# Competition Ordinance/Part 2

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PART 2 The Conduct Rules
Division 1—Agreements etc. Preventing, Restricting or Distorting Competition
Subdivision 1—First Conduct Rule
6. Prohibition of anti-competitive agreements, concerted practices and decisions
(1) An undertaking must not—
    (a) make or give effect to an agreement;
    (b) engage in a concerted practice; or
    (c) as a member of an association of undertakings, make or give effect to a decision of the association,
if the object or effect of the agreement, concerted practice or decision is to prevent, restrict or distort competition in Hong Kong.
(2) Unless the context otherwise requires, a provision of this Ordinance which is expressed to apply to, or in relation to, an agreement is to be read as applying equally to, or in relation to, a concerted practice and a decision by an association of undertakings (but with any necessary modifications).
(3) The prohibition imposed by subsection (1) is referred to in this Ordinance as the “first conduct rule”.
​7. “Object” and “effect” of agreement
(1) If an agreement, concerted practice or decision has more than one object, it has the object of preventing, restricting or distorting competition under this Ordinance if one of its objects is to prevent, restrict or distort competition.
(2) An undertaking may be taken to have made or given effect to an agreement or decision or to have engaged in a concerted practice that has as its object the prevention, restriction or distortion of competition even if that object can be ascertained only by inference.
(3) If an agreement, concerted practice or decision has more than one effect, it has the effect of preventing, restricting or distorting competition under this Ordinance if one of its effects is to prevent, restrict or distort competition.
8. Territorial application of first conduct rule
The first conduct rule applies to an agreement, concerted practice or decision that has the object or effect of preventing, restricting or distorting competition in Hong Kong even if—
    (a) the agreement or decision is made or given effect to outside Hong Kong;
    (b) the concerted practice is engaged in outside Hong Kong;
    (c) any party to the agreement or concerted practice is outside Hong Kong; or
    (d) any undertaking or association of undertakings giving effect to a decision is outside Hong Kong.
Subdivision 2—Decisions
9. Application for decision
(1) An undertaking that has made or given effect to, is giving effect to or is proposing to make or give effect to an agreement may apply to the Commission for a decision as to whether or not the agreement is—
    (a) excluded from the application of the first conduct rule by or as a result of Schedule 1;
    (b) exempt from the application of the first conduct rule by virtue of a block exemption order issued under section 15;
    (c) exempt from the application of the first conduct rule by virtue of an order of the Chief Executive in Council made under section 31 (Exemptions on public policy grounds) or section 32 (Exemption to avoid conflict with international obligations); or ​
    (d) excluded from the application of this Part by virtue of section 3 (Application to statutory bodies) or section 4 (Application to specified persons and persons engaged in specified activities).
(2) The Commission is only required to consider an application under this section if—
    (a) the application poses novel or unresolved questions of wider importance or public interest in relation to the application of exclusions or exemptions under this Ordinance;
    (b) the application raises a question of an exclusion or exemption under this Ordinance for which there is no clarification in existing case law or decisions of the Commission; and
    (c) it is possible to make a decision on the basis of the information provided.
(3) The Commission is not required to consider an application under this section if the application concerns hypothetical questions or agreements.
10. Consideration of application
(1) Before making a decision on an application made under section 9, the Commission must—
    (a) in order to bring the application to the attention of those the Commission considers likely to be affected by the decision, publish notice of the application—
       (i) through the Internet or a similar electronic network; and
       (ii) in any other manner the Commission considers appropriate; and
    (b) consider any representations about the application that are made to the Commission.
(2) A notice under subsection (1) must specify the period within which representations may be made to the Commission about the application.
(3) The period specified for the purpose of subsection (2) must be a period of at least 30 days beginning after the day on which the notice is first published.
11. Decision by Commission
(1) After considering the representations, if any, made within the period referred to in section 10, the Commission may make a decision as to whether or not the agreement in question is excluded or exempt from the application of the first conduct rule or this Part.
(2) A decision by the Commission may include conditions or limitations subject to which it is to have effect.
​(3) After the Commission has made its decision, it must inform the applicant in writing of the decision, the date of its decision and the reasons for it.
