First come, first served for price-fix whistleblowers in leniency bid

Wallis Wang

Only the first company that reports price-fixing activities to the competition watchdog can be spared from prosecution, even if more than one company applies for leniency that same day, Competition Commission executive director of legal services Lester Lee Hiu-leung said.

Lee told a radio program yesterday that businesses involved in price-fixing have to compete with each other and that only the first one to report the crime to the commission can assist the investigation in exchange for leniency.

This came after the watchdog on Tuesday sued Midland Holdings and its subsidiaries Midland Realty and Hong Kong Property for allegedly fixing the minimum net commission rate at 2 percent with their rival, Centaline Group's Centaline Property Agency and Ricacorp Properties.

But no one from Centaline was named as defendants by the commission.

Lee said if two companies involved in a price-fixing case report the crime to the commission on the same day, the watchdog will consider which company applied for leniency first and whether the information they submit is useful.

The leniency policy can deter acts of conspiracy in the future as companies risk that their price-fixing partners may turn against them, he said.

But Lee said the policy will not be applied to all companies.

For example, if a company is the sole mastermind and forced other companies to participate in the crime, it will not be allowed to apply for leniency.

Lee said Centaline Property Agency and Ricacorp Properties were not prosecuted as they have provided information to the watchdog, significantly reducing its work in searching for evidence.

He added the two agencies have huge responsibilities during the investigation.

"When a company applies for leniency, they have to assist our investigation and submit documents. Their employees and board members involved in the price-fixing activities will also meet with us," Lee said. "During the prosecution period, they are also required to fully cooperate with us so that we can win the lawsuit."

Executive Council member and senior counsel Ronny Tong Ka-wah said leniency does not mean the commission is letting the company walk free and that Centaline Property Agency and Ricacorp Properties may still face civil lawsuits.

Without the leniency arrangement no company would cooperate with the watchdog, hampering efforts to find proof of conspiracy, Tong said.