Competition Commission v. Multisoft Ltd and Others
Read the full judgment text of CTEA 1/2023 on BabelCite. This CTEA judgment was delivered on 7 June 2024.
1. Before the Tribunal are four applications:
Cited by 2 cases · Cites 4 cases
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CTEA 1/2023 [2024] HKCT 2 IN THE COMPETITION TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COMPETITION TRIBUNAL ENFORCEMENT ACTION NO 1 OF 2023 ________________
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__________________________________ REASONS FOR JUDGMENT __________________________________ Introduction 1.Before the Tribunal are four applications:
2.The Commission and the Respondents (save for the 6th Respondent and the 7th Respondent) have come to agreement on both issues of liability and penalty. Their respective Statements of Agreed Facts are appended to these reasons. 3.The CTR 76 Summons against the 6th Respondent and the 7th Respondent was listed for directions at this hearing. However, before me the Commission argued that, given (1) the express statutory powers of the Tribunal to make an order granting the reliefs sought in default of filing of a response, (2) the 6th Respondent and the 7th Respondent’s default in filing a response and apparent lack of intention to participate in the proceedings, (3) the Commission’s clear case against them, based on the Commission’s pleaded case in its Originating Notice of Application (“ONA”), and (4) the public interest in effectively allocating the Commission’s and the Tribunal’s time and resources, it is appropriate for the Tribunal to grant the reliefs sought against the 6th Respondent and the 7th Respondent under rule 76 of the CTR in a manner akin to the grant of a default judgment in other civil proceedings in the High Court. 4.The Commission’s case as pleaded in the ONA can be briefly summarised as follows. 5.At all material times ([3], [59]–[76] of ONA):
6.The Collusive Conduct took place in the context of the Distance Business Programme (“D-Biz”), whereby public funds were used to support local enterprises to adopt IT solutions to continue their businesses and services during the COVID-19 epidemic. For funding applications involving a non-subscription based IT solution, the applicant is required to obtain quotations from at least two IT service providers and to select the service provider which had submitted the lowest value conforming quotation to provide the relevant IT solution (“Two-Quotation Requirement”). 7.The Commission’s case is that after the parties reached an agreement at or following Agnes Au Yeung’s birthday party in May 2020, each of Multisoft, Yat Ying, KWEK and BP/ Noble (collectively, the “Subject Undertakings”) engaged in the Collusive Conduct whereby in order to enable a prospective customer of Yat Ying or BP/ Noble to satisfy the Two-Quotation Requirement when making an application, a second cover bid from one of the other Subject Undertakings was provided. In other words, Yat Ying or BP/ Noble would become the “selected service provider” while Multisoft and KWEK would become the “non-selected service provider”. 8.The Collusive Conduct comprised two batches of applications ([85], [96]–[100] of ONA):
9.It is not in dispute that in doing so, each of ML, MTT, BP, Noble, KWEK and Agnes Au Yeung (trading as Yat Ying) contravened the First Conduct Rule under section 6 of the Competition Ordinance (Cap. 619) (“Ordinance”) by making and/or giving effect to an agreement or engaging in a concerted practice involving price-fixing, customer allocation, bid-rigging and/or information-sharing, with the object of preventing, restricting or distorting competition in Hong Kong. Kam Kwong Applications 10.The Kam Kwong procedure explained and adopted by the Tribunal in Competition Commission v Kam Kwong Engineering Co Ltd and Ors[1] has been applied on a number of occasions in relation to liability, declarations of contravention, pecuniary penalties and disqualification orders alike to dispose of proceedings by agreement: see for example Competition Commission v Quadient Technologies Hong Kong Ltd and Ors[2]; Competition Commission v Quantr Ltd and Ors[3]; Competition Commission v Nutanix Hong Kong Ltd[4]. 11.The Tribunal must be satisfied that it has the power to make the orders proposed and that the orders are appropriate. Once satisfied, the Tribunal exercises a degree of restraint when scrutinising the proposed settlement terms, particularly when both parties are legally represented and are able to evaluate the desirability of settlement. It will not search out reasons to disagree with an agreement that the Commission, which has expertise in the subject matter of the proceedings, and Respondents consider appropriate: Quadient at [40]; Quantr at [5(2)] and Nutanix at [5]–[6]. 12.In deciding whether an agreed order should be granted, the Tribunal treats the consent of the respondent as an admission of all facts necessary to the granting of relief sought against it. The same applies to declarations sought by agreement: Quantr at [5(3)]. 13.Where a declaration is sought, the court has to be satisfied that: (i) the applicant has a real (as opposed to an abstract or hypothetical) interest in the subject matter of the declaration; (ii) that he has a real interest in obtaining a declaration against the adverse party; and (iii) that the adverse party is a proper contradictor: Kam Kwong at [38]. 14.As to the amount of penalty:
15.In line with the above approach of restraint in scrutinising proposed settlement terms, while the Tribunal will assess if the amount of the agreed penalty is “appropriate” having regard to the circumstances of the case and the matters specified in section 93(2)(a)–(d) of the Ordinance, where the proposed penalty is within a proper range and does not appear to the Tribunal to be manifestly excessive or inadequate, or otherwise contrary to public interest, the Tribunal is unlikely to depart from it, and should not do so merely because the Tribunal might itself have been disposed to select some other figure: Nutanix at [6]. 16.The agreed draft order submitted to the Tribunal includes the following relief:
17.In the following paragraphs, I will briefly address the legal basis for the Tribunal to make the orders proposed in (1), (2), (3) and (4) above. Declaration of contravention 18.I accept that it is appropriate for the Tribunal to grant the proposed declaration, because:
Penalties for the 1st and 2nd Respondents 19.As to the agreed pecuniary penalty of HK$1,190,000 for the 1st Respondent, which is guaranteed by the 2nd Respondent, this was arrived at as follows:
Adoption and implementation of competition compliance scheme 20.The Tribunal has the broad power to grant an order requiring any person who has contravened or been involved in the contravention to do any act or thing: [1(c)] of Schedule 3 of the Ordinance. 21.The adoption and implementation of a competition compliance programme is a common undertaking required from the respondents in a cooperation agreement: [28(e)] of the Commission’s Cooperation and Settlement Policy for Undertakings Engaged in Cartel Conduct (“Cooperation Policy”). 22.This is particularly apt in the present proceedings against the 1st Respondent, which is a sizable corporation with resources to educate its directors and employees, ensure compliance with competition law and prevent recurrence of contraventions. Payment of investigation costs 23.This Court has the power to grant an order for payment of the Commission’s investigation costs under section 96 of the Ordinance. The costs of and incidental to the investigation amounts to HK$621,730, consisting of transcription and translation fees and other miscellaneous expenses. The sum of HK$155,000 (rounded down to the nearest thousand) represents the 1st Respondent’s share of such investigation costs: [37] and Annex B of the 1st Respondent/ the 2nd Respondent Statement. Penalties for the 3rd and 4th Respondents 24.The agreed draft order includes the following relief:
25.As to the agreed pecuniary penalty of HK$90,000 jointly and severally payable by the 3rd Respondent and the 4th Respondent, this was arrived at as follows:
Penalties for the 5th and 8th Respondents 26.The 5th Respondent/ the 8th Respondent Statements set out the factual basis giving rise to the admission of liability and quantum. 27.The agreed draft order includes the following relief:
28.I accept that the 8th Respondent is clearly a person involved in a contravention of a competition rule under section 91 of the Ordinance because:
29.The 4-step approach in W Hing Construction does not apply to individuals. In determining the appropriate pecuniary penalty for individuals, the Commission proposes that a global assessment approach is adopted, that is, the Commission proposes a lump sum figure which is derived primarily from the mandatory considerations set out in section 93(2) of the Ordinance. 30.In the case of the 8th Respondent, the Commission proposes a lump sum of HK$40,000 (before cooperation discount) having regard to the following factors:
