Hong Kong’s Competition Tribunal has fined three companies and a director of another a total of HK$1.31 million (US$167,740) for manipulation of bids for a Covid-19 relief programme – the first case of its kind in the city.
The Competition Commission on Friday said that companies involved had admitted price-fixing, market-sharing, bid-rigging, and sharing sensitive information when they gave quotes for the Distance Business Programme, designed to help businesses continue despite coronavirus restrictions.
KWEK Studio, Multisoft and its parent company MTT Group Holdings, as well as Yat Ying Hong, were accused of improperly securing contracts.
BP Enterprise Company and Nursing Home Company (BP/Noble), two companies acting together, were also accused of participation.
It was alleged the group secured a total of HK$13 million under the programme.
The Competition Tribunal ordered Multisoft to pay HK$1.19 million in penalties. BP/Noble was told to pay HK$90,000 and KWEK director Tang Wai-chun was hit with a HK$32,000 fine.
But the three were given discounts on their fines of between 18 and 25 per cent because of their cooperation with investigators.
Multisoft Limited, BP/Noble and KWEK were also ordered to pay the commission’s costs for the investigation and Tang was disqualified from acting as a director for two years.
The commission added it had applied to the tribunal for penalties to be imposed on two others involved in the case – Au Yeung Kit-yee, who traded as Yat Ying Hong, and Fan Sing-chi, a representative of Yat Ying Hong and BP/Noble.
Yeung and Fan failed to respond to notice of the proceedings.
The Distance Business Programme was set up under the government’s Anti-Epidemic Fund in May 2020 to help businesses adopt IT changes so they could continue to operate over the pandemic.
The commission started its investigation last year after the programme administrator, the Hong Kong Productivity Council, notified it in June 2020 about complaints made to it about the funding scheme.
Applications were open between May 2020 and October 2020, with funding capped at HK$100,000 per bid.
The commission had said that it had identified suspicious patterns involving the companies after it examined all 14,000 applications submitted at the time.
Investigators noticed that, in the 189 bids that involved the four companies, KWEK and Multisoft never won.
But Yat Hing Hong was awarded 60 per cent of the applications and BP/Noble secured the remainder.
The investigation was the first time the commission has pursued a cartel case connected to a government subsidy scheme.
Rasul Butt, the commission CEO, said on Friday that the case was also the first time data screening techniques had been used to identify possible anticompetitive conduct and that it was also the first successful collaboration with the Productivity Council.
Companies found to have breached Competition Ordinance rules face penalties of up to 10 per cent of their turnover in Hong Kong over a maximum of three years.
