On 19 October 2018, the Hong Kong Competition Commission (HKCC) decided that the Code of Banking Practice (Code) has to comply with the First Conduct Rule, which prohibits undertakings and associations of undertakings from agreeing or making decisions which have the object or effect of restricting competition in Hong Kong.
The Hong Kong Monetary Authority (HKMA) approved Code is an industry code of practice issued by the DTC Association and the Hong Kong Association of Banks. Amongst others, the Code requires banks, in certain circumstances, not to impose various fees and charges, charge customers multiple credit card fees or allow customers' credit card debts to exceed certain amounts.
In December 2017, 14 institutions authorised under the Banking Ordinance submitted an application (Application) arguing that the Code should be excluded from the First Conduct Rule by reason of section 2 of Schedule 1 of the Competition Ordinance, which excludes the First Conduct Rule from applying to "any agreement to the extent that it is made for the purpose of complying with a legal requirement...imposed by or under any enactment in force in Hong Kong".
The HKCC took the view that the legal requirement exclusion did not apply as the Code was not a legal requirement imposed by or under the Banking Ordinance. Importantly, the HKCC expressly stated that it has not decided if the Code infringes the First Conduct Rule, as this was not part of the Application. Nonetheless, as a matter of enforcement policy, the HKCC currently does not intend to investigate or enforce against the Code as it "may in fact benefit customers...is intended to promote good banking practices towards customers, and has been formulated with the input and support of the Consumer Council and the HKMA".
Please see here for our previously reported explanation (Chinese language) in 2015 on how the Code would likely fall within the ambit of the Competition Ordinance.
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