Disqualification order 31.Pursuant to sections 101 and 102 of the Ordinance, the Tribunal may make a disqualification order against a person if: (1) it has determined that a company of which the person is a director has contravened a competition rule; and (2) it considers that the person’s conduct as a director makes the person unfit to be concerned in the management of a company. 32.The Commission submits that the above criteria have been satisfied. In particular, the 8th Respondent’s lending of assistance to the Collusive Conduct by the 5th Respondent’s provision of cover bids and personal acceptance of monetary reward from the 7th Respondent demonstrate the 8th Respondent’s unfitness to be concerned in the management of a company. This is agreed to by the 8th Respondent and there is no suggestion or evidence that any financial hardship would result therefrom. Legal Principles and Rationale 33.Rule 76 of the CTR provides that:
34.The time specified in rule 75 of the CTR for the respondent to file a response is 28 days from the day on which the ONA is served. It is not in dispute that the 6th Respondent and the 7th Respondent have defaulted in filing a response within the time limit required in rule 75—in fact they have not filed any response to date despite the lapse of about a year. 35.The Commission submits that rule 76 envisages the provision to operate like the default judgment procedure:
36.The above indicates an intention to create a specific provision conferring a power on the Tribunal to make a judgment in default of filing of a response coupled with a mechanism for an application for setting it aside. That rule 76 is intended to operate as a default judgment procedure is also borne out by its wording, when read in conjunction with other provisions of the Ordinance and the CTR:
37.The availability of a “default judgment procedure” is consistent with the observation made in the Report for the Subcommittee to study the Proposed Subsidiary Legislation on the Procedures to be Adopted by the Competition Tribunal, that “given the commercial nature and the importance of competition cases to the relevant industry or the general public, cases before the Tribunal should be dealt with as expeditiously as is reasonably practicable”. 38.The Commission argues that relief should be ordered against the 6th Respondent (Agnes Au Yeung trading as Yat Ying and in her personal capacity) and the 7th Respondent (Joe Fan) at this hearing for the following reasons. 39.First, in accordance with the order for substituted service dated 17 May 2023, the 6th Respondent and the 7th Respondent have been served with the ONA by way of email on 22 May 2023. As the 6th Respondent and the 7th Respondent failed to file their responses within 28 days i.e. by 19 June 2023 (and the default continues to date for about a year), this triggers the Tribunal’s discretion under rule 76 to grant the relief sought. 40.Second, it is appropriate for relief to be granted at this stage because:
41.Third, there are presently sufficient particulars pleaded in the ONA to support the reliefs sought by the Commission against the 6th Respondent and the 7th Respondent in the draft order, which comprise:
42.In terms of liability, the Commission emphasises that:
43.I accept that both the 6th Respondent (Agnes Au Yeung in her personal capacity) and the 7th Respondent (Joe Fan) were persons involved in a contravention of a competition rule under section 91 of the Ordinance, because:
44.In terms of penalty, applying the 4-step approach set out in W Hing Construction, the Commission proposes, and I agree, the figure of HK$242,000 for the 6th Respondent and HK$160,000 for the 7th Respondent. 45.For the 6th Respondent:
46.Similar to the case of the 8th Respondent, the Commission proposes, and I agree, that a lump sum penalty of HK$160,000 for the 7th Respondent is appropriate considering the following factors:
Disposition 47.I will make the following orders:
Mr Jenkin Suen SC and Ms Tinny Chan, instructed by MinterEllison LLP, for the Applicant Ms Annie Lai, instructed by Mandy Wan & Co, for the 3rd and 4th Respondents Mr Lam Chi Yau, of C Y Lam & Co, for the 5th and 8th Respondents The attendance of Pauline Wong & Co, for the 1st and 2nd Respondents, was excused The 6th Respondent was not represented and did not appear The 7th Respondent was not represented and did not appear STATEMENT OF AGREED FACTS BETWEEN THE COMPETITION COMMISSION (“COMMISSION”) AND THE 1ST AND 2ND RESPONDENTS (Prepared pursuant to Rule 39 of the Competition Tribunal Rules, Cap. 619D (“CTR”) and Paragraph 72 of the Competition Tribunal Practice Direction 1 (“CTPD1”)) PART A — INTRODUCTION 1. On 22 March 2023, the Commission issued proceedings pursuant to sections 92(1), 94(1), 96(1) and 101(1) of the Competition Ordinance, Cap. 619 (“Ordinance”) before the Competition Tribunal (“Tribunal”) against, amongst others, Multisoft Limited (“ML”) and MTT Group Holdings Limited (“MTT”), being the 1st and 2nd Respondents in these proceedings respectively. 2. The Commission sought, as against each of ML and MTT:
3. Subject to the approval of the Tribunal, the Commission and each of ML and MTT agree to (1) enter judgment on liability and consequential orders in favour of the Commission against ML alone, and (2) stay the portion of the proceedings against MTT upon terms set out in the schedule to the draft consent order, by way of the summary procedure as provided for in Rule 39 of the CTR and §72 of the CTPD1. The procedure as envisaged by the parties is that sanctioned by the High Court of England and Wales in the case of Re Carecraft Construction Co Ltd [1994] 1 WLR 172 and clarified by the Court of Appeal of England and Wales in Secretary of State for Trade and Industry v Rogers [1996] 1 WLR 1569, and as adopted in Hong Kong for proceedings under section 214 of the Securities and Futures Ordinance (Cap. 571) and section 168H of the former Companies Ordinance (Cap. 32). Further, the procedure was endorsed by the Honourable Mr Justice Jonathan Harris in the case of Competition Commission v Kam Kwong Engineering Co Ltd [2020] 4 HKLRD 61 as a “readymade blueprint for disposing of proceedings under the Ordinance” (at §17) and by the Honourable Madam Justice Linda Chan in her judgment handed down on 3 November 2020 (Competition Commission v. Quantr Limited and Others [2020] HKCT 10). Additionally, the same procedure was adopted by the Honourable Mr Justice Godfrey Lam (as he then was) in his judgment handed down on 16 December 2020 in relation to the penalty proceedings in Competition Commission v. Nutanix Hong Kong Limited and Others [2020] HKCT 11. 4. This Statement of Agreed Facts (“Statement”) is submitted pursuant to Rule 39 of the CTR and §72 of the CTPD1. The Tribunal is asked to make the orders sought in the draft consent order on the basis of the facts set out in this Statement. 5. For the purpose of resolving these proceedings summarily, by reference to the facts as set out in Part B below, the Commission contends and each of ML and MTT admits that between early May 2020 until at least 19 April 2021, ML has contravened the FCR by having made and given effect to an agreement and engaged in a concerted practice involving price fixing, customer allocation, bid-rigging and the exchange of competitively sensitive information with three other undertakings[6], namely (1) BP/Noble (consisting of BP Enterprise Company Limited (“BP”) and Noble Nursing Home Company Limited (“Noble”), being the 3rd and 4th Respondents in these proceedings respectively); (2) KWEK Studio Limited (“KWEK”), being the 5th Respondent in these proceedings; and (3) Au Yeung Kit Yee, also known as Agnes Au Yeung (“Agnes Au Yeung”) (trading as Yat Ying Hong (“Yat Ying”)), being the 6th Respondent in these proceedings, in relation to the supply of quotations for the provision of IT services under the Distance Business Programme (“D-Biz”) (“Subject Arrangement”). The Subject Arrangement contravened section 6 of the Ordinance, as more particularly described in paragraphs 26 to 34 below (“Contravention”). 6. The facts as set out in this Statement are agreed by the Commission and each of ML and MTT. This Statement is filed before the Tribunal to support the joint application by the Commission and ML and MTT for the orders sought in the draft consent order submitted as part of the application to be made under Rule 39 of the CTR (“Joint Application”). 7. If the Tribunal for whatever reason is of the view that these proceedings shall not be dealt with by way of the Joint Application, no admission or concession by either the Commission or ML or MTT regarding liability to a pecuniary penalty (save and except the matters set out in paragraphs 36 to 37 below) shall be referred to or relied upon by either the Commission or ML or MTT at any adjourned or subsequent hearing or in any other proceedings without the prior written consent of both the Commission and each of ML and MTT. 8. The Commission and each of ML and MTT accept and acknowledge that none of the admissions made by ML or MTT in this Statement shall be binding on any other Respondents in these proceedings. 