RE AUTHORIZED OFFICER OF THE COMPETITION COMMISSION, FOR A SEARCH WARRANT PURSUANT TO SECTION 48 OF THE COMPETITION ORDINANCE, CAP. 619

HCCM 101/2018

[2020] HKCFI 988

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONFIDENTIAL MISCELLANEOUS PROCEEDINGS

NO 101 OF 2018

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D E C I S I O N

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1.  This is an application by the Competition Commission (the Commission) for two search warrants to enter and search premises pursuant to section 48 of the Competition Ordinance, Cap 619, (the Ordinance).

2.  Before dealing with the relevant statutory provisions in relation to the Commission’s power of search and seizure, it is appropriate to provide a brief overview of the Ordinance.  The object of the Ordinance is to prohibit conduct that prevents, restricts or distorts competition in Hong Kong; to prohibit mergers that substantially lessen competition in Hong Kong; to establish a Competition Commission and a Competition Tribunal; and to provide for incidental and connected matters. Part 3 of the Ordinance deals with Complaints and Investigations.  It is in Division 2 entitled Investigations that the Commission’s power to conduct investigations is set out in section 38.  It provides under subsection (2) that “the Commission may only conduct an investigation under this Part if it has reasonable cause to suspect that a contravention of a competition rule has taken place, is taking place or is about to take place.”

3.  Under section 47 of the Ordinance, the Commission may appoint an employee of the Commission as an authorized officer of the Commission for the purposes of Part 3 of the Ordinance which includes Division 3 which sets out the relevant provisions for search and seizure. 

4.  The power to apply and obtain a search warrant is set out in section 48 which reads as follows:

“(1) A judge of the Court of First Instance may issue a warrant authorizing a person specified in the warrant, and any other persons who may be necessary to assist in the execution of the warrant, to enter and search any premises if the judge is satisfied, on application made on oath by an authorized officer, that there are reasonable grounds to suspect that there are or are likely to be, on the premises, documents that may be relevant to an investigation by the Commission.

(2)     A warrant under subsection (1) may be issued subject to any conditions specified in it that apply to the warrant itself or to any further authorization under it (whether granted under its terms or any provision of this Ordinance).”

5.  On an application made on oath by an authorised officer, a judge may issue a warrant pursuant to section 48 authorising a person as specified in the warrant to enter and search premises if satisfied:

(1) that there are reasonable grounds to suspect;

(2) that there are or likely to be on premises;

(3) documents (as defined by section 2(1) and further defined by section 50(2));

(4) that may be relevant to an investigation by the Commission.

6.  The judge has a discretion whether to issue the warrant that is sought, and if granted may issue the warrant subject to conditions which should be specified in the warrant if they apply to the warrant or to any further authorisation under it (section 48(2)). 

7.  The warrant is an authorisation from the judge to the person specified in the warrant (the warrant holder) and any other persons assisting in the execution of the warrant to enter and search the premises specified in the warrant.  The warrant authorises the warrant holder to enter and search the premises, and the powers under the warrant are set out under section 50.  Section 50 reads:

“(1) A warrant issued under section 48 authorizes the persons specified in it—

(a) to enter and search the premises specified in the warrant;

(b) to use such force for gaining entry to the premises and for breaking open any article or thing found on the premises as is reasonable in the circumstances;

(c) to make use of such equipment as is reasonable in the circumstances;

(d) to remove by force any person or thing obstructing the execution of the warrant;

(e) to require any person on the premises to produce any document that appears to be a relevant document, in the possession or under the control of that person;

(f) to make copies of or take extracts from any document that appears to be a relevant document found on the premises or produced to a person executing the warrant;

(g) to prohibit any person found on the premises from—

(i) altering or otherwise interfering with any document that appears to be a relevant document; or

(ii) removing any such document from the premises or causing or permitting any other person to remove such document from the premises;

(h) to take possession of any documents found on the premises that appear to be relevant documents if—

(i) such action appears to be necessary for preserving the documents or preventing interference with them; or

(ii) it is not reasonably practicable to take copies of the documents on the premises;

(i) to take any other steps that appear to be necessary for the purpose mentioned in paragraph (h)(i);

(j) to take possession of any computer or other thing found on the premises that the person executing the warrant has reasonable grounds for believing will, on examination, afford evidence of a contravention of a competition rule;

(k) to require any person on the premises to give an explanation of any document appearing to be a relevant document or to state, to the best of his or her knowledge and belief, where such an explanation may be found or obtained;

(l) to require any information which is stored in electronic form and is accessible from the premises and which the person executing the warrant considers relates to any matter relevant to the investigation, to be produced in a form—

(i) in which it is visible and legible or from which it can readily be produced in a visible and legible form; and

(ii) in which it can be taken away.

(2) In this section—

“relevant document” (有關文件) means a document of a kind that could be required to be produced to the Commission under this Part.”

