On 16 April 2020, the Hong Kong Competition Commission (“Commission”) released:
- a revised leniency policy for undertakings involved in cartel conduct (“Leniency Policy for Undertakings”); and
- a new leniency policy for individuals involved in cartel conduct (“Leniency Policy for Individuals”).
Key changes to the Leniency Policy for Undertakings
The changes to the Leniency Policy for Undertakings now afford more protection to leniency applicants that report their cartel involvement before the Commission opens an initial assessment or investigation (ie a “Type 1 Leniency Applicant”).
Before the amendments, a successful leniency applicant had to admit to its participation in a cartel, which could result in an order declaring that the applicant had contravened competition laws. This declaration exposed the leniency applicant to follow-on private action by persons who suffered loss or damage as a result of the cartel.
Following the amendments, the Commission will not require Type 1 Leniency Applicants to admit to a competition contravention. Given that private actions for damages in Hong Kong can only be brought against parties who have contravened competition law (ie follow-on private action), Type 1 Leniency Applicants will in practice enjoy immunity from private actions as no such admission will be made. However, applicants that seek leniency after the Commission has opened an initial assessment or investigation into the cartel (“Type 2 Leniency Applicant”) remain exposed to private actions as the Commission may issue an infringement notice requiring such leniency applicants to admit to a competition law contravention. In other words, more protection is afforded to leniency applicants who report their cartel before the Commission has started looking into the case.
Features of the Leniency Policy for Individuals
The new leniency framework introduces a new Leniency Policy for Individuals. Individuals that are not undertakings (ie not engaged in economic activity), but who are involved in cartel conduct, can now apply for leniency directly. Leniency is only available to the first individual who reports the cartel to the Commission, and before an undertaking approaches the Commission with information about the same cartel. Individuals who are clearly the single ringleader of, or who coerced other to participate in the cartel will not qualify for leniency.
Disgruntled Employee, Exposed Company?
The introduction of a Leniency Policy for Individuals could give rise to potential conflict of interest between companies and their employees: a whistleblowing employee could report his company’s involvement in a cartel in a bid to escape individual liability.
It is therefore important for companies and their employees to have a clear understanding of all of the leniency rules and for employees to know that they can also enjoy protection from prosecution if leniency is successfully applied for under the aegis of his company. It will be critical for companies to train their staff, and develop clear internal whistleblowing policies, to ensure protection for themselves and their employees.
Ultimately, the new leniency policies are to be welcomed for providing greater clarity to businesses and individuals. However, the way the two regimes co-exist alongside each other, and the instances in which they may overlap or impinge on each other makes it more crucial than ever for businesses and individuals to seek detailed legal guidance on their internal policies and the decision and timing of any leniency application.
Editorial Note: This is a summary of a fuller article that considers the practical implications of the recent changes to the Hong Kong Competition Commission’s leniency framework. Please see the full article “Disgruntled Employee; Exposed Company? Implications of the Hong Kong Competition Commission’s Revised Leniency Framework” on the Exclusively Online section of the Hong Kong Lawyer website for further discussion.
– Joshua Seet, Registered Foreign Lawyer,
– Andrew Skudder, Partner,