9. The Commission reserves the right to refer to this Statement for all purposes connected with or ancillary to these proceedings. PART B – UNDISPUTED FACTS RELEVANT TO LIABILITY B1. ML and the relevant employees 10. ML is and was at all material times a limited liability company incorporated under the laws of Hong Kong. Its current sole shareholder is Multisoft Holding Limited, which is a company incorporated in the British Virgin Islands. Multisoft Holding Limited is 100% owned by MTT. 11. ML was at all relevant times, and is, engaged in economic activity, namely the business of providing IT enterprise solutions, specialising in systems, networking, security and cloud services. ML participated in D-Biz as an IT service provider. From 17 December 2013 to 1 February 2021, the late WU Wai Hung, also known as Vincent Wu (“Vincent Wu”), was a director of ML. His last position, and his position at all material times, was sales director, responsible for the divisions consisting of sales, marketing and business development. He passed away in early 2021. In January 2021, Vincent Wu’s position as sales director for ML was taken up by another director of ML who had previously been, and was at all material times, the designated person responsible for signing NCCs for ML under the D-Biz scheme. 12. The employees reporting to Vincent Wu at all material times included one who had joined ML, on 16 January 2018, as a product executive (“the Relevant ML Employee”). On 1 April 2019, the Relevant ML Employee was promoted to product manager in ML’s business development team. That remained his position at all material times. In that role, his duties included product planning, benchmarking and feasibility studies, product definition, product development, project management and ensure customer satisfaction. His employment contract for that position also required him to perform “any other functions as may be assigned by the management from time to time”. In October 2021, he was dismissed by ML, after the Commission conducted searches of ML’s premises as part of its investigation of the Contravention. 13. At the material times, ML actively sought business opportunities under D-Biz and was enrolled to D-Biz’s IT Service Providers Reference List (“Reference List”) for 5 out of the 12 designated categories of IT solutions mentioned in paragraph 16 below. However, businesses applying for D-Biz funding were allowed to choose other IT service providers than those set out in the Reference List. In fact, none of the other parties involved in the Subject Arrangement, i.e. BP, Noble, KWEK and Yat Ying, were enrolled to the Reference List but they were still eligible to participate in D-Biz by providing quotations to D-Biz applicants, just as ML was. 14. Prior to the launch of the D-Biz scheme, Vincent Wu and the Relevant ML Employee were already acquainted with BP and Noble’s joint director (“BP/Noble Director”), KWEK’s shareholder and director Tang Wai Chun, also known as Koki Tang (“Koki Tang”, being the 8th Respondent in these proceedings), Yat Ying’s owner Agnes Au Yueng as well as her husband, Fan Sing Chi, also known as Joe Fan (“Joe Fan”, being the 7th Respondent in these proceedings). B2. The D-Biz scheme 15. On 20 April 2020, the Innovation and Technology Commission (“ITC”) launched the D-Biz funding scheme, using public funds from the Government’s anti-epidemic fund to support local enterprises to adopt IT solutions to continue their businesses and services during the COVID-19 epidemic. The Hong Kong Productivity Council (“HKPC”) was appointed as the secretariat of D-Biz and was responsible for conducting eligibility checking and preliminary screening on the applications. Once screened, eligible applications were submitted to the Distance Business Programme Vetting Committee (“Committee”), chaired by the Commissioner for Innovation and Technology, for consideration. 16. D-Biz covered twelve IT solution categories relating to distance business, namely:
17. D-Biz opened for applications between 18 May and 31 October 2020. At the initial stage of the scheme, each applicant was permitted to submit only one application adopting no more than three IT solutions within the designated twelve categories as set out above. On 16 August 2020, the ITC introduced enhancement measures pursuant to which each applicant was permitted to submit a second application from 31 August 2020 onwards for another three IT solutions which were different from the approved categories in any application which the applicant had made in the initial stage of the D-Biz scheme. Following these enhancement measures, each applicant was therefore permitted to submit two applications for six IT solutions in total. The funding ceiling for each IT solution was HK$100,000 and the aggregate funding ceiling granted to each applicant was HK$300,000. 18. For each application for funding, the applicant was required to obtain written price quotation(s) from IT service provider(s), which set out in detail the project duration, scope of work, deliverables, and breakdown of cost items such as the software expenses, hardware expenses and IT service charges. In addition, the applicant was required to obtain from each person submitting a quotation a signed ‘probity and non-collusive quotation / tendering certificate’ (“NCC”) as part of their quotation submission. The NCC contains representations by the person submitting the quotation that: the quotation/bid was genuinely and independently prepared, with an intention to win and to implement the relevant project when awarded; and, in preparing the quotation/bid, no agreement, understanding or communication regarding competitively sensitive information such as price or bidding intention was made with another competing bidder. 19. The number of price quotations which an applicant needed to obtain was dependent on whether the application involved (i) a subscription-based IT solution or (ii) a system integrator/non-subscription-based IT solution. In the former case, the applicant was only required to obtain one quotation. Conversely, in the latter case, the applicant was required to obtain quotations from at least two IT service providers, otherwise full justifications had to be provided. As between the two quotations, unless otherwise justified by the applicant and agreed by the Government or the HKPC, it was stipulated that the service provider submitting the lowest conforming quotation was to be selected by the applicant to provide the relevant IT solution (“Two-Quotation Requirement”). The Subject Applications (as defined at paragraph 25 below) concerned in this case all initially sought funding for non-subscription-based IT solutions and were thus required to meet the Two-Quotation Requirement. 20. Each D-Biz application was done online through D-Biz’s website. As part of the application process, applicants were required:
21. Applications that the HKPC assessed as being eligible were submitted to the Committee for approval. It was also possible for the level of funding to be adjusted with reference to the project cost such that the HKPC would only approve a reduced scope for the IT solution by comparison with the scope which had been applied for. 22. An initial payment of 30% of the approved funding amount was payable to a designated bank account of the applicant. The selected service provider could then start to implement the IT solution(s) for the applicant. 23. Within two months after the completion of the IT solution(s), the applicant was required to submit among other things, a final project report indicating a summary of project expenditures and project deliverables, and an audited statement of income and expenditure covering the whole project period from an independent auditor to the HKPC, if the total approved funding exceeded HK$30,000. 24. Upon project completion and upon the HKPC’s acceptance of the final project report together with supporting documents, the final payment (i.e., the remaining 70% of the approved funding amount) was then released to the applicant. 25. The Subject Arrangement concerns 189 applications under D-Biz (“Subject Applications”), details of which are provided in Annex A to this Statement. However, for the purpose of the Joint Application and as agreed among the Commission, ML and MTT, out of the Subject Applications, only 51 applications were affected by ML’s involvement in the Subject Arrangement, i.e., the applications as enumerated as item nos. 1 to 51 in Annex A to this Statement. B3. ML’s participation in the Subject Arrangement 26. In early May 2020 (after the announcement of D-Biz on 20 April 2020 but before its commencement on 18 May 2020), Agnes Au Yeung and Joe Fan held a birthday gathering to celebrate Agnes Au Yeung’s birthday. Vincent Wu and the BP/Noble Director were among those invited to attend the gathering. 