Clarifying the Competition Tribunal's Costs Regime: Landmark Ruling on Sanctioned Payments and the Competition Commission's Investigation Costs

(A) Introduction
 
In Competition Commission v. Gray Line Tours of Hong Kong Ltd and others, CTEA 1/2022, date of judgment: 21 October 2025, [1] the Competition Tribunal (the “Tribunal”) provided significant clarifications on three key aspects of costs in Tribunal proceedings. The judgment establishes important principles regarding: (1) the allocation of costs between parties; (2) the inapplicability of sanctioned payment procedures under Order 22 of The Rules of the High Court (Cap. 4A) (“RHC”) to competition enforcement proceedings; and (3) the distinct nature and assessment methodology for investigation costs under Section 96 of the Competition Ordinance, Cap. 619 (the “Ordinance”).
 
(B)  Background and Procedural History
 
The Dispute on the Penalty Calculation Methodology
 
The central issue in the penalty phase of the proceedings was the correct methodological approach. The “Structured Methodology” as established in Competition Commission v W Hing Construction Co. Ltd [2020] 2 HKLRD 1229, involves a four-step process for determining a pecuniary penalty: [2]
(1)   Determining the Base Amount;
(2)   Making adjustments for aggravating, mitigating and other factors;
(3)   Applying the statutory cap; and
(4)   Applying reduction for cooperation and considering any plea of inability to pay.
 
Prudential Hotel (BVI) Limited (“Prudential”) argued that: [3]
(1)   It is the default approach for all cases, ensuring transparency, certainty, and predictability, and should not be discarded simply because the Commission finds the outcome unsatisfactory.
(2)   The Base Amount must start from “the value of the undertaking’s sales directly or indirectly related to the contravention in the relevant geographical area within Hong Kong in the financial year in question”.
(3)   For serious anti-competitive conduct, a gravity percentage of 15-30% should be applied.
(4)   Adjustments can be made at the second stage to increase the deterrent effect of the fine in appropriate cases
 
In contrast, the Competition Commission (the “Commission”) argued that the penalty should be assessed on a lump sum basis. [4] The Tribunal should derive a penalty figure from an assessment of the matters, which are relevant to the gravity of the contravention and what represents an appropriate financial penalty for it.
 
The Tribunal rejected the Commission's position. [5] It affirmed that the structured methodology was the correct and default approach, and found that the Commission had provided no valid justification for departing from it in this case.
 
Costs of the Hearing on 29 November 2023
 
As Prudential successfully defended its position on the correct legal methodology for determining the penalty, the Tribunal made a costs order nisi that the cost of and occasioned by the hearing on 29 November 2023 be paid by the Commission to Prudential. [6]
 
The Subsequent Costs Judgment
 
The judgment dated 21 October 2025 addressed the remaining consequential costs issues, which were in dispute: [7]
(1)   Who should pay the remaining costs of the proceedings;
(2) Whether the costs incurred after the date Prudential purported to make a sanctioned payment pursuant to RHC Order 22 should be paid by the Commission on an indemnity basis with an enhanced rate of interest; and
(3)   How the costs of the investigation leading to the proceedings should be assessed.
 
(C) Decision
 
The Costs of the Proceedings other than Quantum
 
The Tribunal found that although Prudential accepted liability by September 2021, it did not respond constructively to the Commission’s initial correspondence between July and October 2018 and the prospect of an infringement notice being used to resolve the matter without recourse to the Tribunal was lost. As such, the Tribunal held that the correct costs order was that:- [8]
 
(1)  The Commission pays Prudential the costs of and incurred in relation to the determination of the penalty including the costs of the hearing on 29 November 2023, to be taxed if not agreed.
(2)    Prudential pays the Commission the costs of the proceedings other than the costs covered by order (1) hereinabove, to be taxed if not agreed.
 
Sanctioned Payment
 
On 12 October 2023, Prudential made a sanctioned payment of HK$200,000 under RHC Order 22, which exceeded the penalty of HK$104,000. [9] It argued that the consequences of the Commission's refusal should mirror those in civil litigation, entitling it to indemnity costs and enhanced interest. [10]
 
The Tribunal rejected this argument. It held that proceedings before the Competition Tribunal are not conventional civil litigation. [11] The Commission is a public body regulator fulfilling a statutory duty, and the Tribunal's role in determining infringement and penalty is non-delegable. The mechanism of RHC Order 22, which allows for a stay of proceedings upon acceptance, is incompatible with this statutory framework. 

