(A) Introduction
Personal liability under competition
law has become increasingly important. Recent cases in Hong Kong and Mainland
China indicate a shift towards stricter accountability for individuals engaging
in anti-competitive behavior, strengthened regulations and heightened deterrence.
In early 2025, Hong Kong Competition
Commission (“Commission”) demonstrated its intensified focus on personal
liability through two landmark cases. On 20 January 2025, the Competition
Tribunal (“Tribunal”) ruled on a cleansing services cartel case (“CTEA
2/2021”), imposing significant penalties on cleansing service companies and
their directors as well as 24-month disqualification orders for three directors.
This was followed on 28 February 2025 by Hong Kong’s first criminal conviction
for obstructing a competition investigation, where an individual was sentenced
to two months’ imprisonment for non-compliance with the Commission’s
investigative powers.
In Mainland China, the Anti-Monopoly Guidelines for the Pharmaceutical Field (“Guide”)
published on 23 January 2025 established that an individual’s level of
cooperation during investigations is a key factor when determining liability
for anti-competitive conduct in the pharmaceutical sector. This was followed by
two landmark cases. On 19 March 2025, the Shanghai Municipal Administration for
Market Regulation (“SHAMR”) penalized three pharmaceutical companies and one general manager for
reaching horizontal monopoly agreements between the companies to fix or modify
the prices of commodities and divide the sales or raw material procurement
market, marking the first instance in the Mainland China where individuals
directly responsible for reaching these agreements were held personally liable
(“Shanghai Case”).
Shortly after, on 9 May 2025, the Tianjin Municipal Commission for Market
Regulation (“TMCMR”)
penalized three pharmaceutical
companies and an individual who facilitated those companies in reaching
monopoly agreements (“Tianjin Case”), indicating
the first application of Article 19 of
Anti-monopoly Law of the PRC (2022 Amendment) (“AML”), which expands
liability to business operators who organize or assist other business operators
to reach a monopoly agreement.
This
article examines the evolving landscape of personal liability under competition
law in Hong Kong and Mainland China. By analyzing the implications of landmark 2025
cases and the legislative reforms in both jurisdictions, it shows a growing convergence toward more stringent and precise
standards for individual accountability.
(B) Key
Developments in Hong Kong
(1) CTEA 2/2021: Directors’ Liability in
a Cleansing Services Cartel
On 20 January 2025, the Tribunal ruled
against two cleanings companies and their directors. In determining the appropriate
pecuniary penalty for individuals, the Tribunal agreed with the Commission that
the 4-step approach in Competition Commission v W Hing Construction Company
Ltd and Or is not applicable to individuals. Instead, it adopted a global
assessment approach, where the Commission proposed a lump sum figure primarily
based on the mandatory considerations outlined in section 93(2) of the
Competition Ordinance (Cap. 619) (“Ordinance”), namely (1) the nature
and extent of the conduct that constitutes the contravention; (2) the loss or
damage, if any, caused by the conduct; (3) the circumstance in which the
conduct took place; and (4) whether the person has previously been found by the
Tribunal to have contravened this Ordinance. As the directors agreed to
guarantee payment of their companies’ pecuniary penalties and accepted
disqualification orders, the Tribunal imposed a nominal penalty of HK$10,000 on
each director. Further, the Tribunal imposed
24-month disqualification orders on each director given their admission of
exchanging of commercially sensitive information in tenders submitted to the
Hong Kong Housing Authority, thus breaching the First Conduct Rule under
section 6 of the Ordinance.
(2) First Criminal Conviction
On 28 February 2025, an individual
was convicted and sentenced to 2 months’ imprisonment, setting a precedent for
criminal sanctions against individuals obstructing investigations.
It highlighted the Commission’s willingness to pursue criminal sanctions
against individuals obstructing its investigations.
In December 2017, during the
Commission’s investigations into a suspected price-fixing cartel among
cleansing service companies, an employee of one of the cleansing service
companies attempted to delete five documents and some computer links that were
potentially relevant to the Commission’s investigation. The Commission
subsequently referred the case to the Hong Kong Police Force for criminal
investigation. The Court found her guilty of disposing
of and concealing documents, in contravention of Section 53(1)(a) of the
Ordinance, which stipulates that any person, having been required to produce
a document under the Commission’s investigation powers, destroys, disposes of,
falsifies or conceals that document, shall be liable on conviction to a fine of
up to HK$1,000,000 and imprisonment for up to two years.
(C) Key
Developments in Mainland China
(1) Obstruction
of Investigations in the Pharmaceutical Sector
Articles 50 and 62 of the AML set
out the obligations and penalties for business operators, interested parties
and other relevant entities and individuals under investigations to cooperate
with the anti-monopoly authority in performing its functions. Refusing to
provide related materials and information, provide fraudulent materials or
information, conceal, destroy or remove evidence, or refuse or obstruct
investigation in other ways, the anti-monopoly authority shall order them to
make rectification, impose to the entity/ an individual a fine.
