In a landmark judgment, a court has ruled that it is unconstitutional for the Director General for Competition to decide cases over alleged breaches of competition rules, as only a proper court can give a fair hearing and impose heavy sanctions.
The judgment may force the government to amend the relevant parts of the Competition Act, if it decides against filing an appeal. The ruling could also affect several other laws under which public authorities are vested with the power to impose hefty fines and sanctions.
The decision was handed down by Madam Justice Jacqueline Padovani Grima in a case instituted by the Federation of Estate Agents against the director general and the Prime Minister. The federation mounted its legal challenge against these provisions in the wake of the decision by the director general to fine it €1.25 million for alleged breaches of competition rules.
Following 2011 changes to the Act, the director general assumed 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 from the undertaking.
This decision can be appealed before the Competition and Consumer Appeals Tribunal or at a later stage in court, but only on a point of law.
Failure to pay the administrative fine is a criminal offence and subject to an additional fine of between €1,000 and €20,000.
Prior to the introduction of the changes, only the Court of Magistrates could impose fines following criminal proceedings. The estate agents’ federation argued that the procedure whereby the competition office investigated and imposed fines was in violation of Article 39(1) of the Constitution and Article 6(1) of the ECHR, which address the right to a fair hearing.
Madam Justice Padovani Grima, presiding over the First Hall of the Civil Court in its Constitutional jurisdiction, found that the new provisions in the Act were in breach of the Constitution and the European Convention on Human Rights with regard to fair hearing. Though Maltese law classified this offence as administrative, the type of crime and the severity of the penalty transformed it completely. Consequently the offence had to be considered criminal in nature.
The charges had therefore to be brought before an independent and impartial court, not the Director General for Competition and the Consumer Appeals Tribunal.
The right to a fair hearing could not be sacrificed for efficiency and conformity with European legislation. Where the name of an offence was changed but the penalty was kept or increased, sacrificing a fair hearing – by an independent and impartial court established by law in terms of the Constitution – could not be sanctioned.
In order to avoid a bottleneck in appeals, specialised courts could be created (such as the juvenile courts) to fully respect the right to a fair hearing, Madam Justice Padovani Grima said.
The court, while rejecting the federation’s claim for moral damages, found that the competition proceedings breached the cited articles of the Constitution and the European Convention on Human Rights.
The federation was represented by lawyers Richard Camilleri, Annalies Azzopardi and Katja Psaila Savona.