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GRC Professional : GRC Autumn 2013
13 (SMEs), which have complained the costs and requirements would severely impact their business. Toothless tiger Others have said the reform is a toothless tiger. Mergers, for instance, come under the government's scrutiny only when telecommunication companies are involved, whereas in China any significant merger requires approval by China's Ministry of Commerce (MOFCOM). The Ordinance does not, however, prevent merger requirements being extended later. "In some respects the legislation is less aggressive tha n in other countries," says Hickin. "It will depend on how keenly the commission wants to pursue these things and their appetite for enforcement," he says. The law does not provide for criminal sanctions, but the commission can enter into commitments with businesses to correct breaches, issue warnings and refer civil cases to the Competition Tribunal, which can impose civil penalties such as fines of up to 10 per cent of a company's turnover for three years for serious breaches. Hickin says as Hong Kong is home to a large number of conglomerates these fines could run into millions. "In the recent past there has been debate around the fact that Hong Kong is a free economy and is consistently ranked as such, so it has been said by some that there is no need for new competition legislation at all," he says. "But the general theme springing up in the region is that with the explosion of business, anti-competitive practices are being taken a lot more seriously." Anti-trust and competition regulations have been in place in Korea and Japan for many years, but more generally across the Asian region, they have been introduced to China, Malaysia, India, Singapore and Vietnam in the past decade. ••• Managing anti-competitiveness Global consulting and compliance services company The Red Flag Group has drawn up key points for complying with the Ordinance. Commitment - The CEO and Board need to be fully aware of the Ordinance and the risks associated with potential breaches. Compliance must be communicated to the top tier of executives. Implementation -- As the concept of competition law is unfamiliar to many, educating employees and raising awareness is crucial to avoid breaches of the Ordinance. The responsibilities of various units will need to be defined and communicated and relevant training programs developed and implemented. Behavioural change throughout an organisation must also be facilitated. Employees need to be questioned on what motivates and drives them, and what can be done to align those motives with the objectives of the compliance program. Reward mechanisms or a mentoring program could be a solution. Monitoring and measurement -- Monitoring the effectiveness of the competition compliance procedures and policies is a crucial phase in ensuring the success of an organisation's risk management. Measurement, reporting and accurate document- keeping must back up monitoring. Appropriate incentives and rewards will avoid the pressure for staff to collude and engage with competitors. Continual improvement -- The first prosecutions under the Ordinance will further define the parameters by which it operates. Changes in the external environment and the law's interpretation must be captured in policies and procedures.
GRC Summer 2013