A court today ruled that provisions in the Competition Act introduced in 2011 were in breach of the Constitution and the European Convention on Human Rights.

The Federation of Estate Agents filed a case against the Director of Competition and the Prime Minister challenging the provisions in the wake a the decision by the Director of Competition to fine the federation €1.25 million for alleged breaches in competition rules.

According to the Competition Act as amended in 2011, the director general had the power to investigate and sanction behaviour deemed to restrict competition and, if necessary, impose an “administrative “fine” of 10 per cent of the turnover of the under taking.

Failure to pay such fine would result in a criminal offence and was subject to another fine of between €1,000 and €20,000.

According to the amendments, the decision could be appealed in front of the Competition and Consumer Appeals Tribunal. Another appeal was possible in court, but only on a point of law.

Prior to the introduction of these amendments, the Office of Fair Competition investigated alleged breaches, but it was up to the Court of Magistrates to impose fines following criminal proceedings.

The federation argued that the procedure whereby the director investigated and imposed fines on alleged breaches was in violation of the European Convention of Human Rights.

In a landmark judgment, , the First Hall of the Civil Court in its Constitutional jurisdiction concluded that although Maltese law classified this an offence of an administrative nature, the type of crime and the severity of the penalty gave a totally different outlook.

Consequently, such offence had to be considered as being of a criminal nature.

The court also noted that the fine was considerable and not intended as compensation for damages, but as a penalty having deterrent effect and with a punitive scope.

Therefore, the court concluded that the offence which the federation was charged with was of a criminal nature.

Consequently, charges had to brought before an independent and impartial court, and not in front of the director general for Competition and the Consumer Appeals Tribunal.

The Court concluded that the right to a fair hearing could not be sacrificed for the sake efficiency and international conventions and European legislation had to be respected.

It said that in order to avoid a bottleneck in appeals, specialised courts, such as juvenile courts could be created, which fully respect the right to a fair hearing.

It rejected the federation’s claim for moral damages and found the competition proceedings in breach of the Constitution and the European Convention on Human Rights.

The Federation of Estate Agents was represented by Richard Camilleri,  Annalies Azzopardi and Katja Psaila Savona.

 

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