Hong Kong’s Competition Law
- Kristina Coluccia
- 6 days ago
- 3 min read
If you're doing business in Hong Kong—or planning to enter the market—it’s essential to understand the local competition law landscape. While Hong Kong offers one of the most open, free-market economies in the world, it also enforces strict rules to maintain fair competition and protect consumer welfare.
Hong Kong’s Competition Ordinance, which came into force in 2015, applies to all sectors of the economy. Whether you’re a new entrant or an established player, compliance isn’t optional. Failure to understand and follow the rules can result in fines, disqualification of directors, and reputational damage.
Here’s what you need to know to stay on the right side of the law.
The Three Key Rules
Hong Kong’s Competition Ordinance is built around three core pillars:
1. The First Conduct Rule
This rule prohibits anti-competitive agreements and coordinated practices between businesses. It covers:
Cartels (price fixing, bid rigging, market sharing)
Resale price maintenance
Information sharing between competitors
Even informal verbal arrangements or understandings can fall foul of this rule.
2. The Second Conduct Rule
This prohibits businesses with substantial market power from abusing their dominance. Common examples include:
Predatory pricing
Exclusive dealing
Refusal to supply key inputs
Having market power isn’t illegal—but abusing it is.
3. The Merger Rule
Currently limited to the telecommunications sector, this rule prevents mergers that would substantially lessen competition in Hong Kong. However, this scope could expand in future reviews of the law.
Who Enforces the Law?
The Competition Commission is the independent statutory body that investigates and brings enforcement actions. It can:
Conduct dawn raids and demand documents
Investigate complaints
Refer cases to the Competition Tribunal, a dedicated court that has the authority to impose penalties
Penalties may include:
Fines up to 10% of annual turnover (in Hong Kong) for up to three years
Director disqualification (up to five years)
Individual fines and, in serious cases, imprisonment
Compliance Is Not Optional
Even small and medium-sized enterprises (SMEs) are subject to the Competition Ordinance. While certain thresholds apply in specific cases, there are no blanket exemptions. The key consideration is whether your business conduct has the potential to harm competition in Hong Kong.
This includes conduct that takes place outside of Hong Kong but has a competitive effect within the territory.
Mitigating Risk: Leniency and Settlement
The Competition Commission operates a Cartel Leniency Policy, offering immunity from penalties to the first cartel participant who reports the misconduct and cooperates with the investigation.
Additionally, a Cooperation and Settlement Policy offers reduced penalties to businesses that admit liability and assist with enforcement actions.
Being proactive about compliance is not only good governance—it’s good business.
Don’t Let Compliance Be an Afterthought
Competition law in Hong Kong is relatively new, but enforcement is tightening. Businesses must ensure that staff are trained, agreements are reviewed, and internal policies are aligned with local regulations.
At Woodburn Accountants & Advisors, we help companies structure their Hong Kong operations in full compliance with local laws. From reviewing distribution strategies to assessing risk exposure across partnerships and pricing models, our team ensures your business is built on solid, compliant foundations.
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