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