12. Effect of decision
(1) Subject to subsection (2), if the Commission makes a decision that an agreement is excluded or exempt from the application of the first conduct rule or this Part then each undertaking specified in the decision is immune from any action under this Ordinance with regard to that agreement.
(2) The immunity provided by subsection (1) applies to an undertaking only to the extent of the first conduct rule or this Part, and in so far as that undertaking complies with every condition and limitation subject to which the decision is to have effect.
13. Non-compliance with condition or limitation
(1) If an undertaking fails or ceases to comply with a condition or limitation subject to which a decision has effect, the immunity provided by section 12 ceases to apply with respect to that undertaking with effect from the date on which the non-compliance begins.
(2) If an undertaking starts to comply or resumes compliance with the condition or limitation, the immunity provided by section 12 applies to that undertaking with effect from the date on which the compliance begins or resumes.
(3) Action may be taken under this Ordinance against any undertaking relating to a contravention of the first conduct rule by that undertaking, that occurs during any period in which the immunity provided by section 12 does not apply to it.
14. Rescission of decision
(1) The Commission may rescind a decision made under section 11 if it has reason to believe—
    (a) that there has been a material change of circumstances since the decision was made; or
    (b) that the information on which it based its decision was incomplete, false or misleading in a material particular.
(2) Before rescinding a decision under this section the Commission must—
    (a) in order to bring the proposed rescission to the attention of those undertakings the Commission considers likely to be affected by it, publish notice of the proposed rescission— ​
       (i) stating that the Commission is considering rescinding the decision and the reasons why it is considering the rescission; and
       (ii) inviting the undertakings to make representations about the proposed rescission within the period specified in the notice; and
    (b) consider any representations received within the period specified in the notice.
(3) The notice referred to in subsection (2) must be published—
    (a) through the Internet or a similar electronic network; and
    (b) in any other manner the Commission considers appropriate.
(4) The period specified in the notice published under subsection (2) must be a period of at least 30 days beginning after the day on which the notice is published.
(5) If, after—
    (a) the expiry of the period specified in the notice published under subsection (2); and
    (b) considering any representations received within that period,
the Commission is of the view that the decision should be rescinded, it may, by notice in writing given to each undertaking for which the decision provides immunity, rescind that decision.
(6) A notice of rescission given under subsection (5) must inform the undertakings of—
    (a) the rescission and the reasons for the rescission;
    (b) the date on which the determination to rescind the decision was made; and
    (c) the date from which the rescission takes effect.
(7) If the Commission is satisfied that any information—
    (a) on which it based its decision; and
    (b) which was provided to it by a party to the agreement,
was incomplete, false or misleading in a material particular, the date specified in a notice under subsection (6)(c) may be earlier than the date on which the notice is given.
(8) If a decision is rescinded under this section, each undertaking specified in the notice of rescission loses its immunity from action under this Ordinance, as from the date the rescission takes effect, with regard to anything done after that date.
(9) A rescission of a decision under this section may be made with regard to all of the undertakings for which the decision provides immunity or with regard to only one or more of them.
Subdivision 3—Block Exemptions
15. Block exemption orders
(1) If the Commission is satisfied that a particular category of agreement is an excluded agreement, it may issue a block exemption order in respect of that category of agreement.
(2) The Commission may, either of its own volition or on application by an undertaking or an association of undertakings, issue a block exemption order.
(3) The Commission may, in a block exemption order—
    (a) impose conditions or limitations subject to which the block exemption order is to have effect; and
    (b) specify a date from which the order is to cease to have effect.
(4) The Commission must, in a block exemption order, specify a date, being a date not more than 5 years after the date of the order, upon which it will commence a review of the block exemption order.
(5) In this section—
“excluded agreement” (豁除協議) means an agreement that is excluded from the application of the first conduct rule by or as a result of section 1 (Agreements enhancing overall economic efficiency) of Schedule 1.
16. Procedures regarding block exemption orders
(1) Before issuing a block exemption order, the Commission must—
    (a) in order to bring the proposed block exemption order to the attention of those the Commission considers likely to be affected by it, publish notice of the proposed block exemption order—
       (i) through the Internet or a similar electronic network; and
       (ii) in any other manner the Commission considers appropriate; and
    (b) consider any representations about the proposed block exemption order that are made to the Commission.
