Exchanging confidential information with competitors may breach Hong Kong’s new competition law and expose businesses to substantial penalties.
The Competition Commission has indicated that information sharing between competitors will be of particular concern if it relates to prices, sales, market shares, customers or territories.
Caution must be exercised when speaking with competitors, including in informal settings such as industry and social events.
Prohibited Information Exchange
The Competition Ordinance (Cap. 619) may be breached if competitors exchange confidential, commercially sensitive information about:
- future price plans or price strategies, including elements of price such as discounts;
- dividing or allocating the market in terms of geographic areas or customers;
- business plans, including marketing strategies;
- intentions to bid, or not to bid, for work; or
- preventing or restricting production or supply.
The Ordinance may also be breached if information is exchanged indirectly through a third party.
Permissible Information Exchange
In general, discussing the following kinds of information with competitors is unlikely to raise competition law concerns:
- publicly available information;
- matters of general interest, such as government policy, regulatory changes, industry problems and industry lobbying; and
- general economic and technical issues.
It is also generally permissible to share information that is historical, aggregated and anonymised.
What if I’m at a meeting where competitors exchange confidential information?
Presence at meetings where competitors exchange confidential information may be enough to infringe the Competition Ordinance. The risks can be mitigated by:
- checking the agenda in advance to identify impermissible discussion items, and object if any are identified;
- objecting if any anti-competitive matters are discussed, and stating that you will leave if the discussion continues;
- leaving the meeting if anti-competitive discussions continue after your objection; and
- making sure your objection is noted in the minutes.
Similarly, if you receive an email or other communication from a competitor disclosing commercially sensitive information, you should reply stating that you do not wish to receive such communications and the sender should stop sending you such communications.
The Competition Commission has indicated that joint ventures may give rise to competition concerns if the agreement leads to the exchange of commercially sensitive information beyond what is strictly necessary for operating the joint venture. Proposed joint ventures should be considered in light of the Competition Ordinance to determine whether any concerns arise.