Handling of and Investigations into Telecom Complaints About Misleading or Deceptive Conduct

Section 7M of the TO, which prohibits misleading and deceptive conduct by telecommunications licensees, was repealed upon the commencement of the Trade Descriptions (Unfair Trade Practices) (Amendment) Ordinance 2012 on 19 July 2013. As a transitional arrangement, if the misleading or deceptive conduct of a licensee was engaged at a time prior to the implementation of the amended TDO, such conduct is still regulated and dealt with under section 7M of the TO. During the period of 1 April 2013 to 31 March 2014, OFCA assisted the CA in handling 92 complaint cases under section 7M of the TO. Six of these complaint cases were confirmed as infringements of the TO and the financial penalties imposed by the CA ranged from HK$50,000 to HK$90,000.

Handling of and Investigations into Competition Complaints in the Telecommunications and Broadcasting Sectors, and Merger & Acquisition Cases in the Telecommunications Sector

During the period of 1 April 2013 to 31 March 2014, we assisted the CA in considering 56 complaint cases under section 7K, 7L or 7N of the TO, which prohibits anti-competitive conduct by telecommunications licensees. After due consideration, all the cases were closed with no investigation opened. During the same period, we assisted the CA in considering five complaint cases under section 13 or 14 of the BO, which prohibits anti-competitive conduct by broadcasting licensees. Four of these cases were closed with no investigation opened. As regards the remaining case, the licensee concerned was found in breach of sections 13 and 14 of the BO, and the CA imposed on it inter-alia a financial penalty of HK$900,000 as sanction⁴.

During the same period, we assisted the CA in considering two cases under section 7P of the TO, which oversees merger and acquisition activities involving carrier licensees. One case was the acquisition on 20 December 2013 by HKTV of 100% equity interest of China Mobile Hong Kong Corporation Limited (“CMHKC”), which was the holder of a carrier licence issued under the TO to provide mobile television services. In January 2014, the CA decided not to commence an investigation under section 7P of the TO on the basis of OFCA’s assessment that the acquisition did not give rise to a concern that it may have, or was likely to have, the effect of substantially lessening competition (“SLC”) in the relevant telecommunications markets. Another case was the proposed acquisition of CSL New World Mobility Limited (“CSLNWM”), which fully owned CSL Limited (“CSL”), the holder of a carrier licence issued under the TO for the provision of mobile telecommunications network services, by HKT Limited, which fully owned Hong Kong Telecommunications (HKT) Limited (“HKT”), the holder of a number of carrier licences issued under the TO to provide fixed and mobile telecommunications network services. In relation to HKT Limited’s application for prior consent to its proposed acquisition of CSLNWM, the CA conducted a public consultation from 23 December 2013 to 4 February 2014, as required under section 7P of the TO, to invite representations from carrier licensees and interested persons. Having considered the representations made by the concerned parties, the competition analysis performed by an external economic consultant and the assessment of OFCA, the CA decided to give consent in April 2014 to the proposed acquisition, subject to the direction that HKT and CSL, as the carrier licensees concerned, should take such remedial actions specified by the CA as necessary to eliminate or avoid any identified effect of SLC.

Enforcement of the Amended Trade Descriptions Ordinance

The amended TDO came into full implementation on 19 July 2013. It has extended the coverage of the TDO from goods to services, prohibiting specified unfair trade practices, and providing for an enhanced enforcement mechanism (collectively known as “fair trading sections”). The CA is conferred concurrent jurisdiction with the Customs and Excise Department to enforce the fair trading sections of the TDO in relation to the commercial practices of licensees under the TO and the BO directly connected with the provision of telecommunications and broadcasting services. The two enforcement agencies have issued enforcement guidelines to provide guidance to traders and consumers as to the operation of the fair trading sections, and entered into a memorandum of understanding to co-ordinate the performance of their functions under the amended TDO.

During the period of 19 July 2013 to 31 March 2014, OFCA received a total of 359 complaints under the TDO. Amongst these complaints, 160 were closed for there being insufficient evidence to suspect / establish a contravention or falling outside the scope of the TDO, five complaints were closed after the CA issued advisory letters to the licensees concerned, with a view to bringing the subject matter to their attention and improving their relevant commercial practices in relation to the sale or supply or promotion of telecommunications or broadcasting services to consumers, and the remaining 194 complaints were under process at various stages.

