What is cartel conduct?

The harm of cartel conduct

Cartels typically increase prices artificially and make customers pay more than they would have to under competition.

By eradicating competition, cartels harm the economy as cartelists lack the incentive to enhance efficiency or promote innovation. Cartelists may also try to prevent new businesses from becoming competitors in order to protect their cozy position.

When cartelists have their eyes on public funding, as when they rig the bids for government contracts, victims of cartels go beyond consumers to include all Hong Kong people.

How do cartels operate?

Cartels can be formed directly among competitors or indirectly through a third party. Cartelists can use verbal or written forms of communications to ensure that their actions are aligned. Companies can also engage in cartel conduct by sharing sensitive information with their competitors. For example, they can signal their pricing intentions to competitors in the expectation that they will match them rather than compete.

Cartel conduct, which has been in place in the industry for a long time, may give the impression of being a legitimate way of doing business. In particular, the idea of competing may seem foreign in some sectors. This is not an excuse.

Consequences of contravention

Cartel conduct is unlawful and will result in severe penalties for both the businesses and individuals involved. The Commission will spare no effort in stamping out such harmful practices in Hong Kong.