COMPETITION COMMISSION v. LINDE HKO LTD AND OTHERS

CTEA 3/2020

[2021] HKCT 3

IN THE COMPETITION TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COMPETITION TRIBUNAL ENFORCEMENT ACTION NO 3 OF 2020

________________

________________

________________

D E C I S I O N

________________

1.  Today I heard a case management conference for directions for the further conduct of this enforcement action brought by the Commission. The Parties agreed most of the directions. Only one matter that was addressed before me needs comment and that concerns discovery.

2.  The Commission offered to make discovery of all documents in its possession relevant to the issues in the action.  In other words effectively giving general discovery.  Although I do not have any evidence concerning what that might involve it appears to be uncontentious that many of the documents will have been obtained by the Commission during its investigations that have led to the action and by virtue of the exercise of its powers to require documents to be provided to advance the investigations.  The Commission wants orders that the Respondents also make general discovery. However, the Commission’s legal team have in my view overlooked the procedure that is required of a party seeking discovery and this has contributed to the application not being properly formulated as a consequence of which I declined to make an order for the Respondents to make discovery at this time.

3.  Rule 24 of the Competition Tribunal Rules (“Rules”), Cap 619D, deals with discovery and inspection.  It provides as follows:

“(1) A party may apply to the Tribunal for an order for discovery and production of a document relating to the proceedings from a person for inspection.

(2) The application may be determined by the Tribunal with or without a hearing.

(3) The Tribunal may make or refuse to make an order for discovery and production of a document having regard to all the circumstances of the case, including—

(a) the need to secure the furtherance of the purposes of the Ordinance as a whole;

(b) whether the information contained in the document sought to be discovered or produced is confidential;

(c) the balance between the interests of the parties and other persons; and

(d) the extent to which the document sought to be discovered or produced is necessary for the fair disposal of the proceedings.

(4) Order 24 (except rules 1, 2, 3, 4 and 6) of the RHC applies to the discovery and production of documents in any proceedings.”

4.  Rule 8 provides that all interlocutory applications, which includes discovery, must be made by filing a summons in Form 2 in the Schedule to the Rules.  This form is for all practical purposes the same as the form of inter partes summons used in High Court proceedings.  No application has been issued by the Commission.

5.  The way in which the Commission has formulated its submissions on discovery seem to assume that there is a presumption of sorts that general discovery is the norm in enforcement actions.  This in my view is wrong.  Although the parties can agree to make general discovery, if this is not agreed it is necessary for a party to make an application for what is analogous to an order under Order 24 rule 3 or rule 7 of the RHC.  Justifying the Commission making general discovery given the nature of the proceedings will be straightforward for a respondent as the Commission accepts that it should make discovery on the generous basis explained in Securities and Futures Commission v Wong Yuen Yee[1]; a position which the Commission has accepted from the first case to come before the Tribunal[2]. However, the opposite is not the case.  The Tribunal aims to ensure that enforcement actions are conducted fairly not just in the sense of applying the Rules and substantive law in a consistent, intellectually coherent and equitable way, but also expeditiously and cost effectively.  Orders for discovery need to be proportionate to those objectives.  It follows from this that it is necessary for the Commission to justify the order sought and this requires the Commission to explain to the Tribunal what documents or categories of documents it seeks, how they are relevant to the issues and, in many cases I anticipate, why discovery is justified given the fact that the Commission has already been able to obtain documents through its investigatory powers.  This has not been done in the present case.  I have no idea what documents the Commission has and what additional documents they anticipate being able to obtain.  It seems to me likely that if discovery is justified it should be limited to clear categories of documents.  If, as I assume it will, the Commission wishes to pursue a discovery application it will have to formulate it broadly in line with my observations.