HKUST Business School Magazine

As Hong Kong’s economy and society continue on the path to rapid digitization, conduct affecting digital markets has become one of the Competition Commission’s three enforcement priorities to ensure a level playing field for businesses and consumers. “E-commerce is a global trend, and in Hong Kong, a sizable portion of business has gone digital,” said Rasul Butt, the Commission’s Chief Executive Officer. “Anti-competitive conduct used to be confined to the brick-and-mortar sectors, but they, too have gone digital.” These developments have resulted in certain changes to how the Commission carries forward its mandate. Established in 2013, its primary role is to safeguard fair competition in all sectors. The aim is to promote an environment that is conducive to the free flow of trade, innovation and business efficiency. “We are not the ones to come out with new products and services,” Butt said. “Instead, we safeguard the competitive process and allow companies to compete fairly with each other.” Tackling digital sector With the onset of digitization, the Commission’s mandate took on new significance as online platforms and breakthrough technology enabled businesses to transform the commercial landscape. For example, in 2020, the Commission took decisive action by securing commitments frommajor online travel agents to remove clauses that might reduce competition. More recently, it also addressed exclusivity arrangements and most-favored nation clauses in contracts between food delivery platforms and restaurants. “We focused on the issues of new entry to markets and the expansion of smaller platforms being very difficult in Hong Kong,” Butt said. “That’s the approach we took in tackling the case.” Rather than pursuing a blanket ban on exclusivity arrangements, the Commission crafted a more nuanced solution that allowed the incumbents to maintain exclusivity against each other, while prohibiting them from exercising it against smaller platforms with a less than 10%market share. This illustrated the Commission’s clear-eyed approach in addressing competition issues in the digital space which may differ from other jurisdictions. For example, in many cases concerning food delivery platforms, overseas competition authorities tended to tackle them from an “abuse of dominance” angle whereas the Commission’s case was one based on the “First Conduct Rule” – anti-competitive agreements. This difference in approach was due to the unique characteristics of the Hong Kong market where there were more than one active player in the market and the competition issue related to the difficulties for small or new food delivery platforms to enter into or expand in the market. Biz@HKUST 21