Gas supplier faces competition law trial

The Competition Commission has filed the city's first case on abuse of substantial market power against a medical gas supplier, accusing it of distorting competition and affecting public hospitals' consumer interests.

The watchdog has filed the case with the Competition Tribunal against Linde HKO and Linde GmbH for abusing Linde's "substantial degree of market power" in Hong Kong's medical gas supply market between October 2015 and January 2018, hindering competition in the downstream medical gas pipeline system maintenance market.

It is also pursuing Linde HKO's general manager Tse Chun-wah, who was "actively involved in formulating and executing" the exclusionary acts, for contravening the Competition Ordinance.

The commission alleged Linde limited or even ceased supply of medical gases to MGI (Far East), the only other potential pipeline maintenance service provider for public hospitals.

Describing Linde as having a "de facto monopoly position" in the medical gas supply market, the watchdog said it engaged in exclusionary acts ranging from unjustified denial of supply of gases essential for maintenance services to unreasonable trading terms so MGI could not compete for pipeline maintenance contracts.

It is also seeking orders to declare Linde and Tse to have contravened the Second Conduct Rule of the ordinance, which prohibits businesses from abusing its market power to prevent, restrict or distort competition in Hong Kong.

Abusive conduct includes refusals to deal, margin squeezing, predatory pricing, typing and bundling, and any behavior that can ultimately limit choices available to consumers.

The commission is also asking the tribunal to impose fines on Linde and Tse and disqualify Tse as a director for up to five years.

The commission's chairman Samuel Chan Ka-yan said: "The egregious nature of the conduct seriously affected public hospitals which provide close to 90 percent of hospital services to all Hong Kong patients."

Contravention of the ordinance could result in a fine of up to 10 percent of the company's annual turnover for a maximum period of three years.

The tribunal can also issue orders requiring compensation for victims.

As of last month, the commission had received over 4,600 complaints and inquiries, with 55 percent related to the First Conduct Rule, which prohibits anti-competitive agreements, and over 17 percent about concerns under the Second Conduct Rule.