27. During that gathering, Vincent Wu discussed with Agnes Au Yeung and the BP/Noble Director the fact that they were both interested in participating in D-Biz as IT service providers. Agnes Au Yeung and the BP/Noble Director told Vincent Wu that they both had potential customers, but each had found it difficult to obtain a second quotation from another IT service provider for the purpose of enabling their prospective customers to comply with the Two-Quotation Requirement. Vincent Wu said that he would help by using ML to issue second quotations as cover bids for the quotations to be submitted by Yat Ying or BP/Noble, in order to enable Agnes Au Yeung’s and the BP/Noble Director’s prospective customers to purportedly comply with the Two-Quotation Requirement when applying for funding under D-Biz. 28. At or shortly after that gathering, it was the consensus and/or common understanding of Vincent Wu, Agnes Au Yeung and the BP/Noble Director that Yat Ying and BP/Noble would determine their respective quotation prices for each of their prospective customers after seeing the prices of ML’s quotations for the same customers. 29. Further, it was their consensus and/or common understanding that the two quotations submitted for each IT solution would be priced so that the lowest bid would be the one submitted by Yat Ying or BP/Noble, and Yat Ying or BP/Noble would therefore become the selected service provider for the relevant IT solution. In this way, the contract to provide IT services to each prospective customer (and the associated D-Biz funding) would be allocated to the firm operated by the individual who had originally found the customer in question, i.e., the customers found by Agnes Au Yeung would be allocated to Yat Ying; and the customers found by the BP/Noble Director would be allocated to either BP or Noble. 30. After the birthday gathering, Agnes Au Yeung and the BP/Noble Director each instructed Joe Fan to contact Vincent Wu on both Yat Ying’s and BP/Noble’s behalf to arrange for ML to provide quotations for use in D-Biz applications by Yat Ying’s and BP/Noble’s prospective customers in order purportedly to satisfy the Two-Quotation Requirement. Accordingly, shortly after the birthday gathering and before the commencement of D-Biz on 18 May 2020, Joe Fan called Vincent Wu to obtain ML’s quotations. In the telephone conversation, Vincent Wu asked Joe Fan to contact the Relevant ML Employee directly to follow-up on this matter. Separately, Vincent Wu also instructed the Relevant ML Employee to issue ML’s quotations to the customers which Joe Fan would identify. 31. In or around the period between 18 May 2020 and 1 June 2020, Yat Ying and BP/Noble (both through Joe Fan) and ML (through Vincent Wu and the Relevant ML Employee) further coordinated to effect the provision of 56 quotations from ML to prospective customers of Yat Ying or BP/Noble in support of their applications for D-Biz funding. Without being exhaustive:
32. ML only provided quotations for IT solutions in designated category 1, so Joe Fan separately obtained cover bids for the other categories from KWEK through Koki Tang. Being a co-shareholder of KWEK, the Relevant ML Employee was aware of this. 33. As a result of ML’s participation in the Subject Arrangement, there was no genuine competition between the IT service providers providing quotations in the 51 applications for D-Biz funding enumerated at nos. 1 to 51 of Annex A to this Statement. On the contrary, the intended winner (i.e., the service provider to be selected to provide the relevant IT services to be funded by the D-Biz scheme) had been pre-determined pursuant to the Subject Arrangement. The HKPC was led to approve D-Biz funding under the false impression that the relevant applications had been made following a competitive selection process in compliance with the Two-Quotation Requirement. Further, the prospective customers, in whose name the relevant applications were made, had not been informed of the Subject Arrangement (including in particular that one of the two IT service providers submitting quotations would only submit a cover bid rather than competing to win). B5. Particulars of the Contravention 34. It is the Commission’s case (which is not disputed by ML and MTT) that the Subject Arrangement insofar as ML is concerned was agreed and given effect to in accordance with the events set out below:
B6. Admission of ML’s liability by ML and MTT 35. By reason of the matters set out herein, each of ML and MTT admits the following:
PART C – UNDISPUTED FACTS ON THE CALCULATION OF RECOMMENDED PECUNIARY PENALTY FOR BP/NOBLE AND THE INVESTIGATION COSTS OF THE COMMISSION 36. For the purposes of assessing the amount of recommended pecuniary penalty under section 93 of the Ordinance, each of ML and MTT admits the following:
37. As to the Commission’s costs of and incidental to its investigation into this matter, the Commission has incurred such costs in the sum of HK$621,730 (see Annex B), of which HK$155,000 (rounding down to the nearest thousand) represents the 1st Respondent’s share of such investigation costs. Dated this day of 2024.
STATEMENT OF AGREED FACTS BETWEEN THE COMPETITION COMMISSION (“COMMISSION”) AND THE 3RD AND 4TH RESPONDENTS (Prepared pursuant to Rule 39 of the Competition Tribunal Rules, Cap. 619D (“CTR”) and Paragraph 72 of the Competition Tribunal Practice Direction 1 (“CTPD1”)) PART A — INTRODUCTION 1. On 22 March 2023, the Commission issued proceedings pursuant to sections 92(1), 94(1), 96(1) and 101(1) of the Competition Ordinance, Cap. 619 (“Ordinance”) before the Competition Tribunal (“Tribunal”) against, amongst others, BP Enterprise Company Limited (“BP”) and Noble Nursing Home Company Limited (“Noble”), being the 3rd and the 4th Respondents in these proceedings respectively. 2. The Commission seeks, as against each of BP and Noble:
3. Subject to the approval of the Tribunal, the Commission and each of BP and Noble agree to enter judgment on liability and penalty in favour of the Commission against BP and Noble by way of the summary procedure as provided for in Rule 39 of the CTR and §72 of the CTPD1. The procedure as envisaged by the parties is that sanctioned by the High Court of England and Wales in the case of Re Carecraft Construction Co Ltd [1994] 1 WLR 172 and clarified by the Court of Appeal of England and Wales in Secretary of State for Trade and Industry v Rogers [1996] 1 WLR 1569, and as adopted in Hong Kong for proceedings under section 214 of the Securities and Futures Ordinance (Cap. 571) and section 168H of the former Companies Ordinance (Cap. 32). Further, the procedure was endorsed by the Honourable Mr. Justice Jonathan Harris in the case of Competition Commission v Kam Kwong Engineering Co Ltd [2020] 4 HKLRD 61 as a “readymade blueprint for disposing of proceedings under the Ordinance” (at §17) and by the Honourable Madam Justice Linda Chan in her judgment handed down on 3 November 2020 (Competition Commission v. Quantr Limited and Others [2020] HKCT 10). Additionally, the same procedure was adopted by the Honourable Mr. Justice Godfrey Lam (as he then was) in his judgment handed down on 16 December 2020 in relation to the penalty proceedings in Competition Commission v. Nutanix Hong Kong Limited and Others [2020] HKCT 11. 4. This Statement of Agreed Facts (“Statement”) is submitted pursuant to Rule 39 of the CTR and §72 of the CTPD1. The Tribunal is asked to make the orders sought in paragraph 2 above on the basis of the facts set out in this Statement. 5. For the purpose of resolving these proceedings summarily, by reference to the facts as set out in Part B below, the Commission contends and each of BP and Noble admits that between early May 2020 until at least 2 September 2021, BP and Noble have contravened the FCR by having made and given effect to an agreement and/or engaged in a concerted practice involving price fixing, customer allocation, bid-rigging and/or the exchange of competitively sensitive information with three other undertakings[7], namely (1) Multisoft (consisting of Multisoft Limited (“ML”) and its parent company MTT Group Holdings Limited (“MTT”), being the 1st and 2nd Respondents in these proceedings respectively); (2) KWEK Studio Limited (“KWEK”), being the 5th Respondent in these proceedings; and (3) Au Yeung Kit Yee, also known as Agnes Au Yeung (“Agnes Au Yeung”) (trading as Yat Ying Hong (“Yat Ying”)), being the 6th Respondent in these proceedings, in relation to the supply of quotations for the provision of IT services under the Distance Business Programme (“D-Biz”) (“Subject Arrangement”). The Subject Arrangement contravened section 6 of the Ordinance, as more particularly described in paragraph 35 to 38 below (“Contravention”). 6. The facts as set out in this Statement are agreed by the Commission and each of BP and Noble. This Statement is filed before the Tribunal to support the joint application by the Commission and BP and Noble for the orders sought in paragraph 2 above to be made under Rule 39 of the CTR (“Joint Application”). 7. If the Tribunal for whatever reason is of the view that these proceedings shall not be dealt with by way of the Joint Application, no admission or concession by either the Commission or BP or Noble regarding liability to a pecuniary penalty (save and except the matters set out in paragraphs 40 to 41 below) shall be referred to or relied upon by either the Commission or BP or Noble at any adjourned or subsequent hearing or in any other proceedings without the prior written consent of both the Commission and each of BP and Noble. 