Hong Kong News: Hung Fook Yuen Hearing | Competition Commission: Building Maintenance Anti-Competitive Conduct Widespread, Including Price Fixing Collusion

Taipo Hong Fuk Court Fire Independent Committee held its third hearing today. Competition Commission representative Li Hiu-leung delivered an opening statement, stating that the Competition Commission has indeed observed long-term, widespread, systemic, and serious anti-competitive behaviors across Hong Kong, Kowloon, and the New Territories, involving numerous consulting engineers.

Contractors Agree “I Do Kowloon, You Do New Territories”

Li Hiu-leung pointed out that these behaviors are not limited to bid-rigging but also include other serious anti-competitive practices such as collusive pricing and market division. Some contractors engage in bid-rigging through collusive pricing agreements, such as agreeing not to bid below a certain price, allowing any winner to make excessive profits, or dividing markets by agreeing “I do Kowloon, you do New Territories,” without further negotiation during the bidding process.

Li Hiu-leung stated that some contractors provide their bidding documents to friendly contractors, using these templates to create a false appearance of competition. This is also known as “phantom bids,” where only one business entity exists, and other bidders are shell companies.

He further mentioned that the Competition Commission has observed independent or seemingly independent consulting engineers secretly “colluding,” allowing the contractor they support to persuade other bidders to withdraw, thereby suppressing competition. Instances of misconduct by independent or suspected independent consulting engineers have been observed.

Li Hiu-leung pointed out that leaders of bid-rigging groups, upon seeing a particular tender, would “assign tasks,” arranging group-affiliated contractors to bid according to instructions, ensuring that the group’s designated contractor ultimately wins the bid.

Bid-Rigging Groups May Collaborate to Ensure Winning

Additionally, in large building renovation tenders, there are cases where bid-rigging groups cooperate with each other to increase their chances of winning. They may “borrow” contractors from other bid-rigging groups.

He emphasized that the Competition Commission understands and supports any legislative measures to address bid-rigging and anti-competitive behaviors. However, the Commission urges caution, as focusing solely on bid-rigging is insufficient and does not address multiple related issues.