Chapter 5 Facilitating Market Competition and Strengthening Consumer Protection
Full Commencement of the Competition Ordinance
The CO, a cross-sectoral competition law prohibiting anti-competitive conduct in all sectors, commenced full operation on 14 December 2015. Under the CO, the CA is conferred concurrent jurisdiction with the Commission to enforce the CO in respect of the conduct of undertakings operating in the telecommunications and broadcasting sectors, including merger and acquisition activities involving carrier licensees in the telecommunications sector. The competition provisions in the BO and TO were repealed simultaneously subject to transitional arrangements.
Upon full commencement of the CO, the CA and the Commission signed a memorandum of understanding (“MoU”) to co-ordinate the performance of their functions on which they have concurrent jurisdiction. In accordance with the principles agreed by the CA and the Commission under the MoU, the CA will ordinarily take the role of the lead authority for matters falling within the concurrent jurisdiction. For matters involving issues that are partly within and partly outside the concurrent jurisdiction, the CA and the Commission will discuss and agree on how best to process the matter on a case-by-case basis.
To assist businesses and the public to understand the CO, the CA and the Commission jointly issued under the CO six sets of guidelines on 27 July 2015 setting out how they would interpret and give effect to the three competition rules, and explaining the procedures for handling complaints, conducting investigations and considering applications for exclusions and exemptions.
In relation to handling leniency applications in respect of the telecommunications and broadcasting sectors under the CO, the CA, having considered the views received from the telecommunications and broadcasting sectors, and taking into account its experiences in enforcing the competition provisions under the TO and the BO since 2000, announced on 19 November 2015 that it would not adopt a leniency policy for its enforcement of the CO, either on its own or jointly with the Commission. The CA may, in accordance with the relevant provisions of the CO and the actual circumstances of the cases on which it has concurrent jurisdiction with the Commission, consider making leniency agreements with the telecommunications and broadcasting licensees on a case-by-case basis.
We will continue to assist the CA in enforcing the CO in the broadcasting and telecommunications sectors as well as liaising with the Commission to coordinate the performance of functions under the concurrent jurisdiction arrangement.
Handling of and Investigations into Competition Complaints in the Telecommunications and Broadcasting Sectors and Merger & Acquisition Cases in the Telecommunications Sector
Since the full commencement of the CO on 14 December 2015 to 31 March 2016, a total of 45 complaints and/or enquiries were received, with 40 cases closed without the need for further actions and five cases under processing. During the period, we also assisted the CA in reviewing two transactions under the Merger Rule of the CO, and no further action was considered necessary in respect of these two transactions.
In addition to handling competition cases under the CO, from 1 April 2015 to 31 March 2016, we assisted the CA in processing five complaint cases under sections 7K, 7L and 7N of the TO, and two cases under section 7P of the TO, which respectively prohibit anti-competitive conduct by telecommunications licensees, and anti-competitive mergers involving carrier licensees, that took place prior to the commencement of the CO. All cases were closed after due consideration, with no investigation opened. During the same period, we assisted the CA in considering two complaint cases under sections 13 and 14 of the BO, which prohibit anti-competitive conduct by broadcasting licensees that took place prior to the commencement of the CO. After due consideration, all cases were closed, with no investigation opened.
We assisted the CA in handling the proceedings in relation to the JR lodged by TVB against the appeal mechanism under the BO and the CA’s decision on a complaint case relating to TVB’s alleged violation of the competition provisions under the BO. On 29 January 2016, of the seven grounds of appeal submitted by TVB, the Court of First Instance ruled in favour of TVB on two grounds: (i) the appeal mechanism to the CE in C under section 34 of the BO is in contravention of Article 10 of the Hong Kong Bill of Rights; and (ii) paragraph 277 of the CA’s decision, which required TVB to abandon all relevant contractual clauses and policies, was not proportional to redress the anti-competitive act of TVB. The Court quashed the CA’s decision. On 26 February 2016, the CA filed its Notice of Appeal to the Court of Appeal.
Handling of and Investigations into Complaints about Contravention of TDO
The fair trading sections of the TDO prohibit certain specified unfair trade practices by traders in the provision of goods and services to consumers.
The CA is conferred concurrent jurisdiction with the C&ED to enforce the fair trading sections of the TDO in relation to the commercial practices of licensees under the TO and the BO directly connected with the provision of telecommunications and broadcasting services. The two enforcement agencies have entered into a MoU to co-ordinate the performance of their functions under the fair trading sections of the TDO and have issued a set of enforcement guidelines to provide guidance for traders and consumers as to the operation of the fair trading sections.
