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The Hong Kong Court of Appeal has allowed an appeal by the Competition Commission in the first appeal concerning penalties under the Competition Ordinance

The Competition Tribunal (G Lam J) had imposed fines upon ten respondents for participation in a cartel to fix the terms of decoration works in new public rental estates of the Hong Kong Housing Authority.  The Tribunal had also, however, reduced the fines imposed upon three of the ten respondents on the basis that they formed only part of the undertaking liable in each case for the infringement, since those respondents had subcontracted that work in breach of their licences from the HKHA.  The Court of Appeal (Hon Poon CJHC, Kwan VP and Au JA) accepted the Competition Commission’s appeal that the Tribunal had erred in principle in adopting such an approach, because (i) such a reduction was wrong in principle by reference to EU case law on joint and several liability (paras 33-60), (ii) it was contrary to public policy to permit the respondents to rely upon their own unlawful conduct in mitigation of a penalty (paras 61-71), and in any event (iii) it was irrelevant to have regard to matters internal to the undertaking (paras 72-76).

James Segan QC acted for the Competition Commission, leading Jonathan Wong and Byron Chiu and instructed by King & Wood Mallesons.

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