On 27 April 2017, Hong Kong’s High Court rejected allegations by travel agency, Loyal Profit International Development that certain directives issued by the Travel Industry Council (TIC) were anti-competitive, and refused to rule on alleged violations of competition law.
Loyal Profit alleged TIC’s requirement of taking Mainland Chinese tourists only to shops that registered under a Refund Protection Scheme was anti-competitive and thus, in breach of one of the TIC’s articles of association which said the TIC’s aim was to “discourage unfair competition”. The case was brought in the High Court based on the contravention of Hong Kong Companies Ordinance. Loyal Profit sought to prove the breach of TIC’s articles of association by asking the court to find TIC’s conducts anti-competitive under the Competition Ordinance.
The Court rejected Loyal Profit’s approach, and held that the Competition Ordinance “cannot be subverted by relying on an act said to infringe the ordinance to make good a cause of action for breach of an agreement, and requiring the court to embark on the exercise reserved by the Competition Ordinance to the Competition Tribunal”.
Under the Competition Ordinance, it is the Competition Commission (and the Communications Authority in respect of telecommunications and broadcasting matters) that have primary responsibility for bringing actions for alleged anticompetitive conduct. Private claims may be made only in “follow-on” litigation (i.e. proceedings launched after a contravention has been established).
This judgment suggests that where legal provisions such as articles of association refer to concepts such as “unfair competition”, the High Court in commercial disputes will not be drawn into arguments about whether or not the conduct constitutes a breach of the Competition Ordinance. Such claims are a matter for determination by the Competition Tribunal.
Please see the full judgement at this link.
