a recommendation that organizations inviting bids for contracts prohibit bidders from communicating with any other person prior to making a bid. Although there are certain exceptions, these are narrowly drawn, and many consortium bids and supply arrangements would be ruled out if this recommendation is followed. The recommendation is contained in a "User Guide" for procuring organizations. Fortunately, the recommendation is not legally binding, and HKCC has made it clear that procuring organizations are free not to follow it. Unusually, businesses were not given an opportunity to comment on this proposal before it was finalized, as there was no prior public consultation.
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HKCC's approach contrasts with that of competition authorities in other jurisdictions such as Ireland, where the competition authority has actively encouraged consortium bidding by small and medium-sized businesses (SMEs), as this increases competition. The authority has issued a guide for SMEs, explaining how they can engage in consortia while complying with competition law. It is hoped that HKCC will do likewise, as a counterpart to its User Guide for procuring organizations.
Separately, HKCC is consulting on the first application for an exemption of an individual agreement (as opposed to a block exemption) under the Competition Ordinance (CO). The application has been made by 14 banks in Hong Kong for exemption of the Code of Banking Practice, which was issued by the Hong Kong Association of Banks and the DTC Association (the full name of which is the Hong Kong Association of Restricted Licence Banks and Deposit-taking Companies). The application claims the benefit of the legal compulsion exclusion, which exonerates from the CO arrangements that are compelled by other legislation. Interested parties have until 15 February 2018 to make representations on the application.
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For further information, please contact:
Stephen Crosswell, Partner, Baker & McKenzie
stephen.crosswell@bakermckenzie.com
