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In brief

  • HKCC accepts proposed commitments from seaport alliance
  • The Tribunal approves first cartel settlement
  • HKCC publishes policy on calculating fines

An alliance among four terminal operators agreed to comply with pricing restrictions and behavioral conditions to settle HKCC’s investigation. The Tribunal has resolved a case by way of approving a consensual application following a settlement between the parties for the first time. The HKCC also published a policy on calculating fines, which sets out a four-step approach to the formulation of recommended pecuniary penalties.

This update was published on 16 October 2020 as part of our quarterly newsletter, Asia Pacific Competition Highlights. Click here to access the full report, which covers the most notable antitrust developments across 11 Asia Pacific jurisdictions.

HKCC accepts proposed commitments from seaport alliance

The investigation into the alliance was first announced on 10 January 2019. The alliance jointly operate and manage their 23 berths across eight terminals at Kwai Tsing port in Hong Kong. HKCC’s investigation found that the alliance likely gives rise to anti-competitive effects in the market for port terminal services for gateway cargo; in related markets for the provision of overflow services to the operator of Container Terminal 3 at Kwai Tsing; and for the provision of various services at Kwai Tsing to parties other than the shipping lines.

In response, the four terminal operators offered commitments to, among other things, cap their charges for gateway cargo services to the level applicable on 1 April 2019 (subject to indexation); provide a minimum service level for gate access to Kwai Tsing and the turnaround time for truck services at the port; and maintain reciprocal overflow arrangements with the operator of Container Terminal 3. The proposed commitments would last for up to eight years and would be monitored by an independent monitoring trustee. The proposed commitments were published on 12 August 2020 for consultation until 26 August 2020.

HKCC this year has, for the first time, accepted commitments from persons under investigation. To date, HKCC has accepted commitments from four different parties in two cases.

The Tribunal approves first cartel settlement

On 3 June 2020, the Tribunal made its first finding of breach of the First Conduct Rule based on consent orders, i.e. resulting from a settlement between the HKCC and several of the Respondents. The case concerns alleged price fixing/market sharing in the renovation of certain public housing estates (Competition Commission v Kam Kwong Engineering Company Ltd & Ors [2020] HKCT 3,). The Tribunal’s judgment only concerns liability: penalties were held over to be determined at a later hearing.

The Tribunal applied the so-called “Carecraft” procedure, which has been applied for many years in the context of proceedings brought for directors disqualification orders under companies and securities and futures legislation. The Carecraft procedure allows the parties to submit a statement of agreed facts and proposed orders. This allows the Tribunal to dispense with a trial and rely upon the statement of agreed facts when making orders.

The decision clarifies firstly that the Tribunal can make orders by consent to determine liability in competition cases, and also the procedure by which settlement cases will be dealt with.

HKCC publishes policy on calculating fines

On 22 June 2020, the HKCC published a policy on recommended pecuniary penalties. The policy adopts a methodology that is broadly in line with both the approach taken in the first Tribunal case where penalties were imposed, and the approach taken in the EU and UK.

  • Step 1: determining a “base amount” taking – as a starting point – the sales to which the infringement directly or indirectly relates in the relevant geographic area within Hong Kong in the financial year in question.
  • Step 2: making adjustments for aggravating and mitigating circumstances.
  • Step 3: applying the statutory cap; and
  • Step 4: applying any cooperation reduction and conducting inability to pay.

Hong Kong follows a judicial model, where it is ultimately the Tribunal that decides an appropriate penalty, not the HKCC. But the Tribunal decided in the CTEA 2/2017 penalties decision dated 29 April 2020 that the HKCC may recommend penalties, and it is expected to do so in cases going forward.


Stephen Crosswell is a partner in Baker McKenzie's Competition practice in Hong Kong, where he oversees competition matters in Hong Kong, China, Vietnam and Korea. He is consistently recognized as a leading lawyer for competition/antitrust by Chambers Asia. He wrote the Hong Kong chapters of Sweet & Maxwell's Competition Law in China & Hong Kong and the Oxford University Press Global Antitrust Compliance Handbook. Mr. Crosswell regularly speaks at leading antitrust events in Asia. He is also involved in capacity building with regional regulators and antitrust policy work. Prior to joining Baker McKenzie, Mr. Crosswell headed a Magic Circle firm's antitrust and competition practice in Hong Kong and coordinated their overall practice in Asia.