21 November, 2015
With less than a month to go before the Competition Ordinance comes into full force on 14 December 2015, the Hong Kong Judiciary issued two new practice directions for the Competition Tribunal yesterday.
The first practice direction deals with the general conduct of proceedings before the Competition Tribunal and the second practice direction deals with the confidential treatment of information. Both practice directions will come into effect on 14 December 2015.
A new specialist court
The Competition Tribunal is a specialist court which has the primary jurisdiction to hear and adjudicate on competition cases.
The Tribunal will consist of Court of First Instance (CFI) Judges and has the same jurisdiction and powers as the CFI. Hearings will generally take place in open court.
If the Tribunal finds that a party has breached a competition conduct rule, it may impose a broad-range of sanctions on that party, including:
- pecuniary penalties;
- director disqualification orders;
- awards of damages in follow-on actions;
- various other ancillary orders.
In terms of pecuniary penalties, the fines that the Tribunal may impose are significant – up to 10 per cent of the turnover of the party involved for a maximum of three years.
Familiar territory?
Practice Direction No. 1 confirms that the Tribunal will actively manage its cases (as is the case in the CFI) and conduct its proceedings flexibly with "as much informality as is consistent with attaining justice".
Where neither the Ordinance nor the Rules address a particular matter, the relevant Rules of the High Court (RHC) will apply. The practice and procedure of the CFI will therefore remain relevant for proceedings before the Tribunal. If so, the "informality" of proceedings before the Tribunal may be queried. That said, the Tribunal retains the discretion to disapply any provision of the RHC to conduct the proceedings expeditiously and informally, or to save costs.
Practice Direction No. 1 contains the following, among other, examples of when the RHC will apply:
- Summary judgment. However, the rules on summary judgment are expected to be relevant only in follow-on actions and actions transferred from the CFI.
- Offers to settle and payments into court. It remains to be seen how the application of these rules to proceedings before the Tribunal will play out in practice, but this is in line with the underlying objectives of the courts to facilitate the settlement of disputes.
- Expert evidence. Expert evidence is likely to feature prominently in competition cases that involve economics. Practice Direction No. 1 reminds parties that they should serve no more expert evidence than is necessary. Otherwise, the Tribunal may refuse to allow the evidence.
Notably, unlike in the CFI, there will be no automatic discovery before the Tribunal. Parties will have to apply for directions on discovery or apply for discovery and production from parties or non-parties.
Protecting confidentiality in proceedings
Confidentiality is a real concern in competition cases, with confidential pricing, profit margin, supplier and marketing information possibly at stake. The Competition Tribunal Rules address this concern by allowing:
- a party to apply for an order to treat a document as confidential; and
- the Tribunal to refuse an order for discovery and production of a document having regard to all the circumstances of the case, including whether the information contained in the document is confidential.
Practice Direction No. 2 sets out the practice relating to confidential information in proceedings in the Tribunal. It encourages parties to agree the confines of confidentiality and make use of confidentiality undertakings.
Where agreement cannot be reached, an applicant for a confidentiality order needs to:
- show that the information genuinely needs to be protected; and
- specify the persons or class of persons against whom confidentiality is asserted.
According to Practice Direction No. 2, confidentiality cannot be claimed for the whole document as protection can normally be achieved with limited redactions.
Practice Direction No. 2 sets out the procedure for obtaining confidential treatment of a document so that a redacted version may be filed and served. However, parties will not be able to use this procedure to conceal information from the Tribunal – an unredacted version of the document will still have to be filed with the Tribunal.
In addition to redacting court documents, parties may request the Tribunal for a private hearing and for the Tribunal to exclude confidential information from its publicly available judgments and decisions.
Gearing up
Despite the looming full commencement date of 14 December, it may be a while before the Competition Commission brings a full-fledged case to the Tribunal and the practice directions are referred to by parties. That said, the practice directions serve to provide much-needed procedural guidance for when the first case is brought to the Tribunal, especially as regards confidentiality.
As you gear up for the inevitable, you should look out for the following final few pieces that will complete the picture:
- final cartel leniency policy;
- statement of enforcement priorities;
- legal professional privilege policy;
- forms for applications under the Ordinance;
- Memorandum of Understanding between the Competition Commission and the Communications Authority.
For further information, please contact:
Patrick Sherrington, Partner, Hogan Lovells
patrick.sherrington@hoganlovells.com
