Competition Commission Rules Hong Kong Code of Banking Practice is Subject to Competition Laws

The Hong Kong Competition Commission (Commission) recently found that the Code of Banking Practice (Code) is subject to the First Conduct Rule (FCR) in s. 6(1)[2] of the Competition Ordinance (CO). The Code is an industry code for retail banking services aimed primarily at promoting sound banking practices and consumer protection. On 15 October 2018, the Commission rejected an application by 14 Hong Kong banks for a decision under s. 9(1) CO confirming that the provisions of the Code were excluded from the competition rules by virtue of s. 2 of Sch. 1 to the CO.[3] Importantly, the Commission did not confirm whether the Code had the object or effect of harming competition in contravention of the FCR. The procedural framework only required the Commission to rule on the availability of the exclusion in s. 2 of Sch. 1. That said, the Commission provided an assurance that it had no current intention of taking any enforcement action against the applicant banks in respect of their compliance with the Code, noting that the Code may benefit Hong Kong consumers.