8. This Statement is signed and filed solely for the purpose of the Joint Application and for no other purposes. Accordingly, this Statement itself shall not be used by either the Commission or each of BP and Noble for purposes other than these proceedings and any proceedings ancillary thereto. 9. For the avoidance of doubt, this Statement is signed between the Commission on the one hand and BP and Noble on the other hand. Nothing contained in this Statement shall be considered to be binding on the individual director(s) of BP and Noble in their personal capacities in any event. 10. The Commission reserves the right to refer to this Statement for all purposes connected with or ancillary to these proceedings. PART B – UNDISPUTED FACTS RELEVANT TO LIABILITY B1. The relevant parties 11. BP is and was at all material times a limited liability company incorporated under the laws of Hong Kong. BP was initially set up on 11 June 2019, for developing an online shopping platform. Accordingly, BP established an online platform named ‘FanSung Market’ to sell food, gift sets and anti-pandemic products. However, in late 2020, FanSung Market was closed down because the profit of BP’s online shopping business was unsatisfactory. Apart from the foregoing, BP had no other business except as an IT service provider to participate in D-Biz. 12. Noble is and was at all material times a limited liability company incorporated under the laws of Hong. Noble was initially set up, on 27 July 2018, for developing nursing services for the elderly but was unsuccessful because no suitable place was found to set up an elderly care centre. Apart from the foregoing, Noble had no other business until it was used as an IT service provider to participate in D-Biz. 13. At all material times, the “BP/Noble Director” is and was the sole shareholder of both BP and Noble, the sole director of BP, and also a director of Noble. In this statement, the undertaking of which BP and Noble form a part is referred to as “BP/Noble”. Agnes Au Yeung and Fan Sing Chi, also known as Joe Fan (“Joe Fan”), assisted in handling BP’s and Noble’s affairs (whether as representatives and/or agents), including the setting up of the FanSung Market and the quotations submitted by BP and Noble in support of applications for D-Biz funding by prospective customers. 14. ML is and was at all material times a limited liability company incorporated under the laws of Hong Kong. Its current sole shareholder is Multisoft Holding Limited, which is a company incorporated in the British Virgin Islands. Multisoft Holding Limited is 100% owned by MTT. ML was at all relevant times, and is, engaged in the business of providing IT enterprise solutions, specialising in systems, networking, security and cloud services. ML participated in D-Biz as an IT service provider. At all material times until 1 February 2021, the late Wu Wai Hung, also known as Vincent Wu (“Vincent Wu”), was sales director of ML, responsible for ML’s sales, marketing and business development divisions. The employees reporting to Vincent Wu at all material times included a former product manager (“the Relevant ML Employee”). 15. KWEK was at all material times (and still is) a limited liability company incorporated in Hong Kong. Tang Wai Chun, also known as Koki Tang (“Koki Tang”), is and was at all material times (and still is) a shareholder and a director of KWEK. 16. Yat Ying was at all material times (and still is) a sole proprietorship which is an unincorporated entity owned by Agnes since 10 January 2016. Yat Ying also participated in D-Biz as an IT service provider. Agnes Au Yeung is responsible for decisions regarding Yat Ying’s business, including determining Yat Ying’s bid prices for quotations to prospective customers applying for D-Biz funding. At all material times, she also participated in preparing quotations for prospective customers of BP/Noble applying for D-Biz funding. At all material times, Joe Fan was the husband of Agnes Au Yeung. He has no formal employment contract with Yat Ying, but he also participated in preparing quotations for prospective customers of BP/Noble applying for D-Biz funding, and in delivering IT solutions to Yat Ying’s and BP/Noble’s respective customers. B2. The D-Biz scheme 17. On 20 April 2020, the Innovation and Technology Commission (“ITC”) launched the D-Biz funding scheme, using public funds from the Government’s anti-epidemic fund to support local enterprises to adopt IT solutions to continue their businesses and services during the COVID-19 epidemic. The Hong Kong Productivity Council (“HKPC”) was appointed as the secretariat of D-Biz and was responsible for conducting eligibility checking and preliminary screening on the applications. Once screened, eligible applications were submitted to the Distance Business Programme Vetting Committee (“Committee”), chaired by the Commissioner for Innovation and Technology, for consideration. 18. D-Biz covered twelve IT solution categories relating to distance business, namely:
19. D-Biz opened for applications between 18 May and 31 October 2020. At the initial stage of the scheme, each applicant was permitted to submit only one application adopting no more than three IT solutions within the designated twelve categories as set out above. On 16 August 2020, the ITC introduced enhancement measures pursuant to which each applicant was permitted to submit a second application from 31 August 2020 onwards for another three IT solutions which were different from the approved categories in any application which the applicant had made in the initial stage of the D-Biz scheme. Following these enhancement measures, each applicant was therefore permitted to submit two applications for six IT solutions in total. The funding ceiling for each IT solution was HK$100,000 and the aggregate funding ceiling granted to each applicant was HK$300,000. 20. For each application for funding, the applicant was required to obtain written price quotation(s) from IT service provider(s), which set out in detail the project duration, scope of work, deliverables, and breakdown of cost items such as the software expenses, hardware expenses and IT service charges. In addition, the applicant was required to obtain from each person submitting a quotation a signed ‘probity and non-collusive quotation / tendering certificate’ (“NCC”) as part of their quotation submission. The NCC contains representations by the person submitting the quotation that: the quotation/bid was genuinely and independently prepared, with an intention to win and to implement the relevant project when awarded; and, in preparing the quotation/bid, no agreement, understanding or communication regarding competitively sensitive information such as price or bidding intention was made with another competing bidder. 21. The number of price quotations which an applicant needed to obtain was dependent on whether the application involved (i) a subscription-based IT solution or (ii) a system integrator/non-subscription-based IT solution. In the former case, the applicant was only required to obtain one quotation. Conversely, in the latter case, the applicant was required to obtain quotations from at least two IT service providers, otherwise full justifications had to be provided. As between the two quotations, unless otherwise justified by the applicant and agreed by the Government or the HKPC, it was stipulated that the service provider submitting the lowest conforming quotation was to be selected by the applicant to provide the relevant IT solution (“Two-Quotation Requirement”). The Subject Applications (as defined at paragraph 27 below) concerned in this case all initially sought funding for non-subscription-based IT solutions and were thus required to meet the Two-Quotation Requirement. 22. Each D-Biz application was done online through D-Biz’s website. As part of the application process, applicants were required:
