Competition and Anti-competitive Practices

Cartels

What are Cartels?

Cartels are agreements between competitors to cooperate rather than compete to win customers by means such as price fixing, bid-rigging and market sharing.

They raise prices while lowering quality and innovation – harming both consumers and the economy.

How to spot a Cartel?

Cartels can be found in any sector or industry and can involve the provision of goods and services in any relevant market.

Some markets are particularly vulnerable to cartels especially where:

1. The competitors are few in number, making it easy for them to collude;
2. The relevant products/services are homogeneous in nature;
3. There are considerable barriers to entry for potential competitors to overcome; and
4. There is excess capacity on the supply side.

In most cases, cartels operate in secrecy but there are some “tell-tale” signs that may indicate their existence:

1. Abnormal or suspicious price movements e.g. different brands of a product increase in price at around the same time and in a way that does not seem to be in line with market conditions;
2. Inexplicable actions by suppliers e.g. suppliers refusing to supply to customers in certain geographical areas without any apparent reasons;
3. Suspicious bids e.g. the same group of bidders seem to take part in tenders and each bidder appears to take turns to win; identical mistakes can be spotted in different tender submissions.

Contact the Commission

These factors alone do not conclusively prove that a cartel exists, but in some cases they might indicate that one exists. If you alert the Commission to your concerns, the Commission can consider whether there is sufficient evidence to investigate the matter further.

When consumers suspect the existence of a Cartel or other competition issues, they should note down details of events, such as the date/time, name of counter parties, communications or observations that lead to their suspicions, and keep relevant documents (such as tenders) and then contact the Commission to file a complaint or submit a query, and provide as much information as possible.

Anonymity and Confidentiality

The Commission accepts complaints provided anonymously.

Section 125 of the Ordinance imposes a general obligation on the Commission to preserve the confidentiality of any confidential information provided to or obtained by the Commission, including information that relates to the identity of any person who has given information to the Commission.

The Commission will not normally disclose the Complainant’s identity, without the Complainant’s consent. In some exceptional cases however, it may be necessary to disclose the Complainant’s identity without their consent. This includes where disclosure is ordered by the courts or under section 126(1)(b) of the Ordinance where the Commission considers it necessary to make a disclosure in the performance of its function or in carrying into effect or doing anything authorised by the Ordinance.

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