HONG KONG

Get in contact or get a price estimation from our partner in Hong Kong Get in contact
Due to the COVID-19 pandemic, certain merger control processes may be affected. We suggest to contact our local partners for more information.
Content last updated: 17-03-2020

Choose the type of information you seek

  • Merger Screening

1. What type of transactions are caught by the merger control regime?

1.1 Concentrations

1.1.1 Type of transactions that are caught by the merger control rules?

The merger control regime only applies to “mergers” involving a carrier licence as defined in the Telecommunications Ordinance (Cap. 106).

A carrier licence relates to network operators that establish and maintain wired or wireless transmission facilities that carry “communications” between locations that are separated by public streets or unleased land. This includes both local and external mobile network operators as well as fixed network operators. 

Any “merger”, as defined within the Competition Ordinance, where either the acquirer or the target holds a telecommunications carrier licence directly or indirectly controls an undertaking that holds a telecommunications carrier licence, is caught by the merger control regime. A merger is defined as follows:

  • two or more previously independent undertakings cease to be independent of each other;
  • one or more persons or undertakings acquire direct or indirect control of the whole or part of one or more other undertakings. In this regard, the creation of a joint venture to perform, on a lasting basis, all the functions of an autonomous economic entity also constitutes a merger; or
  • an acquisition by one undertaking of the whole or a part of the assets of another undertaking such that the acquirer is in a position to replace or substantially replace the acquired undertaking in the business or part of the business concerned in which the acquired undertaking was engaged immediately before the acquisition.

2. Establishing jurisdiction for notification of mergers

2.3 General thresholds

2.3.1 Threshold(s) for when a concentration must be notified under the general merger control regime?

The merger control regime only applies to “mergers” involving a carrier licence as defined in the Telecommunications Ordinance (Cap. 106).

There are no financial thresholds under the Competition Ordinance. Any “merger”, as defined within the Competition Ordinance, involving a carrier license is caught by the merger control regime.

See Section 2.4.1 below.

2.4 Other national thresholds for ex ante merger control (e.g. sector-specific rules)

2.4.1 Relevant thresholds for sector-specific or other ex ante merger control rules?

The merger control regime only applies to “mergers” involving a carrier licence as defined in the Telecommunications Ordinance (Cap. 106).

There are no financial thresholds under the Competition Ordinance. Any “merger”, as defined within the Competition Ordinance, involving a carrier license is caught by the merger control regime. For more information see Section 1.1.1 above.

However, the competition authority has issued two “safe harbours”, which indicate that the merger, if it falls within one of the thresholds, is unlikely to substantially lessen competition.

A merger is unlikely to substantially lessen competition if it is below one or both of the following thresholds:

The four-firm concentration ratio

  • Post-merger, the combined market share of the four largest firms in the relevant market is less than 75%, and the combined market share of the undertakings concerned is less than 40%; or
  • Post-merger, the combined market share of the four largest firms in the relevant market is at least 75%, and the combined market share of the undertakings concerned is less than 15%.

The Herfindahl-Hirschman Index (HHI)

  • Post-merger, the HHI is less than 1,000 in the relevant market; or
  • Post-merger, the HHI is between 1,000 and 1,800, and the merger produces an increase in the HHI of less than 100 in the relevant market; or
  • Post-merger the HHI exceeds 1,800, and the merger produces an increase in the HHI of less than 50.

However, the competition authority has announced that even if the merger is within one of both of the safe harbour thresholds, it only gives an indication that the merger is unlikely to substantially lessen competition and that it may still commence an investigation.

2.5 Foreign-to-foreign mergers

2.5.1 Do any exemptions, special thresholds etc. apply to foreign-to-foreign mergers, i.e. where none of the undertakings concerned is domiciled in the jurisdiction?

The merger control regime applies to foreign mergers if the transaction involves a telecommunications carrier licence under the Telecommunications Ordinance.

This content was delivered
and last updated on 17-03-2020 by

Legal Cross Border has itself provided all input about merger control in Hong Kong. This information has been gathered and validated by our in-house lawyers to guarantee the highest quality outcome. This said, we are currently looking for a local partner to cover Merger Control Hong Kong - please contact us if you would like to be our new partner.