23. Applications that the HKPC assessed as being eligible were submitted to the Committee for approval. It was also possible for the level of funding to be adjusted with reference to the project cost such that the HKPC would only approve a reduced scope for the IT solution by comparison with the scope which had been applied for. 24. An initial payment of 30% of the approved funding amount was payable to a designated bank account of the applicant. The selected service provider could then start to implement the IT solution(s) for the applicant. 25. Within two months after the completion of the IT solution(s), the applicant was required to submit among other things, a final project report indicating a summary of project expenditures and project deliverables, and an audited statement of income and expenditure covering the whole project period from an independent auditor to the HKPC, if the total approved funding exceeded HK$30,000. 26. Upon project completion and upon the HKPC’s acceptance of the final project report together with supporting documents, the final payment (i.e., the remaining 70% of the approved funding amount) was then released to the applicant. 27. The Subject Arrangement concerns 189 applications under D-Biz (“Subject Applications”), details of which are provided in Annex A to this Statement. B3. Background to the relevant conduct 28. In around 2002, Vincent Wu, Agnes Au Yeung and the BP/Noble Director met at a church and became friends. Joe Fan joined their friendship group after marrying Agnes Au Yeung in 2015. The three, and later four, individuals attended gatherings held by each other from time to time. 29. Between 2017 and 2020, the BP/Noble Director lent a sum of money to Agnes Au Yeung and Joe Fan for their business operations. As at May 2020, the loan had not been repaid. As a way to thank the BP/Noble Director, Agnes Au Yeung and Joe Fan helped the BP/Noble Director with various issues including the operation of BP and Noble since 2018, without any compensation. Neither Agnes Au Yeung nor Joe Fan formally held any position in BP or Noble. 30. Between 1 July 2019 and 30 June 2020, BP/Noble and Yat Ying shared the same office located at Flat G, 9th Floor, Mai Luen Industrial Building, 23-31 Kung Yip Street, Kwai Chung, New Territories, Hong Kong. BP/Noble rented the said office as BP’s registered office on 1 July 2019, and shared it with Agnes Au Yeung and Joe Fan for them to use in running Yat Ying’s business, until after the lease of the shared office expired on 30 June 2020. 31. When developing the FanSung Market for BP in 2019, BP/Noble was assisted by Agnes Au Yeung and Joe Fan. BP/Noble also consulted Vincent Wu on some technical issues, who then introduced the Relevant ML Employee to them. In turn, the Relevant ML Employee introduced Koki Tang to BP/Noble, Agnes Au Yeung and Joe Fan; and it was Koki Tang who developed the FanSung Market platform on a freelance basis. 32. Following the announcement of the D-Biz programme in late April 2020, Agnes Au Yeung and BP/Noble each found prospective customers to whom they could each provide IT solutions for online business operations through Yat Ying and BP respectively. Since there was market information at the initial stage of D-Biz suggesting that there would be a limit on the number of applications in which each IT service provider could participate, both BP and Noble were used as IT service providers to increase the overall number of participating applications. 33. With Joe Fan’s effort, and by referrals from friends, BP/Noble had prospective customers interested in applying for D-Biz funding. Agnes Au Yeung and Joe Fan ultimately submitted 74 Subject Applications for D-Biz funding on behalf of BP/Noble customers (marked as customers of the BP/Noble Director in Annex A to this Statement). In parallel, Agnes Au Yeung succeeded in obtaining expressions of interest from prospective customers of Yat Ying, and ultimately submitted 115 Subject Applications for D-Biz funding on their behalf (marked as customers of Agnes Au Yeung in Annex A to this Statement). 34. In total, 189 Subject Applications were thus made to seek funding for non-subscription-based IT solutions, of which 167 Subject Applications were approved for funding. The last of the D-Biz funding contracts was signed on 2 September 2021. Applications from 37 customers of BP/Noble were approved and they entered into D-biz funding agreement with the HKPC. Many have received the 30% initial payment and have paid the same to BP/Noble; the residual funding remains unpaid pending completion of the underlying IT services and administrative steps described above. The total amount of D-biz funding approved for customers of BP/Noble is $4,961,470. B4. The Subject Arrangement 35. In order to enable the proposed customers of BP/Noble and Yat Ying to appear to satisfy the Two-Quotation Requirement while ensuring that BP/Noble or Yat Ying respectively would win the business by offering the lowest quotes, it was agreed that (1) BP/Noble and Yat Ying were to obtain cover bids from ML and KWEK through their relationship with Vincent Wu and Koki Tang (see Annex A items 1-51), and (2) later, BP/Noble and Yat Ying would provide cover bids for each other (see Annex A items 52-189).[8] Such cover bids were to be priced slightly higher than the bids provided respectively by the intended winner to succeed. 36. As between the intended winners BP/Noble and Yat Ying, customers would be allocated according to who found them, i.e., the customers found by BP/Noble would generally be allocated to either BP or Noble, while the customers found by Agnes Au Yeung would be allocated to Yat Ying. Joe Fan and Agnes Au Yeung were the main implementers of the Subject Arrangement. 37. As a result of the Subject Arrangement, there was no genuine competition between the relevant two IT service providers (as the case may be) from which quotations were sought to support each of the Subject Applications for D-Biz funding. On the contrary, for each Subject Application, the intended winner (i.e., the service provider to be selected to provide the relevant IT services to be funded by the D-Biz scheme) had been pre-determined pursuant to the Subject Arrangement. The HKPC was led to approve D-Biz funding – in the case of BP/Noble’s customers, a total amount of $4,961,470 – under the false impression that the Subject Applications had been made following a competitive selection process in compliance with the Two-Quotation Requirement. B5. Particulars of the Contravention 38. It is the Commission’s case (which is not disputed by BP and Noble) that the Subject Arrangement insofar as BP/Noble is concerned was agreed and given effect to in accordance with the events set out below:
B6. Admission of liability by BP and Noble 39. By reason of the matters set out herein, each of BP and Noble admits the following:
PART C – UNDISPUTED FACTS ON THE CALCULATION OF RECOMMENDED PECUNIARY PENALTY FOR BP/NOBLE AND THE INVESTIGATION COSTS OF THE COMMISSION 40. For the purposes of assessing the amount of recommended pecuniary penalty under section 93 of the Ordinance, each of BP and Noble admits the following:
41. As to the Commission’s costs of and incidental to its investigation into this matter, the Commission has incurred such costs in the sum of HK$621,730 (see Annex B), of which HK$155,000 (rounding down to the nearest thousand) represents the 3rd and 4th Respondents’ share of such investigation costs. Dated this day of 2023.
STATEMENT OF AGREED FACTS BETWEEN THE COMPETITION COMMISSION (“COMMISSION”) AND THE 5TH AND 8TH RESPONDENTS (Prepared pursuant to Rule 39 of the Competition Tribunal Rules, Cap. 619D (“CTR”) and Paragraph 72 of the Competition Tribunal Practice Direction 1 (“CTPD1”)) PART A — INTRODUCTION 1. On 22 March 2023, the Commission issued proceedings pursuant to sections 92(1), 94(1), 96(1) and 101(1) of the Competition Ordinance, Cap. 619 (“Ordinance”) before the Competition Tribunal (“Tribunal”) against, amongst others, KWEK Studio Limited (“KWEK”) and its shareholder/director, Tang Wai Chun, also known as Koki Tang (“Koki Tang”), being the 5th and the 8th Respondents in these proceedings respectively. 2. As against KWEK, the Commission seeks:
3. As against Koki Tang, the Commission seeks:
4. Subject to the approval of the Tribunal, the Commission and each of KWEK and Koki Tang agree to enter judgment on liability and consequential orders in favour of the Commission against them by way of the summary procedure as provided for in Rule 39 of the CTR and §72 of the CTPD1. The procedure as envisaged by the parties is that sanctioned by the High Court of England and Wales in the case of Re Carecraft Construction Co Ltd [1994] 1 WLR 172 and clarified by the Court of Appeal of England and Wales in Secretary of State for Trade and Industry v Rogers [1996] 1 WLR 1569, and as adopted in Hong Kong for proceedings under section 214 of the Securities and Futures Ordinance (Cap. 571) and section 168H of the former Companies Ordinance (Cap. 32). Further, the procedure was endorsed by the Honourable Mr. Justice Jonathan Harris in the case of Competition Commission v Kam Kwong Engineering Co Ltd [2020] 4 HKLRD 61 as a “readymade blueprint for disposing of proceedings under the Ordinance” (at §17) and by the Honourable Madam Justice Linda Chan in her judgment handed down on 3 November 2020 (Competition Commission v. Quantr Limited and Others [2020] HKCT 10). Additionally, the same procedure was adopted by the Honourable Mr. Justice Godfrey Lam (as he then was) in his judgment handed down on 16 December 2020 in relation to the penalty proceedings in Competition Commission v. Nutanix Hong Kong Limited and Others [2020] HKCT 11. 5. This Statement of Agreed Facts (“Statement”) is submitted pursuant to Rule 39 of the CTR and §72 of the CTPD1. The Tribunal is asked to make the orders sought in paragraphs 2 and 3 above on the basis of the facts set out in this Statement. 