Hong Kong’s antitrust authority opens first criminal proceedings for failure to comply with investigative powers

On Thursday, Hong Kong’s antitrust authority initiated its first criminal proceedings for failing to exercise its investigative powers. An employee of a cleaning company is being charged with destroying evidence.

The Competition Commission reported the case to police after finding evidence that 53-year-old Jessica Lui Miu-ching attempted to delete five documents from computers on September 23, 2019, during an investigation into alleged price-fixing among cleaning companies.

Lui, who said he was an office worker at Hong Kong Commercial Cleaning Services Limited (HKC), is charged with destruction and embezzlement of documents.

Her case was heard at the West Kowloon Court on Thursday. Judge Tsang Hing-tung adjourned the case until October 10 and set her bail at HK$5,000 (US$641).

“This is the first case in which an individual has been prosecuted for failing to comply with the Commission’s investigative powers,” the Commission said.

The authority stressed that no one should prevent it from exercising its investigative powers and said: “The Commission will continue to carry out its tasks with determination, investigate possible infringements of the Regulation and take appropriate follow-up measures where infringements are found.”

Under the Competition Regulation, obstructing a search by the Commission, for example by destroying, falsifying or concealing documents relevant to the investigation, is a criminal offence punishable by a prison sentence of up to two years and a fine of one million HK dollars.

The Commission may require any person under investigation to produce documents and appear before the Agency to provide relevant information. Its officials may also enter and search relevant premises upon court order.

The regulator launched the investigation against HKC, Man Shun Hong Kong & Kln Cleaning Company Limited and three individuals after receiving complaints alleging they were involved in price-fixing schemes worth approximately HK$180 million.

According to a 2021 Commission press release, between 27 May 2016 and 21 August 2018, the two companies exchanged confidential commercial information on 17 tenders submitted to the Housing Authority for the procurement of cleaning services.

It was alleged that employees at HKC’s office were able to access the other company’s confidential business documents, including tender documents for housing authority contracts and private real estate, through shortcuts that connected HKC’s computers to the other company’s server.

During the execution of a search warrant at HKC’s office, attempts were allegedly made to delete these links and numerous business documents that may have been relevant to the investigation.

The Commission later found that the two companies shared offices and IT access, with the HKC allowing the other company’s employees to work in the same premises.

In addition, there were cases where the same person processed already completed financing proposals and tender documents from both companies and found identical or similar prices in the tender documents without any plausible reason.

Price fixing constitutes serious anti-competitive conduct that violates the first rule of conduct of the Competition Regulation.

For violations of the Competition Regulation, a company can be fined up to 10 percent of its annual turnover in Hong Kong per violation for a period of up to three years.