From 1 April 2015 to 31 March 2016, OFCA handled a total of 899 complaint cases under the TDO. Of these cases, 820 were closed due to insufficient evidence to suspect/establish a contravention, or because they fell outside the scope of the TDO; 19 cases were closed after the CA issued advisory letters to the licensees concerned to bring to their attention the subject matter and advise them of the need to improve their relevant commercial practices in relation to the sale supply or promotion of telecommunications or broadcasting services to consumers; one case was successfully prosecuted (with a conviction by the court on 14 April 2016) and the remaining 59 cases were under processing at various stages.
Handling of and Investigations into Telecommunications Complaints about Misleading or Deceptive Conduct
Section 7M of the TO, which prohibited misleading or deceptive conduct by telecommunications licensees, was repealed upon the commencement of the fair trading sections of the TDO on 19 July 2013. As a transitional arrangement, a licensee engaged in misleading or deceptive conduct that took place before 19 July 2013 would continue to be regulated under section 7M of the TO. In this regard, OFCA assisted the CA in handling 23 complaint cases under section 7M of the TO from 1 April 2015 to 31 March 2016. No case of infringement was found.
Enforcement of the Unsolicited Electronic Messages Ordinance
Under the UEMO, we have established three Do-Not-Call (“DNC”) Registers for facsimile messages, short messages and pre-recorded telephone messages. Commercial electronic messages (“CEMs”) must not be sent to registered numbers unless the senders have obtained consent from the registered users. By March 2016, more than 2.8 million numbers were registered with these three DNC Registers. Apart from not sending CEMs to the registered users of the DNC Registers, senders of CEMs are also required under the UEMO to comply with a number of sending rules. For example, they must provide the recipients with their contact information and an “unsubscribe facility” in their CEMs so that the recipients can approach the sender concerned and unsubscribe from receiving their CEMs.
In 2015/16, the total number of reports received in relation to suspected contraventions of UEMO was 1 725, a reduction of about 16% from that of the previous year. We observed a continued shift of spamming activities from the traditional means of facsimile and pre-recorded voice messages to the use of mobile instant messaging applications (“IMAs”) to send short messages. The UEMO adopts a “technology-neutral” principle in regulating the sending of CEMs, including CEMs sent via IMAs. We will continue to monitor the compliance situation on various platforms and streamline the procedures for more effective enforcement.
If the number of reports received against a sender is below a certain threshold, we will issue an advisory letter reminding the sender to observe the requirements under the UEMO. If the number of reports received against a sender exceeds the threshold, or if we continue to receive reports against the same sender after the issuance of an advisory letter, we will conduct a formal investigation and may issue a warning letter to that sender. In 2015/16, a total of 106 advisory letters and 22 warning letters were issued.
In the event of repeated contraventions by the senders of CEMs, we may issue enforcement notices in accordance with section 38 of the UEMO, directing the senders to take steps to remedy the contraventions. Anyone who fails to comply with the enforcement notice may be liable to a fine of up to HK$100,000 on the first conviction. In 2015/16, we issued two enforcement notices to two senders. On 22 January 2016, we mounted a raid operation against a commercial facsimile sender in relation to its suspected contravention of an enforcement notice served on him7.
Consumer Education Programmes
We continued to organise the annual Consumer Education Campaign (“the Campaign”) in 2015/16 to promote the smart use of communications services. The Campaign, which featured the theme “Smart Use of Communications Services”, was held from August 2015 to May 2016. During the Campaign, a total of eight exhibitions were held at different locations to convey to the community useful consumer messages through informative display panels, various fun games and short videos. In collaboration with an industry association, five public seminars hosted by guest speakers who are experts in the communications industry were also held to educate the public on how to use communications services smartly. In order to reach out to different community groups, in particular those who are not well-versed with the new technologies and mobile devices, 23 community talks were held at social service centres during the Campaign period. A series of school activities, including roving drama performances, mini exhibitions and a Wallpaper Design Competition, were organised to enhance students’ understanding of the importance of using mobile data services smartly and protecting their data in mobile phones. During the Campaign, we visited 20 primary and secondary schools, performing the drama to over 4 000 students. To maximise the exposure of our educational messages, a series of printed advertorials in the form of comic strips were printed in newspapers, and short videos were broadcast on public transport media channels.
In addition, a series of publicity initiatives targeting outbound travellers were launched during the year to remind them of issues to which they should pay attention while using mobile data roaming services outside Hong Kong. The initiatives included issuing press releases with consumer messages before peak travelling seasons, posting messages on the website of the Travel Industry Council of Hong Kong, distributing comic strips of consumer messages through the outlets of local travel agents, and displaying posters at major immigration control points.