Are Agreements not to Compete Anticompetition?

Rising construction costs are of great concern in all development projects. Cost increases may be the result of inflation but can also be attributable to malpractice, such as bid rigging. This paper first discusses bid rigging in general and focuses on agreements not to compete to illustrate the pitfalls of this relatively more subtle form of bid rigging. Decided cases from Hong Kong and the United Kingdom are used to illustrate that the common law approach to knock-out agreements, whereby potential buyers agree not to bid at an auction, finds them lawful. However, these cases were decided with regard to criminal charges of conspiracy to defraud and deceive. An agreement not to compete per se is insufficient to constitute conspiracy and deceit in common law. This study revisits the nature of such agreements from an anticompetition perspective and in light of the Hong Kong Competition Ordinance (CO). It is argued that agreements not to compete are anticompetition. Notwithstanding that such agreements are not illegal per se under common law, their competition lessening effect make them a kind of bid rigging practice that is disallowed under the First Conduct Rule of the competition ordinance.