(2) A notice under subsection (1) must specify the period within which representations may be made to the Commission about the proposed block exemption order.
(3) The period specified for the purpose of subsection (2) must be a period of at least 30 days beginning after the day on which the notice is first published.
​17. Effect of block exemption order
(1) Subject to subsection (2), an agreement that falls within a category of agreement specified in a block exemption order is exempt from the application of the first conduct rule.
(2) The immunity provided by subsection (1) to undertakings making or giving effect to an agreement applies to an undertaking only if it complies with every condition and limitation subject to which the block exemption order has effect.
18. Non-compliance with condition or limitation
(1) If an undertaking fails or ceases to comply with a condition or limitation subject to which a block exemption order has effect, the block exemption order ceases to apply with respect to that undertaking with effect from the date on which the non-compliance begins.
(2) If an undertaking starts to comply or resumes compliance with the condition or limitation, the block exemption order applies to that undertaking with effect from the date on which the compliance begins or resumes.
(3) Action may be taken under this Ordinance against any undertaking relating to a contravention of the first conduct rule by that undertaking, that occurs during any period in which the block exemption order does not apply to it.
19. Review of block exemption order
(1) The Commission must commence a review of a block exemption order on the date specified in the order for the commencement of the review.
(2) Despite subsection (1), the Commission may review a block exemption order at any time if it considers it appropriate to do so.
(3) Without limiting the matters that may be considered in deciding, under subsection (2), whether or not to review a block exemption order, the Commission must consider the following—
    (a) the desirability of maintaining a stable and predictable regulatory environment in relation to competition;
    (b) any developments that have taken place in the economy of Hong Kong or in the economy of any place outside Hong Kong that affect the category of agreement that is the subject of the block exemption order; and
    (c) whether any significant new information relating to the particular category of agreement has come to the knowledge of the Commission since the block exemption order was first issued.
​20. Variation or revocation of block exemption order
(1) If the Commission considers that it is appropriate to do so, after reviewing a block exemption order, it may issue an order varying or revoking the block exemption order with effect from a date specified in the order.
(2) Before varying or revoking a block exemption order, the Commission must—
    (a) in order to bring the proposed variation or revocation to the attention of those the Commission considers likely to be affected by it, publish notice of the proposed variation or revocation—
       (i) through the Internet or a similar electronic network; and
       (ii) in any other manner the Commission considers appropriate; and
    (b) consider any representations about the proposed variation or revocation that are made to the Commission.
(3) A notice under subsection (2) must specify the period within which representations may be made to the Commission about the proposed variation or revocation.
(4) The period specified for the purpose of subsection (3) must be a period of at least 30 days beginning after the day on which the notice is first published.
(5) An order made under this section—
    (a) must specify the date on which it is to have effect; and
    (b) may contain any transitional and savings provisions the Commission considers necessary or expedient.
Division 2—Abuse of Market Power
Subdivision 1—Second Conduct Rule
21. Abuse of market power
(1) An undertaking that has a substantial degree of market power in a market must not abuse that power by engaging in conduct that has as its object or effect the prevention, restriction or distortion of competition in Hong Kong.
(2) For the purpose of subsection (1), conduct may, in particular, constitute such an abuse if it involves—
    (a) predatory behaviour towards competitors; or
    (b) limiting production, markets or technical development to the prejudice of consumers.
​(3) Without limiting the matters that may be taken into account in determining whether an undertaking has a substantial degree of market power in a market, the following matters may be taken into consideration in any such determination—
    (a) the market share of the undertaking;
    (b) the undertaking’s power to make pricing and other decisions;
    (c) any barriers to entry to competitors into the relevant market; and
    (d) any other relevant matters specified in the guidelines issued under section 35 for the purposes of this paragraph.
(4) The prohibition imposed by subsection (1) is referred to in this Ordinance as the “second conduct rule”.
22. “Object” and “effect” of conduct
(1) If conduct has more than one object, it has the object of preventing, restricting or distorting competition under this Ordinance if one of its objects is to prevent, restrict or distort competition.