The Tribunal further noted that the Practice Direction (CTPD 1 [25(e)]) [12] that applies RHC Order 22 to tribunal proceedings is misleading and requires amendment. [13] It concluded that this was not a case for an award of indemnity costs or enhanced interest.
 
Costs of the Commission's Investigation
 
The Tribunal rejected Prudential’s argument that an award of costs in its favour should negate the Commission's claim for its investigation costs. [14]
 
It clarified that investigation costs under Section 96 of the Ordinance [15] are a separate head of claim from legal costs of the proceedings. These costs cannot be taxed by the Registrar under RHC Order 62, as that order applies only to costs of “proceedings” (whether in the High Court or other tribunal or arbitration). The Tribunal’s power to award investigation costs under Section 96 is different to its power to order the costs of the proceedings, which is provided for under Section 144(1) of the Ordinance. [16] [17]
 
On quantification, the Tribunal found that the Commission had provided evidence to support its claimed investigation costs. [18] Disagreeing with both the Commission's proposed equal apportionment among all investigated undertakings and Prudential’s suggestion of HK$30,000, the Tribunal assessed the investigation costs at HK$95,000. [19]
 
 
(D) Key Takeaways
 
This case provides useful guidance on costs in the proceedings before the Tribunal:

(1)   Inapplicability of Sanctioned Payments to Public Enforcement: The Tribunal clarified that the sanctioned payment procedure under RHC Order 22 is fundamentally incompatible with competition enforcement proceedings. As the Commission is a public body and only the Tribunal has the power to determine liability and impose a penalty, parties cannot consensually stay proceedings through private settlement. This underscores that standard civil litigation settlement mechanisms do not apply to the Tribunal.

(2)   Assessment of Investigation Costs: The Tribunal clarified that investigation costs awarded under section 96 of the Ordinance are distinct from legal costs of the proceedings and cannot be taxed by the Registrar under RHC Order 62. The assessment must be done by the Tribunal itself.

(3)   Costs Consequences of Early Engagement Failures: A respondent's failure to engage constructively with the Commission during initial stages, for example, when an infringement notice may be a potential resolution mechanism, may result in the respondent bearing the costs of subsequent proceedings, even if they later concede liability.

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[1] https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=173580

[2] Competition Commission v. Gray Line Tours of Hong Kong Ltd and others, CTEA 1/2022, date of judgment: 25 March 2025, §8

[3]  Ibid, §10-11 

[4]  Ibid, §22

[5] Ibid, §23

[6] Ibid, §48

[7] Competition Commission v. Gray Line Tours of Hong Kong Ltd and others, CTEA 1/2022, date of judgment: 21 October 2025, §2

[8]  Ibid, §4

[9]  Ibid, §5

[10]  Ibid, §7

[11]  Ibid

[12]  Where no other provision is made by the Ordinance and the Rules for a matter, the RHC apply. For example, by virtue of rule 4 of the Rules: (e) Order 22, concerning offers to settle and payments into court, is applicable to proceedings in the Tribunal, there being no other provision in the Ordinance or the Rules dealing with those matters.

[13] Competition Commission v. Gray Line Tours of Hong Kong Ltd and others, CTEA 1/2022, date of judgment: 21 October 2025, §6

[14]  Ibid, §9

[15]  (1) The Tribunal may order any person who has contravened a competition rule to pay to the Government an amount equal to the amount of the costs of and incidental to any investigation into the conduct or affairs of that person, reasonably incurred by the Commission in connection with proceedings for the contravention.

(2) In this section—costs (開支) include fees, charges, disbursements, expenses and remuneration.

[16] The Tribunal may decide its own procedures and may, in so far as it thinks fit, follow the practice and procedure of the Court of First Instance in the exercise of its civil jurisdiction, and for this purpose, has the same jurisdiction, powers and duties of the Court in respect of such practice and procedure, including the jurisdiction, powers and duties of the Court in respect of costs.

[17] Competition Commission v. Gray Line Tours of Hong Kong Ltd and others, CTEA 1/2022, date of judgment: 21 October 2025, §13

[18] Ibid, §14

[19] Ibid, §15