Enforcement of the Unsolicited Electronic Messages Ordinance

Do-Not-Call Registers

Under the UEMO, we have established three Do-Not-Call (“DNC”) Registers for facsimile messages, short messages and pre-recorded telephone messages. Commercial electronic messages must not be sent to registered numbers unless the senders have obtained consent from the registered users. By September 2014, more than 2.6 million numbers have been registered with these three DNC Registers. Apart from the need to respect the wishes of the registered users of the DNC Registers, senders of commercial electronic messages are also required under the UEMO to comply with a number of sending rules. For example, they must provide their contact information and an “unsubscribe facility” in their commercial electronic messages so that the recipients could approach the sender concerned and indicate their wish not to receive further commercial electronic messages from that particular sender.

In 2011/12, 2012/13 and 2013/14, the total numbers of reports received in relation to suspected contraventions of UEMO were 2 613, 2 410 and 1 998 respectively. They represent a decrease in the number of reported cases by around 14%, 8%, and 17% respectively on a year-on-year basis. This downward trend reflects that the telemarketing industry has gained a better understanding of, and can therefore achieve an improving compliance record with the requirements under the UEMO. We will continue to monitor the compliance situation and streamline the procedures for more effective enforcement.

Enforcement

If the number of reports received against a sender is below a certain threshold, we will issue an advisory letter reminding the sender to observe the requirements under the UEMO. If the number of reports received against a sender exceeds the threshold or we continue to receive reports against the same sender after the issuance of an advisory letter, we will conduct a formal investigation and may issue a warning letter to that sender. In 2013/14, a total of 155 advisory letters and 83 warning letters were issued.

In the event of repeated contraventions by the senders of commercial electronic messages, we may issue enforcement notices under section 38 of the UEMO directing the sender to take steps to remedy the offences. Anyone who fails to comply with the enforcement notice may be liable to a fine of up to HK$100,000 on the first conviction. In 2013/14, we issued a total of six enforcement notices to six senders and instituted the first case of prosecution under the UEMO for contravening an enforcement notice.

Preparation for the Implementation of the Competition Ordinance

The CO was passed by the Legislative Council on 14 June 2012. It provides for a cross-sectoral competition law prohibiting anti-competitive conduct in all sectors when it has the object or effect of preventing, restricting or distorting competition. Under the CO, the CA is granted concurrent jurisdiction with the Competition Commission to enforce the CO in respect of the conduct of telecommunications and broadcasting licensees, including merger and acquisition activities involving carrier licensees in the telecommunications sector. Upon commencement of the CO, the competition provisions in the BO and TO will be repealed, subject to transitional arrangements.

OFCA has been assisting the CA in close liaison with the Competition Commission on the preparatory work required before the commencement of the CO, including preparation of the guidelines on the enforcement of the CO for public consultation, and preparation of the memorandum of understanding to be signed between the CA and the Competition Commission to coordinate the performance of their functions under the concurrent jurisdiction arrangement.

Consumer Education Programmes

To sustain our efforts to enhance public awareness of using communications services wisely, we launched an annual consumer education campaign from August 2013 to February 2014. Under the theme “Smart Use of Communications Services”, the campaign embodied creative and interactive elements in various activities and programmes to effectively disseminate the message to the public. One of the highlights of the campaign was a series of six roving exhibitions held in a variety of districts under the title “Smart Communications Service Users Carnival”. The exhibitions provided useful consumer tips to visitors through onsite interactive theatre, informative display panels and short videos, as well as interesting games. With the widespread use of smartphones by students, we also staged a roving drama named “Defeating the King of Bills” at 20 primary and secondary schools to educate the students on how to use smartphones wisely and protect their personal data stored in the phones. Other activities, including four public seminars, an online game cum lucky draw and a poster design competition, were also held to encourage interactive participation by the community. A series of short videos on how to prevent “mobile bill shock” and matters to take note of when entering into telecommunications service contracts were broadcast on different media channels. In view of the good response, we will continue to run a consumer education campaign in 2014/15 under the same theme.