6. For the purpose of resolving these proceedings summarily, by reference to the facts as set out in Part B below, the Commission contends and each of KWEK and Koki Tang admits that between early May 2020 until at least 19 April 2021, KWEK has contravened the FCR by having made and given effect to an agreement and engaged in a concerted practice involving price fixing, customer allocation, bid-rigging and the exchange of competitively sensitive information with three other undertakings , namely (1) Multisoft (consisting of Multisoft Limited (“ML”) and its parent company MTT Group Holdings Limited (“MTT”), being the 1st and 2nd Respondents in these proceedings respectively); (2) BP/Noble (consisting of BP Enterprise Company Limited (“BP”) and Noble Nursing Home Company Limited (“Noble”), being the 3rd and 4th Respondents in these proceedings); and (3) Au Yeung Kit Yee, also known as Agnes Au Yeung (“Agnes Au Yeung”) (trading as Yat Ying Hong (“Yat Ying”)), being the 6th Respondent in these proceedings, in relation to the supply of quotations for the provision of IT services under the Distance Business Programme (“D-Biz”) (“Subject Arrangement”), and that Koki Tang has been involved in the above contravention. The Subject Arrangement contravened section 6 of the Ordinance, as more particularly described in paragraph 28 to 36 below (“Contravention”). 7. The facts as set out in this Statement are agreed by the Commission and each of KWEK and Koki Tang. This Statement is filed before the Tribunal to support the joint application by the Commission and KWEK and Koki Tang for the orders sought in paragraphs 2 and 3 above to be made under Rule 39 of the CTR (“Joint Application”). 8. If the Tribunal for whatever reason is of the view that these proceedings shall not be dealt with by way of the Joint Application, no admission or concession by either the Commission or KWEK or Koki Tang regarding their liabilities (save and except the matters set out in paragraphs 38 to 39 below) shall be referred to or relied upon by either the Commission or KWEK or Koki Tang at any adjourned or subsequent hearing or in any other proceedings without the prior written consent of both the Commission and each of KWEK and Koki Tang. 9. The Commission and each of KWEK and Koki Tang accept and acknowledge that none of the admissions made by KWEK or Koki Tang in this Statement shall be binding on any other Respondents in these proceedings. 10. The Commission reserves the right to refer to this Statement for all purposes connected with or ancillary to these proceedings. PART B – UNDISPUTED FACTS RELEVANT TO LIABILITY B1. The relevant parties 11. KWEK was at all material times (and still is) a limited liability company incorporated in Hong Kong. KWEK was initially set up for developing a mobile application, but this was ultimately unsuccessful. Apart from the foregoing, KWEK had no other business operations until Koki Tang used it to issue quotations for applicants for D-Biz funding pursuant to the Subject Arrangement as more particularly described in Section B4 below. Accordingly, KWEK was at all relevant times, and is, engaged in economic activity. 12. Koki Tang was at all material times (and still is) a shareholder and a director of KWEK. He also holds and at the relevant times held the position of Chief Technology Officer. 13. ML is and was at all material times a limited liability company incorporated under the laws of Hong Kong. Its current sole shareholder is Multisoft Holding Limited, which is a company incorporated in the British Virgin Islands. Multisoft Holding Limited is 100% owned by MTT. ML was at all relevant times, and is, engaged in the business of providing IT enterprise solutions, specialising in systems, networking, security and cloud services. 14. Each of BP and Noble is and was at all material times a limited liability company incorporated under the laws of Hong Kong; at all material times, BP and Noble have been owned and controlled by the same person, namely, the “BP/Noble Director”. 15. Yat Ying was at all material times (and still is) a sole proprietorship owned by Agnes Au Yeung. Agnes Au Yeung – in consultation with her husband Fan Sing Chi, also known as Joe Fan (“Joe Fan”) – is and was at all material times primarily responsible for decisions regarding Yat Ying’s business. B2. The D-Biz scheme 16. On 20 April 2020, the Innovation and Technology Commission (“ITC”) launched the D-Biz funding scheme, using public funds from the Government’s anti-epidemic fund to support local enterprises to adopt IT solutions to continue their businesses and services during the COVID-19 epidemic. The Hong Kong Productivity Council (“HKPC”) was appointed as the secretariat of D-Biz and was responsible for conducting eligibility checking and preliminary screening on the applications. Once screened, eligible applications were submitted to the Distance Business Programme Vetting Committee (“Committee”), chaired by the Commissioner for Innovation and Technology, for consideration. 17. D-Biz covered twelve IT solution categories relating to distance business, namely:
18. D-Biz opened for applications between 18 May and 31 October 2020. At the initial stage of the scheme, each applicant was permitted to submit only one application adopting no more than three IT solutions within the designated twelve categories as set out above. On 16 August 2020, the ITC introduced enhancement measures pursuant to which each applicant was permitted to submit a second application from 31 August 2020 onwards for another three IT solutions which were different from the approved categories in any application which the applicant had made in the initial stage of the D-Biz scheme. Following these enhancement measures, each applicant was therefore permitted to submit two applications for six IT solutions in total. The funding ceiling for each IT solution was HK$100,000 and the aggregate funding ceiling granted to each applicant was HK$300,000. 19. For each application for funding, the applicant was required to obtain written price quotation(s) from IT service provider(s), which set out in detail the project duration, scope of work, deliverables, and breakdown of cost items such as the software expenses, hardware expenses and IT service charges. In addition, the applicant was required to obtain from each person submitting a quotation a signed ‘probity and non-collusive quotation / tendering certificate’ (“NCC”) as part of their quotation submission. The NCC contains representations by the person submitting the quotation that: the quotation/bid was genuinely and independently prepared, with an intention to win and to implement the relevant project when awarded; and, in preparing the quotation/bid, no agreement, understanding or communication regarding competitively sensitive information such as price or bidding intention was made with another competing bidder. 20. The number of price quotations which an applicant needed to obtain was dependent on whether the application involved (i) a subscription-based IT solution or (ii) a system integrator/non-subscription-based IT solution. In the former case, the applicant was only required to obtain one quotation. Conversely, in the latter case, the applicant was required to obtain quotations from at least two IT service providers, otherwise full justifications had to be provided. As between the two quotations, unless otherwise justified by the applicant and agreed by the Government or the HKPC, it was stipulated that the service provider submitting the lowest conforming quotation was to be selected by the applicant to provide the relevant IT solution (“Two-Quotation Requirement”). The Subject Applications (as defined at paragraph 26 below) concerned in this case all initially sought funding for non-subscription-based IT solutions and were thus required to meet the Two-Quotation Requirement. 21. Each D-Biz application was done online through D-Biz’s website. As part of the application process, applicants were required:
22. Applications that the HKPC assessed as being eligible were submitted to the Committee for approval. It was also possible for the level of funding to be adjusted with reference to the project cost such that the HKPC would only approve a reduced scope for the IT solution by comparison with the scope which had been applied for. 23. An initial payment of 30% of the approved funding amount was payable to a designated bank account of the applicant. The selected service provider could then start to implement the IT solution(s) for the applicant. 24. Within two months after the completion of the IT solution(s), the applicant was required to submit among other things, a final project report indicating a summary of project expenditures and project deliverables, and an audited statement of income and expenditure covering the whole project period from an independent auditor to the HKPC, if the total approved funding exceeded HK$30,000. 25. Upon project completion and upon the HKPC’s acceptance of the final project report together with supporting documents, the final payment (i.e., the remaining 70% of the approved funding amount) was then released to the applicant. 