(2) An undertaking may be taken to have engaged in conduct that has as its object the prevention, restriction or distortion of competition even if that object can be ascertained only by inference.
(3) If conduct has more than one effect, it has the effect of preventing, restricting or distorting competition under this Ordinance if one of its effects is to prevent, restrict or distort competition.
23. Territorial application of second conduct rule
The second conduct rule applies to conduct that has as its object or effect the prevention, restriction or distortion of competition in Hong Kong even if—
    (a) the undertaking engaging in the conduct is outside Hong Kong; or
    (b) the conduct is engaged in outside Hong Kong.
Subdivision 2—Decisions
24. Application for decision
(1) An undertaking that has engaged in, is engaging in or is proposing to engage in certain conduct may apply to the Commission for a decision as to whether or not the conduct is— ​
    (a) excluded from the application of the second conduct rule by or as a result of Schedule 1;
    (b) exempt from the application of the second conduct rule by virtue of an order of the Chief Executive in Council made under section 31 (Exemptions on public policy grounds) or section 32 (Exemption to avoid conflict with international obligations); or
    (c) excluded from the application of this Part by virtue of section 3 (Application to statutory bodies) or section 4 (Application to specified persons and persons engaged in specified activities).
(2) The Commission is only required to consider an application under this section if—
    (a) the application poses novel or unresolved questions of wider importance or public interest in relation to the application of exclusions or exemptions under this Ordinance;
    (b) the application raises a question of an exclusion or exemption under this Ordinance for which there is no clarification in existing case law or decisions of the Commission; and
    (c) it is possible to make a decision on the basis of the information provided.
(3) The Commission is not required to consider an application under this section if the application concerns hypothetical questions or conduct.
25. Consideration of application
(1) Before making a decision on an application made under section 24, the Commission must—
    (a) in order to bring the application to the attention of those the Commission considers likely to be affected by the decision, publish notice of the application—
       (i) through the Internet or a similar electronic network; and
       (ii) in any other manner the Commission considers appropriate; and
    (b) consider any representations about the application that are made to the Commission.
(2) A notice under subsection (1) must specify the period within which representations may be made to the Commission about the application.
(3) The period specified for the purpose of subsection (2) must be a period of at least 30 days beginning after the day on which the notice is first published.
​26. Decision by Commission
(1) After considering the representations, if any, made within the period referred to in section 25, the Commission may make a decision as to whether or not the conduct in question is excluded or exempt from the application of the second conduct rule or this Part.
(2) A decision by the Commission may include conditions or limitations subject to which it is to have effect.
(3) After the Commission has made its decision, it must inform the applicant in writing of the decision, the date of its decision and the reasons for it.
27. Effect of decision
(1) Subject to subsection (2), if the Commission makes a decision that conduct is excluded or exempt from the application of the second conduct rule or this Part then each undertaking specified in the decision is immune from any action under this Ordinance with regard to that conduct.
(2) The immunity provided by subsection (1) applies to an undertaking only to the extent of the second conduct rule or this Part, and in so far as that undertaking complies with every condition and limitation subject to which the decision is to have effect.
28. Non-compliance with condition or limitation
(1) If an undertaking fails or ceases to comply with a condition or limitation subject to which a decision has effect, the immunity provided by section 27 ceases to apply with respect to that undertaking with effect from the date on which the non-compliance begins.
(2) If an undertaking starts to comply or resumes compliance with the condition or limitation, the immunity provided by section 27 applies to that undertaking with effect from the date on which the compliance begins or resumes.
(3) Action may be taken under this Ordinance against any undertaking relating to a contravention of the second conduct rule by that undertaking, that occurs during any period in which the immunity provided by section 27 does not apply to it.
29. Rescission of decision
(1) The Commission may rescind a decision made under section 26 if it has reason to believe— ​
    (a) that there has been a material change of circumstances since the decision was made; or
    (b) that the information on which it based its decision was incomplete, false or misleading in a material particular.
