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Hong Kong: Competition issues for distribution and supply agreements

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This piece was originally published on Practical Law and is republished with the permission of the publishers.

In brief

A Practice Note outlining the key antitrust and competition issues that can arise in relation to distribution and supply agreements in Hong Kong. This includes a discussion of the antitrust and competition risks associated with common price-related terms, geographic and territorial restrictions, customer restrictions, sales channel restrictions, exclusivity, tying and bundling, and other considerations for dealing with competitors in a distribution context.

The principal competition legislation in Hong Kong is the Competition Ordinance (Cap 619) which came into full effect on 14 December 2015. The Competition Ordinance prohibits businesses (undertakings) from entering into agreements with other undertakings that prevent, restrict or distort competition in Hong Kong. It also prohibits businesses with a significant degree of market power from abusing their market power in a way which prevents, restricts or distorts competition in Hong Kong.

The Hong Kong Competition Commission (“Commission“) and the Competition Tribunal (“Tribunal“) are primarily responsible for competition law enforcement in Hong Kong. The Commission has broad powers to investigate and bring proceedings relating to alleged breaches of the Competition Ordinance. The Tribunal is a specialist division within the Hong Kong High Court. It has primary responsibility to hear competition cases and issue decisions on breaches, penalties and other relief. Tribunal decisions can be appealed to the Court of Appeal and Court of Final Appeal.

This Note includes:

  • A description of the regulatory framework for challenging vertical distribution agreements in Hong Kong
  • A discussion of the antitrust and competition risks in distribution agreements

While contested vertical-agreement-related cases have been relatively uncommon in Hong Kong, parties should still carefully consider competition law risks when concluding these agreements.

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Author

Highly acclaimed and Band 1 ranked Leading Antitrust Lawyer Stephen Crosswell is the current chair of Baker McKenzie's Asia-Pacific Antitrust & Competition Group. He is also the head of our Greater China Antitrust & Competition team. Clients laud Stephen for his "years of experience working on competition matters." He is described as a "vital resource for clients seeking to navigate the nuances not only of the new local competition law regime in Hong Kong but also across other Asian jurisdictions – including China." Stephen has been granted "Solicitor Advocate" status before the Hong Kong Courts, meaning that he is uniquely placed as a specialist competition advocate in Hong Kong, having rights of audience in the Competition Tribunal and appeal courts. He represented one of the parties to the first enforcement action taken in Hong Kong's Competition Tribunal.

Author

Tom Jenkins is Special Counsel in Baker McKenzie’s Asia-Pacific Antitrust and Competition practice, based in Hong Kong. He advises clients across a range of transactional, advisory and contentious competition matters and regularly speaks at leading antitrust events in the region. Before joining the Hong Kong office in 2015, Tom was based in Baker McKenzie’s Brussels office, where he advised clients on the full range of EU and UK competition law matters.

Author

Vivian Tsang is an Associate in Baker McKenzie, Hong Kong office.

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