The Competition Commission has lodged a case recently against ATAL and Shun Hing. It accused ATAL and Shun Hing of price-fixing, market sharing and big-rigging in air conditioning projects, in contrary to the Competition Ordinance.1 The case is noticeable as ATAL was established by Otto Poon, the husband of Justice Secretary Teresa Cheng and the size of the companies.
When your company applies for government funding such as the TVP, you will notice that the supplier has to sign a certificate of probity and non-collusive quotation. It is also due to the Competition Ordinance. So what is the Competition Ordinance and how is it related to SMEs?
Prohibit collusion to maintain competition
The Competition Ordinance (Ch.610 of Hong Kong Law) was passed in 2012 to prohibit anti-competitive behavior. The First Conduct Rule of the Ordinance states that competitors should not collude to weaken competition, such as price-fixing, market sharing and bid rigging etc.
In ATAL case, the Competition Commission accused the two competitors of secret dealing. Cover bids were provided to make sure some other get the contract. The competitors shared sensitive commercial information. The conduct would weaken market competition and impacted Hong Kong economy in a long run.
TVP quotation should observe the Ordinance
The Technology Voucher Programme usually sponsors 75% of the SME technology project cost. It is a huge amount of taxpayer money. Therefore the Government requires TVP observe the Competition Ordinance and suppliers cannot conduct any price-fixing and bid-rigging.
For example, a company applies the TVP for building an ERP system, and the original cost provided by Supplier A is HK$200,000. Supplier A colludes with a TVP consultant to get two more cover bids of HK$280,000 and HK$300,000. Then, Supplier A can mark up the cost to HK$270,000. If the fee of the consultant is 10% of the project cost, it can get $7,000 more, too. The ones who lose are the applicant and taxpayer.
Know more: How to get TVP quotation
Consequence of contravention
If the ITC discovers any evidence of supplier contravention against the Competition Ordinance, it may pass the case to Competition Commission for further investigation. As well, the ITC may also pass the case to the enforcement. Once the guilty found, the supplier cannot get any TVP project in short, nor get any government funding or projects. Some public enterprises and large companies will also reject the suppliers’ quotation.
If you like to know more about government funding and related services, please feel free to contact BizMagnet.
- “Otto Poon firm accused of price-fixing, bid-rigging”, RTHK, 2022-06-16, https://news.rthk.hk/rthk/en/component/k2/1653300-20220616.htm