We’re joined by Peter Waters, who’s a Partner in the Competition and Regulation Group at Gilbert + Tobin, and joins us from Sydney, Peter welcome to BRR Media.

Thank you.

Well Peter earlier this year Hong Kong’s first ever cross sector Competition Law was enacted; does this reflect a growing trend in the region?

It does in the sense that Hong Kong comes late to the trend.  It is almost the last developed economy in the world to have a Competition Law and in Asia itself a number of the developing economies have also introduced competition laws in the last two or three years; for example Malaysia last year.

Well if we look at the law in Hong Kong what conduct will the new Act apply to?

The ordinance covers familiar territory for those who know things about competition law.  It will cover agreements between competitors and it will also cover abusive dominant positions by large entities within the Hong Kong economy.  However unlike other competition laws it currently does not cover mergers, other than mergers in the telecommunications industry.

Okay so it’s only applicable to that one industry?

Yes because that’s what was regulated under the telco specific law before the competition law came into effect.  Mergers are not a frequent occurrence in the Hong Kong economy, the financial sector is mainly directed at joint ventures and mergers and other sorts of corporate structuring outside Hong Kong; for example on the mainland, and not so much in the Hong Kong economy itself.

Okay are there any unique aspects to the Hong Kong laws?

Yeah there are a couple of aspects to it that I think are unique.  Firstly it’s a very economically rational law; it’s done away with or hasn’t incorporated a lot of the sort of extraneous restraints on competitive activity that you find in other jurisdictions, such as resale price maintenance.  Second it has a number of mechanisms to help with business certainty, so the Regulator is given a number of different avenues by which is can give exemptions and there are also grounds for self-assessment of exemptions, which will help business understand better what sorts of activities are caught and not caught by the competition law.  And thirdly it also has a statutory based leniency test, a number of regulators around the world have developed administrative processes for leniency and what’s been done in Hong Kong is that it’s got a clearer statutory basis to use as a mechanism to encourage parties to report any competitive activity to the Commission and get leniency in return.

Okay and just finally Peter, when are the laws due to come into effect and are there going to be any transitional provisions or will they apply immediately?

Well the law was gazetted last Friday, so it’s in effect, but the conduct rules will be phased in over time, so a bit like in Singapore there’ll probably be a year or so to allow the Commission to be set up, there may be another six months to a year to allow the Commission to make its first set of exemptions and then the conduct rules would cut in after that.  So probably in the next 12 to 18 months we’ll see the sort of rubber hit the road and the conduct rules actually take effect in the market.

So there’s still a bit of time for companies to get their head around it.  Peter thank you so much for sharing your insights today.

Thank you.

That was Peter Waters who’s a Partner in the Competition and Regulation Group at Gilbert + Tobin.  Listeners if you have any questions for Peter send them through either using the panel on your screen or otherwise via email to law@brrmedia.com.