A company chaired by the husband of Hong Kong’s justice minister has been accused of bid-rigging as part of a cartel between 2015 and 2019, with around HK$2 billion worth of air-conditioning potentially affected.
The Competition Commission on Thursday named Analogue Holdings, a leading electrical and mechanical engineering firm, in a cartel case that will be brought to the Competition Tribunal, a branch of the judiciary.
Otto Poon, husband of Secretary for Justice Teresa Cheng, is chairman and executive director of Analogue Holdings. The company is said to have engaged in “serious anti-competitive conduct” by sharing details of its intention to bid, the bidding price and other information with its competitor Shun Hing Holdings Co. between December 2015 and December 2019.
The case involves Analogue’s subsidiary ATAL Building Services Engineering Limited and Shun Hing Engineering Contracting Company Limited. According to the commission’s case, two senior engineers at Analogue, Eric Ser and Cheng Kit-shun, and the senior manager of Shun Hing, Ken Kwan, communicated frequently through emails and phone texts when the companies were responding to tender or quotation requests from customers.
They were said to have sought and agreed to provide cover bids – a common type of bid-rigging in which one party files a bid which is too high or has unacceptable terms to favour an agreed-upon lower bidder.
The Competition Commission also accused them of sharing details about their intention to bid, as well as divulging commercially sensitive information, including their intended bidding price and the time required to complete the air-conditioning work.
The “continuous infringement” by Analogue and Shun Hing lasted more than four years, the commission said, adding that such conduct may have affected a wide range of air-conditioning work. This involved the installation of central air-conditioners, replacement of pipes and chillers and day-to-day maintenance, with an overall estimated value of HK$2 billion.
“The suspected cartel reduced the choices and potentially increased the costs of air-conditioning works for the public sector, owners of commercial buildings and residential homes who had called for the requests for quotation,” a statement by the commission read.
It urged the Competition Tribunal to declare Analogue, Shun Hing, Ser, Cheng and Kwan in breach of the Competition Ordinance and to impose fines on the parties. The regulatory body also urged the tribunal to issue orders banning the companies and employees involved from engaging in anti-competitive conduct, as well as demanding they cover its investigation costs.
Rasul Butt, chief executive officer of the commission, described the enforcement action against Analogue and Shun Hing as “exposing and tackling a multi-year cartel” between two established air-conditioning services providers in the city. He said the commission would continue to make “disrupting hardcore cartels that affect people’s livelihood” one of its top priorities.
“With air-conditioning being a modern necessity, the cartel affected many members of the public residing and working in residential and commercial buildings,” Butt said in the statement.
The commission CEO said the case highlighted the need for parent companies to ensure their subsidiaries comply with the Competition Ordinance. The regulatory body may bring action against any entity comprised in the same undertaking which directly took part in the contravention, Butt said.
Correction 19:35: A previous version of this article incorrectly stated that the amount of air-conditioning work carried out was valued at around HK$2 billion. In fact, HK$2 billion was the amount of air-conditioning work potentially affected. We regret the error.
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