26. The Subject Arrangement concerns 189 applications under D-Biz (“Subject Applications”), details of which are provided in Annex A to this Statement. However, for the purpose of the Joint Application and as agreed among the Commission, KWEK and Koki Tang, out of the Subject Applications, only 51 applications were affected by KWEK’s involvement in the Subject Arrangement with knowledge and consent of KWEK and Koki Tang, i.e., the applications as enumerated as item nos. 1 to 51 in Annex A to this Statement. B3. Background to the relevant conduct 27. In 2019, Agnes Au Yeung and Joe Fan assisted BP in establishing an online platform named ‘FanSung Market’, and engaged Koki Tang as a free-lance programmer in his personal capacity (“BP Project”). Through the BP project, the BP/Noble Director, Agnes Au Yeung and Joe Fan became acquainted with Koki Tang. Joe Fan was the contact person with Koki Tang, and they frequently communicated with each other through WhatsApp. In Koki Tang’s mobile phone, Joe Fan’s WhatsApp contact name is recorded as “Joe@Fansung”. B4. KWEK and Koki Tang’s participation in the Subject Arrangement 28. As the BP Project continued into 2020, it overlapped with the ITC’s launch of D-Biz. On 10 May 2020, Joe Fan raised the topic of D-Biz with Koki Tang for the first time, indicating that he was going to participate in the programme, although he did not mention that he was proposing to do so on BP/Noble and/or Yat Ying’s behalf (as the case may be). On 15 May 2020, after confirming Koki Tang owned a company (i.e., KWEK), Joe Fan asked whether Koki Tang was willing to “help make quotations” (“幫手報價” in original Chinese text). Joe Fan explained that he had found dozens of potential customers who were interested in applying D-Biz funding, and that to do so they would have to satisfy the Two-Quotation Requirement; in order to ensure these customers would be won by him (whether on behalf of BP/Noble and/or Yat Ying, as the case may be), cover bids rather than genuinely competing second quotations were needed from a friendly firm. 29. Koki Tang agreed to help provide cover bids in KWEK’s name. In consideration, Joe Fan agreed to allocate some of the projects to KWEK either by letting KWEK become the winning IT service provider, or by arranging for the intended winner(s) to subcontract the projects to KWEK. Joe Fan stated that he would complete all the relevant paperwork and logistics in relation to the D-Biz applications, and that Koki Tang only needed to sign the quotations and NCCs on behalf of KWEK. After reaching that agreement, Koki Tang fetched KWEK’s company chop from another shareholder on or around 15 May 2020 in anticipation that he would need to stamp the chop when signing those documents. 30. On 21 May 2020, Koki Tang sent to Joe Fan via WhatsApp KWEK’s blank quotation form in editable Microsoft Excel format, among other company and personal details of KWEK and himself, to facilitate Joe Fan’s preparation of the necessary documents. In doing so, Koki Tang allowed Joe Fan to fill in KWEK’s quotation forms with whatever prices that Joe Fan deemed convenient to implement their agreement. Joe Fan proposed that he and Koki Tang should arrange to meet the following evening in order to sign and stamp KWEK’s company chop on the relevant documents. 31. On 22 May 2020, Koki Tang and Joe Fan arranged to meet in Sai Kung. Koki Tang did not sign all of the documents on the spot as there were so many; he took them home and spotted some errors which he asked Joe Fan to correct in the early morning of 23 May 2020. Around the same time, Koki Tang became concerned about the large number of cover bids being requested (60 as he mentioned in one of the audio messages to Joe Fan) and the risk of being caught contravening the Ordinance. The two renegotiated on 24 May 2020 and as a result, Joe Fan agreed to pay Koki Tang HK$500 for each cover bid – totalling HK$30,000 (i.e., HK$500 x 60) – in addition to the allocation of projects to KWEK as previously agreed. Out of the total compensation of HK$30,000, Joe Fan would first pay a 30% deposit upon Koki Tang signing the documents, with the remaining to be paid later. 32. On the evening of 24 May 2020, Koki Tang visited Joe Fan at Flat G, 9th Floor, Mai Luen Industrial Building, 23-31 Kung Yip Street, Kwai Chung, New Territories, which was the office shared by Yat Ying and BP/Noble at that time, and signed all the documents Joe Fan prepared without looking into any details. Because the signature pages of NCCs were identical, they agreed to reproduce one signed page to save time. On 28 May 2020, Joe Fan paid the agreed 30% deposit (i.e., HK$9,000) together with some outstanding payments from the BP Project to Koki Tang. 33. In the following weeks, Joe Fan used KWEK’s quotations and NCCs to pair up with BP/Noble’s and Yat Ying’s in various D-Biz applications which he submitted to the HKPC on behalf of the relevant potential customers. Initially, Joe Fan did arrange KWEK to be the lower, winning bidder in 12 applications in which KWEK was paired up with Yat Ying. However, by the time Joe Fan informed Koki Tang in early August 2020 that some of the customers would be allocated to KWEK and that KWEK would receive around HK$430,000 as a result, Koki Tang declined to engage further with Joe Fan because Koki Tang no longer considered Joe Fan to be credible and did not want to continue working with Joe Fan anymore. This was because Joe Fan had consistently failed to pay the much smaller sum remaining (i.e., the 70% or HK$21,000) from what had been agreed for KWEK to provide the cover bids despite receiving many reminders from Koki Tang over the intervening weeks. 34. Though Koki Tang was not directly involved in the steps that were carried out from June 2020 onwards, he was aware of Joe Fan’s overall plan and the objective of coordinating between the relevant undertakings to provide two quotations to applicants for D-Biz funding in order for the Subject Applications purportedly to comply with the Two-Quotation Requirement, rather than competing with each other as intended by the Two Quotation Requirement. Further, Koki Tang also knew how Joe Fan was going to make use of the quotations he provided in KWEK’s name. For those applications in which KWEK’s quotations were used (i.e., those enumerated at nos. 1 to 51 of Annex A), KWEK was a party to a price fixing, market sharing and bid rigging agreement and concerted practice together with the other relevant undertakings. Further, Koki Tang was directly and knowingly concerned in and party to the making and giving effect of such agreement and engaging in such concerted practice. 35. As a result of KWEK’s participation in the Subject Arrangement, there was no genuine competition between the IT service providers providing quotations in the 51 applications for D-Biz funding enumerated at nos. 1 to 51 of Annex A to this Statement. On the contrary, the intended winner (i.e., the service provider to be selected to provide the relevant IT services to be funded by the D-Biz scheme) had been pre-determined pursuant to the Subject Arrangement. The HKPC was led to approve D-Biz funding under the false impression that the relevant applications had been made following a competitive selection process in compliance with the Two-Quotation Requirement. Further, the prospective customers, in whose name the relevant applications were made, had not been informed of the Subject Arrangement (including in particular that one of the two IT service providers submitting quotations would only submit a cover bid rather than competing to win). B5. Particulars of the Contravention 36. It is the Commission’s case (which is not disputed by KWEK and Koki Tang) that the Subject Arrangement insofar as KWEK is concerned was agreed and given effect to in accordance with the events set out below:
B6. Admission of liability by KWEK and Koki Tang 37. By reason of the matters set out herein, each of KWEK and Koki Tang admits the following:
PART C – UNDISPUTED FACTS ON THE CALCULATION OF RECOMMENDED PECUNIARY PENALTY FOR BP/NOBLE AND THE INVESTIGATION COSTS OF THE COMMISSION 38. For the purposes of assessing the amount of recommended pecuniary penalty against Koki Tang under section 93 of the Ordinance, Koki Tang does not dispute that he personally received HK$9,000 for KWEK’s participation in the Subject Arrangement and that his average monthly income during the relevant period of the Contravention (i.e., from 15 May 2020 to at least 19 April 2021) is HK$41,450. 39. As to the Commission’s costs of and incidental to its investigation into this matter, the Commission has incurred such costs in the sum of HK$621,730(see Annex B), of which HK$155,000 (rounding down to the nearest thousand) represents the 5th Respondent’s share of such investigation costs. Dated this day of 2024.
[1] [2020] 4 HKLRD 61. [2] [2023] 3 HKLRD 374. [3] [2020] 5 HKLRD 528. [5] [2020] 2 HKLRD 1229. [6] “Undertaking” is defined in section 2(1) of the Ordinance to mean any entity, regardless of its legal status or the way in which it is financed, engaged in economic activity, and includes a natural person engaged in economic activity. [7] “Undertaking” is defined in section 2(1) of the Ordinance to mean any entity, regardless of its legal status or the way in which it is financed, engaged in economic activity, and includes a natural person engaged in economic activity. [8] That said, in some of those later Subject Applications, Agnes Au Yeung and Joe Fan used KWEK’s headed paper to create cover bids to pair up with lower quotations from Yat Ying or BP/Noble (as appropriate), but they did so without KWEK’s knowledge or consent. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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