Hong Kong Competition Law: Some observations on the Competition Commission’s revised Leniency Policy for Individuals
On 8 September 2022, the Competition Commission published its revised Leniency Policy for Individuals Involved in Cartel Conduct (“the Revised Policy”). In essence, the Revised Policy provides a higher degree of clarity and enhances the incentives for an individual involved in a cartel to apply for leniency. In this update, Carter Chim and Allison Wong summarise the changes and examine their implications.
According to the original policy, leniency was “only available for the first individual involved in cartel conduct who reports the cartel to the Commission, before the granting of a marker to an undertaking under the Leniency Policy for Undertakings”. This gave rise to two problems. First, it was then a bit uncertain whether individuals who wished to contribute to an existing cartel investigation could benefit from the original policy, even when a marker had not been granted to any undertaking under the Leniency Policy for Undertakings. Such uncertainty would deter individuals from coming forward. Secondly, if an undertaking was granted a marker under the Leniency Policy for Undertakings, no individuals would be eligible for leniency even if they were able to provide substantial assistance to the Commission in its assessment or investigation and were willing to do so. In that sense, the Commission’s hands were tied under the original policy.
By introducing the Revised Policy, the Commission has addressed these problems by making leniency available to the first individual who either:
• discloses his/her involvement in cartel conduct of which the Commission has not commenced an initial assessment or investigation (Type 1); or
• provides substantial assistance to the Commission’s investigation and subsequent enforcement action of cartel conduct which the Commission is already assessing or investigating (Type 2);
and goes on to meet all other conditions for leniency.
Further, the Commission may grant leniency to the first individual who reports a cartel to the Commission even if leniency has already been granted to an undertaking in the same case.
Observations and Implications
Under the Revised Policy, it is now clear that individuals may be eligible for leniency, no matter whether the Commission has already embarked on an investigation into the cartel. It has therefore removed the uncertainty explained above. Moreover, undertakings used to enjoy preferential treatment over individuals when it came to racing for leniency. In the past, individuals would no longer be eligible for leniency if a marker had already been granted to an undertaking. By contrast, an undertaking might still be eligible for leniency even if a marker had already been granted to an individual, i.e. Type 2 Leniency (see paragraph 1.3(d) of the Leniency Policy for Undertakings Engaged in Cartel Conduct). By introducing the Revised Policy, the Commission has aligned the positions of individuals and undertakings in terms of their eligibility for leniency. Individuals no longer need to race against undertakings to get a marker and will be given leniency when they provide information to an existing cartel investigation.
As the Revised Policy may attract individuals to approach and/or cooperate with the Commission during the investigation stage, the individuals’ interests may no longer necessarily align with their employers. It may bring about some changes to the dynamics in cartel investigations. The undertakings and their legal representatives should be alive to the conflict of interests between the undertakings and their employees and/or agents and consider the desirability of separate legal representations of the undertakings and their employees as early as in the investigation stage, for instance, when section 42 notices are served on the employees.
As recognised both locally and abroad, leniency is an important investigative tool to combat cartels which by their nature are difficult to detect. The Revised Policy, which provides certainty and incentive for individuals to come forward, will further sow the seed of mistrust between an undertaking and their employees, thereby destabilising a cartel. This reflects the Commission’s strong determination in curbing cartels and bringing more enforcement actions in the future.
“Carter Chim ‘is well-recognised in Hong Kong for his experience in competition law matters’ and is well-versed in representing public and private clients across a wide spectrum of competition law issues, with enforcement actions prominent in his recent caseload.”
With the support of the British Chevening Postgraduate Scholarship, Carter read competition law at King’s College London, where he received a LLM in Competition Law (Distinction). From 2015 to 2016, he was appointed as a Legal Counsel to the Competition Commission (Hong Kong), during which he furthered his studies in competition law and was awarded the Postgraduate Diploma in Economics for Competition Law from King’s College London. During his tenure, he also acted as the first case manager for the Competition Commission in its first public enforcement action in Competition Commission v Nutanix Hong Kong Ltd v Others (CTEA 1/2017).
In 2016, Carter returned to Denis Chang’s Chambers and has since been regularly accepting instructions on competition matters. His previous or present clients include, among others, some of the respondents in Competition Commission v W Hing Construction Co Ltd and Others (CTEA 2/2017), Competition Commission v TH Lee Book Co Ltd and Others (CTEA 2/2020) and Competition Commission v Linde HKO and Others (CTEA 3/2020).
Visit Carter’s profile for more details.
Allison obtained First Class Honours in her LLB from the University of Hong Kong. She further obtained an LLM from the University of Cambridge. She joined Denis Chang’s Chambers in 2018 upon completion of her pupillage with Mr Hectar Pun SC, Mr Derek Chan SC, Ms Catherine Wong, Mr Vincent Lung, Mr Earl Deng.
Allison specialises in competition law. In her first year of practice, she represented one of the Respondents in the second enforcement action before the Competition Tribunal of Hong Kong: Competition Commission v W Hing Construction Co Ltd & Ors  3 HKLRD 46;  3 HKC 565. She was also instructed to represent two of the Respondents in the first ever application for disposal of proceedings by consent before the Tribunal: Competition Commission v Kam Kwong Engineering Company Ltd & Ors  4 HKLRD 61.
She has recently been instructed to represent the Competition Commission (led by Derek Chan SC) in Competition Commission v Quadient Technologies Hong Kong Limited & Ors (CTEA 1/2021, judgment pending) and Competition Commission v Gray Line Tours of Hong Kong Limited (CTEA 1/2022, judgment pending).
Find out more from Allison’s profile.
This article was first published on 9 September 2022.
Disclaimer: This article does not constitute legal advice and seeks to set out the general principles of the law. Detailed advice should therefore be sought from a legal professional relating to the individual merits and facts of a particular case. The photograph which appears in this article is included for decorative purposes only and should not be taken as a depiction of any matter to which the case is related.