HKCC Advisory Bulletin: Competition concerns regarding joint negotiations in the labour sector

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The Hong Kong Competition Commission (HKCC) believes competition between businesses is not confined to the selling of their products and provision of services but can also involves these competing for resources. This includes competing for employees, who are a vital component for all industries.

The HKCC has been clear that where employers agree or share competitively sensitive information related to employee compensation and/or other employment conditions, such conduct could be in breach of Hong Kong’s Competition Ordinance (the Ordinance). The HKCC has particularly highlighted its concern about trade associations issuing compensation recommendations – which can be equated to recommended fee scales.

In the course of its investigatory work the HKCC encountered situations where groups/associations of businesses engaged in voluntary negotiations with employee representative bodies. Such arrangements can bring about improved employment conditions for employees which may not be achievable through unilateral negotiations. In contrast to some other jurisdictions, these joint negotiations are not excluded from the application of the Ordinance. The HKCC was concerned that, by highlighting the application of the Ordinance to labour markets, there was a risk that joint negotiations between employers and employee bodies, intended to benefit employees, would be discouraged.

To address this concern, and provide certainty that businesses can pursue joint negotiations with employee bodies the HKCC issued an Advisory Bulletin (Advisory Bulletin). The Advisory Bulletin confirms that the HKCC has “no current intention to pursue an investigation or enforcement action where joint negotiations with employee bodies is justified given the industry characteristics and:

(i) the purpose of the conduct is to improve, which could include maintaining, relevant employment conditions; and

(ii) an employee body is a genuine participant in the joint negotiation process.”

The Advisory Bulletin concludes with a Q&A section that sets out a series of scenarios and an explanation of whether and why the scenario gives rise to a competition law concern.

Alongside the issuing of the Advisory Bulletin the HKCC has continued with its work educating businesses and trade associations of how the Ordinance applies including in relation to labour markets. The issuing of the Advisory Bulletin was widely reported and the HKCC was commended for helping businesses understand in clear terms what they could and could not do. In particular going beyond giving guidance and setting out a statement of enforcement intent.