(2) Before rescinding a decision under this section the Commission must—
    (a) in order to bring the proposed rescission to the attention of those undertakings the Commission considers likely to be affected by it, publish notice of the proposed rescission—
       (i) stating that the Commission is considering rescinding the decision and the reasons why it is considering the rescission; and
       (ii) inviting the undertakings to make representations about the proposed rescission within the period specified in the notice; and
    (b) consider any representations received within the period specified in the notice.
(3) The notice referred to in subsection (2) must be published—
    (a) through the Internet or a similar electronic network; and
    (b) in any other manner the Commission considers appropriate.
(4) The period specified in the notice published under subsection (2) must be a period of at least 30 days beginning after the day on which the notice is published.
(5) If, after—
    (a) the expiry of the period specified in the notice published under subsection (2); and
    (b) considering any representations received within that period,
the Commission is of the view that the decision should be rescinded, it may, by notice in writing given to each undertaking for which the decision provides immunity, rescind that decision.
(6) A notice of rescission given under subsection (5) must inform the undertakings of—
    (a) the rescission and the reasons for the rescission;
    (b) the date on which the determination to rescind the decision was made; and
    (c) the date from which the rescission takes effect.
(7) If the Commission is satisfied that any information—
    (a) on which it based its decision; and
    (b) which was provided to it by an undertaking engaging in the conduct,
was incomplete, false or misleading in a material particular, the date specified in a notice under subsection (6)(c) may be earlier than the date on which the notice is given.
​(8) If a decision is rescinded under this section, each undertaking specified in the notice of rescission loses its immunity from action under this Ordinance, as from the date the rescission takes effect, with regard to anything done after that date.
(9) A rescission of a decision under this section may be made with regard to all of the undertakings for which the decision provides immunity or with regard to only one or more of them.
Division 3—Exclusions and Exemptions
Subdivision 1—Exclusions from Conduct Rules
30. Exclusions
The conduct rules do not apply in any of the cases in which they are excluded by or as a result of Schedule 1.
Subdivision 2—Exemptions from Conduct Rules
31. Exemptions on public policy grounds
(1) The Chief Executive in Council may, by order published in the Gazette, exempt—
    (a) a specified agreement or a specified class of agreement from the application of the first conduct rule; or
    (b) specified conduct or a specified class of conduct from the application of the second conduct rule,
if he or she is satisfied that there are exceptional and compelling reasons of public policy for doing so.
(2) An order under subsection (1) may be made subject to any conditions or limitations that the Chief Executive in Council considers appropriate.
(3) An order made under this section remains in force for the period that is specified in the order.
(4) Before the expiry of an order, the Chief Executive in Council may, by order published in the Gazette, extend the period of its validity.
(5) An order made under subsection (1) may provide that the conduct rule in question has never applied to any agreement or conduct specified in the order.
​32. Exemption to avoid conflict with international obligations
(1) The Chief Executive in Council may, by order published in the Gazette, exempt—
    (a) a specified agreement or a specified class of agreement from the application of the first conduct rule; or
    (b) specified conduct or a specified class of conduct from the application of the second conduct rule,
if he or she is satisfied that it is appropriate to do so, in order to avoid a conflict between this Ordinance and an international obligation that directly or indirectly relates to Hong Kong.
(2) An order under subsection (1) may be made subject to any conditions or limitations that the Chief Executive in Council considers appropriate.
(3) An order made under this section remains in force for the period that is specified in the order.
(4) Before the expiry of an order, the Chief Executive in Council may, by order published in the Gazette, extend the period of its validity.
(5) If an international obligation has ceased to have effect or has been varied, the Chief Executive in Council may, by order published in the Gazette, revoke an order made under this section, or (as the case requires) amend it to the extent warranted by the variation.
(6) An order made under subsection (1) may provide that the conduct rule in question has never applied to any agreement or conduct specified in the order.
(7) In this section—
“international obligation” (國際義務) includes an obligation under—
    (a) an air service agreement or a provisional arrangement referred to in Article 133 of the Basic Law;
    (b) an international arrangement relating to civil aviation; and
    (c) any agreement, provisional arrangement or international arrangement designated as an international agreement, international provisional arrangement or international arrangement by the Chief Executive in Council by order published in the Gazette.
