Competition Ordinance/Schedule 1

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General Exclusions from Conduct Rules

1. Agreements enhancing overall economic efficiency

The first conduct rule does not apply to any agreement that—

(a) contributes to—

(i) improving production or distribution; or

(ii) promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit;

(b) does not impose on the undertakings concerned restrictions that are not indispensable to the attainment of the objectives stated in paragraph (a); and

(c) does not afford the undertakings concerned the possibility of eliminating competition in respect of a substantial part of the goods or services in question.

2. Compliance with legal requirements

(1) The first conduct rule does not apply to an agreement to the extent that it is made for the purpose of complying with a legal requirement.

(2) The second conduct rule does not apply to conduct to the extent that it is engaged in for the purpose of complying with a legal requirement.

(3) In this section—

“legal requirement” (法律規定) means a requirement—

(a) imposed by or under any enactment in force in Hong Kong; or

(b) imposed by any national law applying in Hong Kong.

3. Services of general economic interest etc.

Neither the first conduct rule nor the second conduct rule applies to an undertaking entrusted by the Government with the operation of services of general economic interest in so far as the conduct rule would obstruct the performance, in law or in fact, of the particular tasks assigned to it.

4. Mergers

(1) To the extent to which an agreement (either on its own or when taken together with another agreement) results in, or if carried out would result in, a merger, the first conduct rule does not apply to the agreement.

(2) To the extent to which conduct (either on its own or when taken together with other conduct) results in, or if engaged in would result in, a merger, the second conduct rule does not apply to the conduct.

5. Agreements of lesser significance

(1) The first conduct rule does not apply to—

(a) an agreement between undertakings in any calendar year if the combined turnover of the undertakings for the turnover period does not exceed $200,000,000;

(b) a concerted practice engaged in by undertakings in any calendar year if the combined turnover of the undertakings for the turnover period does not exceed $200,000,000; or

(c) a decision of an association of undertakings in any calendar year if the turnover of the association for the turnover period does not exceed $200,000,000.

(2) Subsection (1) does not apply to an agreement, a concerted practice, or a decision of an association of undertakings, that involves serious anti-competitive conduct.

(3) Subject to subsection (4), the turnover period of an undertaking is—

(a) if the undertaking has a financial year, the financial year of the undertaking that ends in the preceding calendar year; or

(b) if the undertaking does not have a financial year, the preceding calendar year.

(4) The turnover period of an undertaking is the period specified as such for the purpose of this subsection in the regulations made under section 163(2) if—

(a) for an undertaking that has a financial year—

(i) the undertaking does not have a financial year that ends in the preceding calendar year; or

(ii) the financial year of the undertaking that ends in the preceding calendar year is less than 12 months; or

(b) for an undertaking that does not have a financial year—

(i) the undertaking is not engaged in economic activity in the preceding calendar year; or

(ii) the period in which the undertaking is engaged in economic activity in the preceding calendar year is less than 12 months.

(5) In this section—

“preceding calendar year” (對上公曆年) means the calendar year preceding the calendar year mentioned in subsection (1)(a), (b) or (c);

“turnover” (營業額)—

(a) in relation to an undertaking that is not an association of undertakings, means the total gross revenues of the undertaking whether obtained in Hong Kong or outside Hong Kong; and

(b) in relation to an association of undertakings, means the total gross revenues of all the members of the association whether obtained in Hong Kong or outside Hong Kong.

6. Conduct of lesser significance

(1) The second conduct rule does not apply to conduct engaged in by an undertaking the turnover of which does not exceed $40,000,000 for the turnover period.

(2) Subject to subsection (3), the turnover period of an undertaking is—

(a) if the undertaking has a financial year, the financial year of the undertaking that ends in the preceding calendar year; or

(b) if the undertaking does not have a financial year, the preceding calendar year.

(3) The turnover period of an undertaking is the period specified as such for the purpose of this subsection in the regulations made under section 163(2) if—

(a) for an undertaking that has a financial year—

(i) the undertaking does not have a financial year that ends in the preceding calendar year; or

(ii) the financial year of the undertaking that ends in the preceding calendar year is less than 12 months; or

(b) for an undertaking that does not have a financial year—

(i) the undertaking is not engaged in economic activity in the preceding calendar year; or

(ii) the period in which the undertaking is engaged in economic activity in the preceding calendar year is less than 12 months.

(4) In this section—

“preceding calendar year” (對上公曆年) means the calendar year preceding the calendar year in which the conduct mentioned in subsection (1) is engaged in;

“turnover” (營業額) means the total gross revenues of an undertaking whether obtained in Hong Kong or outside Hong Kong.