8.  Under section 2(1), “document” includes information recorded in any form.  The definition of document under section 50 is somewhat circular and tautological.  Also under section 50(1), the phrase “any document that appears to be a relevant document” features in various subsections.  It defines “relevant document” to mean a document of a kind that could be required to be produced to the Commission under this Part.  The definition of document is wide and includes information recorded in any form.

9.  A warrant issued under section 48 gives authority to the warrant holder to exercise the powers as stipulated by section 50.  The powers are quite wide and authorise the warrant holder to enter and search the specified premises and execute the warrant unimpeded by requiring the production of or the making of copies of or take extracts from, or take possession of any document that appears to be a relevant document, as well as take possession of any computer or other thing where the warrant holder has reasonable grounds for believing will afford evidence of a contravention of a competition rule.  The powers also include the provision of information of any document appearing to be a relevant document or the production in a visible and legible form of any electronic information. 

10.  Offences relevant to an investigation are set out under Division 4.  Miscellaneous matters are set out under Division 5 which includes section 58 that Part 3 does not affect any claims, rights or entitlements that would arise on the ground of legal professional privilege.

11.  The following comments of Chan CJHC (as he then was) in Apple Daily Ltd v Commissioner of the Independent Commission Against Corruption [2000] 1 HKLRD 647 at 673-674, are apposite in examining the search warrant power under the Ordinance:

“1. A warrant involves an erosion of a citizen’s rights and privacy and must therefore be justified by law.

2. The court has a constitutional duty to supervise the exercise of power in the issue and execution of a warrant and to safeguard citizens against abuse.

3. The court must construe the statute which empowers the issue of a warrant to determine its validity and in doing so, should adopt a strict and restrictive construction. Any doubt which may arise should be resolved in favour of the citizens.

4. The court in discharging this constitutional duty must balance two competing aspects of the public interest, namely, the interest in the detection of crimes and bringing criminals to justice on the one hand and the interest in the protection of citizens’ rights and privacy on the other.”

12.  A judge of the Court of First Instance in an application under section 48 must exercise judicial discretion in deciding whether or not to issue the warrant.  As a basis for exercising this discretion, the person seeking the warrant is required to lay an information on oath, detailing matters in support of the granting of the warrant.  This will require the judge to apply his or her mind to the information and other evidence presented, and decide whether it is proper to issue a warrant.  The judge must satisfy himself or herself that there are reasonable grounds to suspect there are or likely to be on the premises documents that may be relevant to an investigation by the Commission. 

13.  As helpfully set out in Mr Lester Lee’s written submissions, a judge will need to consider, amongst other things, two relevant issues.  First, whether the Commission’s investigation is based on a reasonable cause to suspect that a contravention of a competition rule has taken place, is taking place, or is about to take place; and secondly, whether there are reasonable grounds to suspect that there are or likely to be on the premises documents that may be relevant to the Commission’s investigation.

14.  The test of reasonable grounds to suspect was extensively discussed by Sir Anthony Mason NPJ in his judgment in Yeung May Wan & Others v HKSAR (2005) 8 HKCFAR 137 at 165D-171C.  Briefly stated, where the law requires a reasonable suspicion to be present, it needs to be shown that there is genuine suspicion and that the basis for such a suspicion is objectively reasonable.  Suspicion in its ordinary meaning is a state of conjecture or surmise where proof is lacking. 

15.  So the question as to whether the documents may be relevant to an investigation by the Commission, reference needs to be made to section 39(2) that provides that the Commission may only conduct an investigation “if it has reasonable cause to suspect that a contravention of a competition rule has taken place, is taking place or is about to take place”.  It is therefore necessary to address whether the Commission has genuine suspicion that there has, is, or will be a contravention of a competition rule, and whether the basis for such a suspicion is objectively reasonable. 

16.  In the present case, the Commission suspects that there has been a contravention of the Second Conduct Rule which provides that:

“21(1) An undertaking that has a substantial degree of market power in a market must not abuse that power by engaging in conduct that has as its object or effect the prevision, restriction or distortion of competition in Hong Kong.”

17.  The subject of the investigation is xxxxx xxx xxxxxxx, xxxxxxx, company whose business includes xxxxxxxxxx xxxxxxx xxxxx xx xxxx xxxx xxx xxx xxxxxxxxx xx xxxxxxxxxxxx xxx xxxxxxxxxxx xxxxxxxx xxx xxxxxxx xxx.  The Commission is presently investigating whether xxxxx xxx x xxxxxxxxx xxxxxxx xx xxxxxxx xxxxxx xx x xxxxxxx xxx xxxxxx xxxxxxx xxxxxxxx xxxxxxxxx xxxxxxx xxxxxxxx xxxxxxx xxxxxxxxxxx xxxxxxxxxx xxxxxx xxxxxx xxxxxxxx xxxxxxxxxx xxxxxxxxxx xxxxxxxxx xxxxxxxxxxx xxxxxxxx xxxxxx xxxxxx xxxxxxx xxxxxxxx xxxxx xxxxxxx xxxxxx xxxxx xxxxx xxxxx xxxxxxx, with the object or effect of preventing, restricting or distorting competition in Hong Kong, contrary to section 21 (the Second Conduct Rule). 

