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Hong Kong Former Attorney general’s husband fined $150 million for violating competition laws

Posted by on 2022/11/04. Filed under Breaking News,China,Headline News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

A company controlled by Poon Lok-to, the husband of the former Secretary for Justice, Cheng Yeu-wah, admitted to conspiring to set prices for air conditioning projects with a major electrical conglomerate, Shin Hing Group, in an alleged breach of anti-competition law. The company admitted liability and entered into a cooperation agreement with the Competition Commission, agreeing to a fine of HK $150 million (similarly, about 19.6 million euros) and to pay the commission’s investigation and litigation costs, making it the highest fine in the association’s 10 years of existence.

Advertising senior barrister Ronny Tong as early as the announcement of the commission after the radio program pointed out that this is a rare case since the establishment of the Commission to negotiate the settlement of large fines, can greatly increase the effectiveness of the commission’s enforcement. The Chief executive Officer of the Competition Authority, Thomas Bi, described the incident as “significant progress”. He said that time and public resources would be saved through the cooperation agreement, and that the earlier “cooperation” would affect the terms of the agreement. He urged those already involved in the collusion to contact the Authority as soon as possible to apply for leniency or cooperation.

The Competition Commission filed a complaint with the Competition Tribunal on June 16 this year, alleging that On Lok Engineering, Hong Kong’s largest electrical and mechanical engineering services provider, chaired by Poon Lok to, and its subsidiaries, together with Shing Shing Group, had conspired between 2015 and 19 to set prices, carve up the market and/or bid for air-conditioning projects with potential sales of about $2 billion. Although Pan did not comment on the incident, but stressed that “real gold is not afraid of a flood of fire”, but expected less than five months, reached a cooperation agreement with the competition committee.

Mr Tong points out that because competition penalties are calculated as a multiple of a company’s turnover rather than profits, if On Lok Engineering refuses to reach an agreement and loses the case, there is a chance the fine could exceed $150m, and the case could take 10 years to go to trial. A check shows that On Lok’s turnover exceeded $5.3 billion last year.

Following the announcement, On Lok Engineering also issued a profit warning on the Hong Kong Stock Exchange, noting that it was in the overall interest of the company and its shareholders to enter into an agreement with the Commission. It also noted that various factors had been taken into account and the provision for litigation liability had been increased from $60 million to $150 million in response to the agreement and the second round of litigation. The Group’s net profit for the first nine months of this year is estimated to be 60 to 65 per cent lower than last year’s net profit of about $310 million due to the pandemic, supply chain disruptions, cost increases and the discontinuation of government subsidy assistance, the statement added. But he stressed that the group’s overall business and financial position remained robust.

Although the Commission has been in place for a decade, its first case came only three years ago in 2019, when four IT companies were convicted of bid-fixing and price-fixing collusion. A year later, they were fined between $187,000 and $2.73 million, plus costs. In the second case, 10 construction companies appointed by the Housing Department were each fined between $132,000 and $1.135 million for anti-competitive conduct in offering flat renovation packages for a housing estate.
On Lok Works, the largest fine, was filed by the competition Commission 10 days after it emerged that Mrs Cheng would not seek re-election as Attorney General. In January 2018, a separate house adjacent to Cheng’s was exposed by the media as illegal construction. Poon Lok-to was convicted of illegal construction and fined HK $20,000 the following year.

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