33. Orders to be published and placed before Legislative Council
(1) The Chief Executive is to arrange for every order made under section 31 or 32 to be— ​
    (a) published in the Gazette; and
    (b) laid on the table of the Legislative Council at the next sitting of the Council after its publication in the Gazette.
(2) The Legislative Council may, by resolution passed at a sitting of the Legislative Council held not later than 28 days after the sitting at which an order is laid on the table of the Council (the “relevant period”), amend the order in any manner consistent with the power of the Chief Executive in Council to make the order in question.
(3) If the relevant period would but for this section expire after the end of a session or a dissolution of the Legislative Council, but on or before the day of its second sitting in the next session, the period for amending the order is deemed to be extended and to expire on the day after that second sitting.
(4) The Legislative Council may, before the expiry of the relevant period, by resolution extend the period for amending the order to the first sitting of the Council held not earlier than the twenty-first day after the day of that expiry.
(5) If the relevant period is extended under subsection (3), the Legislative Council may, before the expiry of the extended period, by resolution extend that extended period to the first sitting of the Council held not earlier than the twenty-first day after the day of the second sitting in the next session referred to in that subsection.
(6) A resolution passed by the Legislative Council in accordance with this section must be published in the Gazette not later than 14 days after the passing of the resolution or within such further period as the Chief Executive may allow in any particular case.
(7) An order made by the Chief Executive in Council under section 31 or 32 comes into operation—
    (a) if on the expiry of the relevant period or that period as extended under subsection (3), (4) or (5), the Legislative Council has not passed a resolution amending the order, on the expiry of the relevant period or that period as so extended (as the case may be); and
    (b) if the Legislative Council passes a resolution amending the order, at the beginning of the day on which the resolution is published in the Gazette.
(8) If an order is not laid on the table of the Legislative Council in accordance with this section, it is of no effect.
(9) In this section—
“sitting” (會議), when used to calculate time, means the day on which the sitting commences and only includes a sitting at which subsidiary legislation is included on the order paper.
Division 4—Miscellaneous
34. Register of decisions and block exemption orders
(1) The Commission must establish and maintain a register of—
    (a) all decisions made in respect of applications made under section 9 or 24;
    (b) all notices of rescissions of such decisions, made under section 14 or 29;
    (c) all block exemption orders issued under section 15; and
    (d) all orders varying or revoking block exemption orders, issued under section 20.
(2) The Commission may omit confidential information from any entry made in the register under this section; and where confidential information has been omitted, that fact must be disclosed on the register.
(3) The Commission must make the register available for inspection by any person—
    (a) at the offices of the Commission during ordinary business hours;
    (b) through the Internet or a similar electronic network; and
    (c) in any other manner the Commission considers appropriate.
35. Guidelines
(1) The Commission must issue guidelines—
    (a) indicating the manner in which it expects to interpret and give effect to the conduct rules;
    (b) regarding the manner and form in which it will receive applications for a decision or block exemption order; and
    (c) indicating how it expects to exercise its power to make a decision or grant block exemptions.
(2) The Commission may amend any guidelines it issues under this section.
(3) Guidelines issued under this section, and any amendments made to them, may be published in any manner the Commission considers appropriate.
(4) Before issuing any guidelines or amendments to them under this section, the Commission must consult the Legislative Council and any persons it considers appropriate.
(5) The Commission must make available copies of all guidelines issued under this section and of all amendments made to them—
    (a) at the offices of the Commission during ordinary business hours;
    (b) through the Internet or a similar electronic network; and ​
    (c) in any other manner the Commission considers appropriate.
(6) A person does not incur any civil or criminal liability only because the person has contravened any guidelines issued under this section or any amendments made to them.
(7) If, in any legal proceedings, the Tribunal or any other court is satisfied that a guideline is relevant to determining a matter that is in issue—
    (a) the guideline is admissible in evidence in the proceedings; and
    (b) proof that a person contravened or did not contravene the guideline may be relied on by any party to the proceedings as tending to establish or negate the matter.
(8) Guidelines issued under this section and all amendments made to them are not subsidiary legislation.
36. Amendment of Schedule 1
(1) The Chief Executive in Council may by order amend Schedule 1.
(2) An order made under subsection (1) is subject to the approval of the Legislative Council.