The Hong Kong Competition Tribunal, which hears all cases regarding violations of Hong Kong’s competition law, recently issued a decision addressing (1) the general contours of discovery in enforcement proceedings before the Tribunal and (2) the specific discovery obligations of the Competition Commission in those proceedings. The decision, Competition Commission v. Nutanix Hong Kong Limited and others, is the first of its kind. It provides increased clarity on a number of key discovery issues relevant to respondents charged with a contravention of the competition rules.
The Nutanix decision arises out of the Commission’s first enforcement action, which alleges that Nutanix and other information-technology companies engaged in bid rigging. Specifically, the Commission alleged that Nutanix orchestrated the submission of fake “cover” bids in order to ensure that a particular respondent secured an IT contract with the Hong Kong Young Women’s Christian Association. SiS International Limited—one of the respondents accused of submitting a dummy bid—sought discovery from the Commission in order to contest the allegations. SiS argued that the Commission’s subsequent disclosure was deficient. Mr. Justice Godfrey Lam partially ruled in favour of SiS.
Justice Lam’s decision is notable because it makes clear that respondents before the Tribunal have extensive—although not unbounded—discovery rights in enforcement proceedings. Key holdings include:
- Scope of Discovery: Discovery in Tribunal proceedings “should approach the standard applicable to the prosecution in criminal proceedings,” including the disclosure of relevant material which may undermine the Commission’s case or advance a respondent’s case.
- Other General Discovery Considerations. (a) there is no automatic general discovery in enforcement actions before the Tribunal; (b) discovery is at the discretion of the Tribunal; (c) while discovery in Tribunal proceedings should approach the standard applicable in criminal proceedings, the law does not require automatic disclosure of all unused materials, only those materials meeting the “test of relevance”; and (d) other aspects of criminal jurisprudence and procedures do not necessarily apply or apply in the same way to competition proceedings.
- Leniency Communications. Communications between the Competition Commission and parties who unsuccessfully seek leniency are privileged and need not be disclosed in later proceedings.
Justice Lam reached this result by balancing the public interest considerations of encouraging leniency applicants against the desire to determine Tribunal proceedings based on all available information. Justice Lam held that the public interest in non-disclosure of communications between the Commission and unsuccessful leniency applicants outweighs the contrary interest in disclosure. Any other approach would place unsuccessful leniency applicants in a “worse position than those who have not applied for leniency at all.”
Justice Lam also held that communications regarding unsuccessful leniency applications benefited from the without prejudice privilege or “a privilege akin to it.” Settlement negotiations would benefit from the same privilege protection. Still, any pre-existing documents provided during the course of the leniency process and “successful” leniency communications are subject to disclosure.
- Complaints to the Regulator. Complaint forms filed by members of the public—which can result in Commission investigations and Tribunal proceedings—are ordinarily protected from disclosure. In the Nutanix case, however, the Commission had already revealed the identity of the complainant, likely with the complainant’s consent, undermining any further interest in protecting the complaint form.
- Internal Commission Documents: The Commission’s internal documents are not exempt from disclosure simply because they are internal. Any withholding must be justified based on the content of the individual document. Public interest immunity may, however, extend to (i) internal communications which reveal the Commission’s sources or plans, methods, procedures, and tactics, and (ii) reports made by staff and case handlers to Commission members for decision and minutes of Commission meetings.
The Nutanix decision is notable for an additional reason: The Commission’s positions on disclosure and privilege mirror those taken by antitrust enforcers in other jurisdictions, notably the United States Department of Justice (“DOJ”). The DOJ has successfully argued that communications and information received from leniency applicants—both successful and unsuccessful—can properly be withheld in subsequent proceedings. The DOJ has also successfully challenged the disclosure of internal documents on privilege grounds, including the attorney-work-product privilege, deliberative-process privilege (sometimes called “executive privilege”),