Competition Commission v. Fungs E&M Engineering Co Ltd

CTEA 1/2019

[2020] HKCT 5

IN THE COMPETITION TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COMPETITION TRIBUNAL ENFORCEMENT ACTION NO 1 OF 2019

____________

____________

____________________

D E C I S I O N (NO. 1)

____________________

Introduction

1.The Commission took out the present enforcement proceedings against R1-R6 for contravention of the First Conduct Rule (market sharing and price fixing in provision of renovation services in a public housing estate) under section 6 of the Competition Ordinance, Cap 619 (“the Ordinance”); against R7 and R8 for their involvement in the alleged contravention for the purpose of section 91 of the Ordinance and against R9 for a disqualification order with costs.

2.R4, 6 and 7 indicated that they would admit liability.  R2, 3, 8 and 9, acting in person, indicated that they would admit liability although their defence indicated dispute of facts pleaded by the Commission.  R5 did not file a defence.

3.At the CMC held on 19 November 2019, at the invitation of the Commission, the Tribunal indicated that, before trial of the Respondents who contested liability (“contesting Respondents”), it would deal with sanctioning of those Respondents who admitted liability (“admitting Respondents”) using a procedure similar to the Carecraft procedure under company law. 

4.R1 (who does not admit liability) objected to the same judge dealing with both categories of Respondents (“R1’s Objection”). The concern was to prevent the Tribunal from being prejudiced by the admission of liability by and sanctions imposed on the admitting Respondents.

5.Despite R1’s Objection, the Tribunal pencil-marked the date of 28 February 2020 for hearing the admitting Respondents.  (That hearing could not be proceeded with due to the General Adjournment Period of the Court.)

6.R1’s Objection was adjourned for argument to 26 June 2020.  Meanwhile, on 3 June 2020, Harris J in CTEA 1/2018 ruled that the Carecraft procedure would be adopted for sanctioning the admitting respondents in his case and the same judge will deal with the trial of contesting respondents.  As of this hearing, Harris J has not yet handed down his reasons for decision.

7.Upon learning of Harris J’s decision, R1 withdrew its submission on R1’s Objection.

8.Costs in respect of R1’s Objection should, as a matter of principle, follow the event and be to the Commission and other Respondents.  However, R1 submits that there should be no order as to costs or that costs should be in the cause.

R1’s grounds for objecting to costs

9.The grounds relied on by R1 are that R1’s Objection was neither an application of any sort nor an objection per se. Effectively, R1 is saying that it was merely assisting the Tribunal on a novel procedural issue as directed by this Tribunal on 12 December 2019 (“the directions letter”).  The Commission itself did not expressly refer to or endorse the Carecraft procedure in its own policy.  In its letter dated 14 February 2020, §8, the Commission did not take a firm contrarian position on R1’s Objection.

Ruling

10.I am not persuaded by R1’s arguments. Competition law is new to Hong Kong.  Many issues are novel.  Novelty is not a reason to spare a party from having to pay costs.

11.It was R1 who raised R1’s Objection, which was not supported by any other party.  All the admitting Respondents had wanted to proceed quickly with the hearing for sanction.  The directions letter set out the Tribunal’s view on the suitability of having the same judge handle both categories of Respondents and adoption of the Carecraft procedure.  The Tribunal stated clearly that if any Respondent disagreed to such procedure and had legal basis, that Respondent could write to the Tribunal. That was what R1 did.  It wrote a letter dated 30 December 2019, accompanied by a full lever arch file of authorities.  R1 invited the Tribunal (i) to be slow in adopting the Carecraft procedure; (ii) to consider that it is not bound to make a collective decision on all admitting Respondents; and (iii) to consider if it would be appropriate to deal with the sanctions of the admitting Respondents until after trial of the contesting Respondents.  It triggered a lengthy submission from the Commission.

12.Having withdrawn the submission, I fail to see why R1 should not bear costs.

Quantum of costs

13.The amount of $397,150 charged for arguing a procedural issue on R1’s Objection is excessive especially when counsel has been retained.  I reduce the amount to $200,000.

14.R4, 6 and 7 (admitting Respondents) had been involuntarily drawn into R1’s Objection.  They, however, remained neutral.  It was justified for them to engage counsel given the legal arguments advanced by R1.  The legal team had to hold separate conferences with R4, 6 and 7 but it was fairly conceded that costs on perusal of documents and submissions could be shared.  I summarily assess their costs and allow an amount of $90,000.

15.For the other Respondents who acted in person, they were also involuntarily dragged in. They had not advanced any legal arguments.  They will only be awarded the costs of one attendance related to R1’s Objection.  I order R1 to pay each of R2, R3, R8 and R9 an amount of $200 as costs.

16.In conclusion, I make an order for costs against R1 for the amounts stated in paragraphs 13-15.