When determining liability for
anti-competitive conduct, particularly in the pharmaceutical sector,
anti-monopoly enforcement authorities may consider an individual’s level of
cooperation during investigations. Article 46 of the Guide explicitly requires pharmaceutical entities, interested parties, and other investigated individuals or organizations to cooperate with enforcement authorities during investigations. Undertakings that actively cooperate and voluntarily submit
evidence may receive lighter or mitigated
penalties under the law. In contrast, undertakings that obstruct investigations
may face harsher punishment.
(2) Shanghai
Case: Liability for Initiator
On
19 March 2025, the
SHAMR imposed penalties on three
pharmaceutical companies, namely Shanghai Sine United Pharmaceuticals Co., Ltd.
(“Shanghai Sine”), Henan Runhong Pharmaceutical Co., Ltd. (“Henan
Runhong”) and Chengdu Hui Xin Pharmaceutical Co. Ltd (“Chengdu Hui Xin”)
as well as Mr Guo, one general manager of Shanghai Sine for reaching horizontal
monopoly agreements between the companies involved price-fixing and market
division in the sale of Neostigmine Methylsulfate Injection.
According
to the SHAMR’s investigations, from January 2020 to December 2023, Mr Guo communicated
and negotiated with representatives of Henan Runhong and Chengdu Hui Xin to
reach the monopoly agreement. He also liaised with the Investment and Agency
Business Division to implement the monopoly agreement. As such, he was a
directly responsible individual liable for the formation of the monopoly
agreement.
The
above pharmaceutical monopoly agreement led to significant price increases for
Neostigmine Methylsulfate Injection. Given the leading roles of Shanghai Sine and Mr Guo in reaching the
monopoly agreement as well as his active cooperation with investigators, SHAMR
imposed a fine of RMB 500,000 on Mr. Guo. This
case signals a stricter enforcement stance against key decision-makers. That
said, other involved individuals were not penalized.
(3) Tianjin
Case: Liability for Facilitators and Key Decision-Makers
On
9 May 2025, the TMCMR imposed penalties on three pharmaceutical companies,
namely, Tianjin Tianyao Pharmaceuticals Co., Ltd. (“Tianjin Tianyao”),
Zhejiang Xianju Pharmaceutical Co., Ltd. (“Zhejiang Xianju”), Xi’an
Guokang Pharmaceutical Co.,Ltd. (“Xi’an Guokang”), along with three
executives (one general manager of Tianjin Tianyao, one Chairman of Zhejiang
Xianju, one general manager of Xi’an Guokang) and Mr. Guo, an individual who
facilitated the companies in reaching monopoly agreements.
The
TMCMR found that Mr. Guo organized four competing dexamethasone sodium
phosphate API manufacturers to collectively raise prices and implement a
monopoly agreement. In particular, he drove price increase to strengthen
cooperation among the companies, attempted to sign exclusive distribution
agreements with each company to monopolize the national API market, control the
prices of downstream formulations to obtain monopoly profits. As such, he was
held liable for violating Article 19 of the AML and fined RMB 5,000,000 because
of the serious nature of the violations, his active role in facilitating the
monopoly agreement, and the prolonged duration and harmful consequences.
The
TMCMR clearly stated that the general manager of Tianjin Tianyao, the Chairman
of Zhejiang Xianju, the general manager of Xi’an Guokang were personally liable
for reaching a monopoly agreement. In particular, it highlighted the duty of the
Chairman of Zhejiang Xianju and the general manager of Xi’an Guokang to conduct
business operations in compliance with the AML, and proactively strengthen
compliance awareness on AML. As such, they were each fined RMB 600,000 because
of their involvements in the monopoly agreement.
The above case shows two key factors in determining personal liability and penalty
severity: (1) degree of involvement: whether the individual was an initiator in
the formation and implementation of the monopoly agreement; (2) intention: whether
the conduct aimed to improve corporate performance or seek personal gain. Unlike
Hong Kong, Mainland China don’t consider guarantees of corporate penalties or
impose disqualification orders.
(D) Key
Takeaways
In
conclusion, the above landmark 2025 cases and the Guide show the stricter
stance by authorities in both Mainland China and Hong Kong toward individual
accountability. Both jurisdictions have targeted not only direct participants
but also organizers and facilitators. However, while penalties are escalating,
their severity remains subject to the authorities’ discretion. There are still some
ambiguities in calculating individual fines.
In
light of the evolving landscape, companies should proactively review and strengthen
their compliance frameworks. In particular, directors should take the initiative
to ensure companies adhere to competition laws.