Company: NTCL
Filing Date: 2025-02-18
Form Type: 20-F
Source: 0001410578-25-000153
Chunk: 119

Company: NetClass Technology Inc
Filing Date: 2025-02-18
Form: 20-F
Item: Item 5
Chunk 119
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; and (iv) any barriers to entry or expansion into the relevant market. Although neither the Competition Ordinance nor any guideline issued by the Competition Commission refers to any specific thresholds that may be indicative of a substantial degree of market power for the purpose of the second conduct rule, “market power” has been referred to in guidelines issued by the Competition Commission as the ability of an undertaking to profitably charge prices above competitive levels, or restrict output or quality below competitive levels, for a sustained period of time.

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Whereas the first conduct rule and second conduct rule apply to all sectors of the Hong Kong economy, the merger rule only applies to mergers involving holders of a carrier license granted under the Telecommunications Ordinance (Chapter 106 of the Laws of Hong Kong). As at the date of this annual report, none of NetClass and the Hong Kong Subsidiaries holds a carrier license under the Telecommunications Ordinance. Additionally, we believe that, given the limited market share of the Hong Kong Subsidiaries in the market for sale and purchase of customized servers, graphic cards, hard drives and similar digital devices and components and the provision of ancillary software and technology services in Hong Kong, the Hong Kong Subsidiaries’ lack of power to make pricing and other decisions and the relatively low barrier to entry or expansion into the market by competitors, the second conduct rule does not presently apply to us or any of the Hong Kong Subsidiaries. Nevertheless, in the event of substantial expansion of the scale of the Hong Kong Subsidiaries’ business operations or changes in the conditions of the Hong Kong market for sale and purchase of customized servers, graphic cards, hard drives and similar digital devices and components and the provision of ancillary software and technology services, it is possible that NetClass and/or one or more of the Hong Kong Subsidiaries may come within the ambit of the second conduct rule.

In the event of contravention of the provisions of the Competition Ordinance, the Competition Tribunal may: (i) on application by the Competition Commission, impose pecuniary penalty of any amount it considers appropriate subject to a maximum of 10% of the turnover of the undertaking concerned for each year in which the contravention occurred for each single contravention (or, if the contravention occurred in more than three years, 10% of the turnover of the undertaking for the three years that saw the highest, second highest and third highest turnover); (ii) on application by the Competition Commission,