A company chaired by Otto Poon, the husband of Hong Kong’s former justice secretary, faces a HK$150 million fine, after it admitted to engaging in anti-competitive behaviour in connection with the supply of air-conditioning work between 2015 and 2019.
ATAL Building Services Engineering Limited, which Poon founded, agreed to admit that it breached the First Conduct Rule of the Competition Ordinance by fixing prices, sharing markets or rigging bids, the Competition Commission announced on Friday. It would pay a pecuniary penalty of HK$150 million, pending an official order from the Competition Tribunal.
Eric Ser and Cheng Kit-shun, senior engineers at ATAL’s parent company Analogue Holdings Limited, also agreed to admit they were involved in the cartel case. The commission asked the tribunal to order a recovery of the cost of its probe and proceedings.
The Competition Commission launched the first round of proceedings against Analogue and Shun Hing Engineering Contracting Company Limited in June, after the companies were said to have engaged in “serious anti-competitive conduct” when supplying air-conditioning work in the city between December 14, 2015, and December 4, 2019.
According to the commission’s case, Ser and Cheng of Analogue and the senior manager of Shun Hing, Ken Kwan, communicated frequently through emails and phone texts when the firms were responding to tender or quotation requests from customers.
They 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 commission alleged in June.
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.
Their anti-competitive conduct potentially affected a wide range of air-conditioning work, including 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 independent statutory body said on Friday it would seek an adjournment of proceedings against ATAL after it demonstrated “commitment to fulfil all obligations” in the agreement, but proceedings against the parent company would continue.
Rasul Butt, chief executive officer of the commission, said the cooperation agreements reached with the respondents in the case showed “significant developments” in its investigation into the multi-year air-conditioning cartel.
“[T]he cooperation agreements… will enable the Commission to resolve enforcement cases effectively and efficiently, saving significant time and public resources which would otherwise be spent in a contested hearing,” Butt said, adding that firms who were involved in cartels should approach the commission as soon as possible “for leniency or cooperation.”
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