18.  From the information submitted to me, it would appear that  xxxxxxx xxxxx xxxxxxx xxxxxxxxxx xxxxxx xxxxxxxx xxxxxxx xxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxx xxxxxxx xxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxx xxxxxxx xxxxxxxxxxxx xxxxxxxxx xxxxxxxxxx xxxxxx xxxxxxxx xxxxxxx xxxxxxxxx xxxxxxxx xxxxxxxxxx xxxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxxxxx xxxxxx xxxxxxxx xxxxxxxx xxxxxx xxxxxxxx xxxxxxx xxxxxxxxxx xxxxxxx xxxxxxxx xxxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxxxxx xxxxxxxx xxxxxxxx xxxxxxx xxxxxxxx xxxxxxxxxx xxxxxxxxxx xxxxxxxxxx xxxxxxx xxxxxxx xxxxxxxxx xxxxxxxxx xxxxxxxxxx xxxxxxxxx xxxxxxxxx xxxxxxxx xxxxxxxx xxxxxxx xxxx xxxxxxxxx xxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxx xxxxxxxxxxxx xxxxxxxxxx xxxxxxxxxx xxxxxx. 

19.  Xxxx xxxxx xxxxxx xxxxxxx xxxxxx xxxxxxx xxxxxxxx xxxxxxx xxxxxx xxxxxxx xxxxxxx xxxxxx xxxxxxx xxxxxxx xxxxxx xxxxxxx xxxxxxx xxxxxx xxxxxxxxx xxxxx xx xxxxxx xxxxxx xxxxxx xxxxxxxxx xxxxxxx xxxxxxxx xxxxxxxx xxxxxxx xxxxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxx xxxxxx xxxxxxx xxxxxxxx xxxxxxxxx xxxxxxx xxxxxxxx xxxxxxxx xxxxxxx xxxxxx xxxxxxx xxxxxx xxxxxxx xxxxxxxxxx xxxxxxxx xxxxxxxx xxxxxxx xxxxxxxx xxxxx xxxxxxx xxxxxxxx xxxxxxxxx xxxxxx xxxxxxxxx xxxxxxxx xxxxx xxxxxxx xxxxxxxx xxxxxx xxxxxx xxxxxxxx xxxxxxx xx xxxx xxxxxxxxxx xxxxxxxx xxxxxxx.

20.  I have not gone into the details of the facts of the case and the elements of the conduct under investigation.  They have been extensively addressed in oral and written submissions.  I am satisfied on the basis of the information and materials presented to me that the Commission has reasonable cause to suspect that a contravention of a competition rule has taken place, is taking place, or is about to take place, such that an investigation into the conduct in question has been properly made out. 

21.  The next issue is whether there are reasonable grounds to suspect that there are or likely to be on the premises documents that may be relevant to the Commission’s investigation. 

22.  The company the subject of the investigation occupies two premises and warrants are sought in relation to each one.  I am informed that the premises in question are buildings that the company solely occupies. As these are the business premises of the company, there are reasonable grounds to suspect that there are the documents as described in the premises that may be relevant to the conduct under investigation.

23.  I have considered the draft warrants that have been submitted to me to issue.  As a matter of good practice, the warrant should include with sufficient particularity the premises to be entered and searched, the documents or other things as provided by section 50 to be copied or seized and the offence or offences under investigation to which the documents or other things relate.  Accordingly, I have directed that sufficient particulars be included in the draft warrants submitted.  I have also directed that a copy of the powers conferred by the warrant by virtue of section 50 be included in the order as an annexure.  See P v Commissioner of Independent Commission Against Corruption (2007) 10 HKCFAR 293. 

24.  I note that section 49 provides that the authorised officer executing a warrant must, if requested, produce for inspection his identity document, his authorisation under section 47 and the warrant.  I am of the view that a copy of the warrant should be provided to the occupier of the premises at the time the authorised officer executes the warrant.  The warrant sets out the statutory and factual basis for the warrant, the procedures and authorisation for its issue, as well as putting the recipient of the warrant on notice about these and other matters.

25.  It is important to emphasise that the contents and form of the warrant need to be carefully considered and accurate.  The warrant’s primary purpose is to authorise the officer in question to do something which would otherwise be unlawful without it.  It should necessarily spell out the nature and ambit of the warrant.  This enables all concerned, including the occupier whose premises are being searched, to know and understand the purpose of the warrant and the powers conferred under it.  

26.  I have ordered that this decision not to be published without leave of the Court because the matter is under investigation.  I do allow, however, the Commission to publish the decision for its own purposes.