Competition Ordinance: Managing risks in the private education sector

Competition Ordinance: Managing risks in the private...

This newsletter uses case studies and examples of competition issues in the private education sector to demonstrate how the multidisciplinary team in KPMG China’s Competition Services can help clients analyse a range of economic issues to help ensure they abide by the rules set out in the Competition Ordinance.

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Competition Ordinance

The Competition Ordinance, which came into force on 14 December 2015, is enforced by the Competition Commission (“the Commission”) and prohibits restrictions on competition in Hong Kong through the two rules of conduct:    

  1. The First Conduct Rule prohibits businesses from making agreements with one another or acting in concert to harm competition.
  2. The Second Conduct Rule prohibits businesses with substantial market power from abusing that power by engaging in activities that harm competition. 

The Commission has the power to prosecute and impose fines on companies and individuals, and can disqualify and imprison directors who have been found to infringe on the Conduct Rules. 

Schools often collaborate through associations, or informally at occasional gatherings of administrators. Although this can enhance the education sector and benefit students, the Commission is likely to raise red flags if competitors show evidence of joint decision-making which can ultimately harm price competition. Education administrators therefore need to understand the implications of sharing information on practices, and should be vigilant that its purpose, timing and level of confidentiality may raise anti-competitive concerns. 

This newsletter uses case studies and examples of competition issues in the private education sector to demonstrate how the multidisciplinary team in KPMG China’s Competition Services can help clients analyse a range of economic issues to help ensure they abide by the rules set out in the Competition Ordinance.

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