Deo Debattista, Parliamentary Secretary for Consumer Protection

From the inception of the Competition Act in 1995, the legislative framework has always allowed for the imposition of fines for infringements of the Competition Act either by the Court of Magistrates, or more recently in 2011, by the Director General of the Office for Competition himself. It was only in 2013 that the Director General imposed fines for an alleged infringement of the competition rules, which measure was then challenged before the Maltese courts.

Does this mean that because no fine had ever been imposed during the 18 years from the setting up of an Office for Competition no enforcement was taking place? On the contrary, the Office for Competition throughout the years has intervened successfully in detecting and investigating breaches of the Competition Act and also defended its decisions and reports before the then Commission Fair Trading and today before the Competition and Consumer Appeals Tribunal with a high degree of success.

The Office for Competition has been using other powers present in the Competition Act such as the imposition of interim measures or through the application of the commitments procedure. In addition, the Office for Competition has issued decisions and reports imposing or requesting cease and desist orders and/or compliance orders or requesting that agreements which infringe the Competition Act to be declared null and unenforceable.

On May 3, 2016, the Constitutional Court in Federation of Estate Agents vs Director General (Competition) Et deemed breaches of competition law as being of a criminal nature and held that the administrative procedure for the imposition of fines on undertakings for breaches of competition law, as introduced in the 2011 amendments was in violation of the Constitution which, unlike the ECHR, requires that a person charged with a criminal offence shall be afforded a fair hearing by an independent and impartial court. Following this judgement considerable efforts have been undertaken to address the issues raised by the court. A first attempt to resolve the unconstitutionality raised by the Constitutional Court was made through proposed amendments to the Constitution. This amendment would have ensured the relevant article of the Constitution is brought in line with the European Convention on Human Rights. This proposal however raised other concerns and was therefore not pursued further.

We want to take a proactive approach to strengthen other remedies

A new legislative model had to be therefore developed, the first one being the necessity to promote the alignment of competition procedures with the Constitution. This means striking a balance between enforcing competition law to enhance the efficiency and effectiveness of the Office for Competition and protecting human rights and the rights of the undertakings under investigation. In addition we wanted to make sure other procedures not highlighted by the Constitutional Court judgement and which are present in the Competition Act are aligned with the Constitution.

Through the amendments, to be presented shortly, we want to address the constitutional issues brought to light by the court judgment and to take a proactive approach to strengthen other remedies present in the Competition Act in order to enhance the Maltese competition law enforcement regime. The new proposed model required extensive amendments to the Code of Organisation and Civil Procedure, the Malta Competition and Consumer Affairs Authority Act, the Competition Act and the Consumer Affairs Act together with any subsidiary legislation.

The time taken to address all of the above mentioned issues is the result of a serious and dedicated commitment in ensuring we bring forward a number of amendments to strengthen consumer and competition law enforcement in Malta to protect competition on the market as a means of enhancing consumer welfare and at the same time protecting the fundamental rights of the undertakings involved in the investigation, primarily to ensure their full right to a fair hearing.

Claudette Buttigieg, Opposition spokeswoman for equal rights, civil liberties and citizens’ rights

My reply to your question as to ‘How can the authorities justify the fact that the Competition Authority, a watchdog for the consumer, remains weak because law changes ordered by the court have not been done after two years?’ is a simple and straightforward one. They can’t.

How can a government in authority, with any sense of respect for institutions, even begin to justify a two-year total disrespect of a judgement by the Constitutional Court? Of course, the attempt to justify will be made but there is nothing new there.

I assume that the ‘authorities’ will say that undertakings comply with their directions and that amendments are in the pipeline. This however does not explain why two years have almost passed and nothing tangible has been done. Moreover the authorities fail to state clearly what they will do if an undertaking decided to call their bluff and acts blatantly in breach of competition law.

Since the National Competition Office is not a court of law, it should not be empowered to inflict such fines

In substance, the Constitutional Court judgment of May 3, 2016 in the case of the Federation of Estate Agents vs Director General (Competition) effectively meant that as from that date onward the Office of Competition could not make use of its powers under the Competition Act (Cap. 379) to impose dissuasive fines (administrative fines) on undertakings which act in breach of competition law of up to 10 per cent of the total turnover of the previous year.

As your paper reported then, this was a“landmark ruling” which in a nutshell decided that some decisions taken by the Office of Competition and Consumer Affairs clearly go against the Constitution.

The basis for the court’s judgment is that such fines are criminal in nature as they are meant to punish, arguing that in accordance with article 39 of the Constitution only a court of law is empowered to inflict sanctions of a criminal nature.

This also implies that since the National Competition Office is not a court of law, it therefore should not be empowered to inflict such fines.

The only solution to this was (and still is) obvious to all. The government had to make “urgent” changes to the Competition Act.

What is of concern is that close to two years have passed and yet the law has not been amended to ensure that there are in place effective sanctions if there is a breach of a competition law. It is of serious concern that the National Competition Office has during this time been impotent to effectively intervene.

In October 2016, there was a decision by the National Competition Office where it decided that an undertaking had acted in breach of article 5 of the Competition Act. In the 2016 Malta Competition and Consumer Affairs Authority annual report, it is clearly stated that, “the OC concluded that the undertakings concerned have infringed Article 5(1)(a) of the Competition Act by entering into an RPM (resale price maintenance) agreement, which has as its object the prevention, restriction or distortion of competition in Malta or parts of Malta, by indirectly fixing the selling price of diesel”. However, the authority decided that it could not impose an administrative fine because of the Federation of Estate Agents judgment.

In the meantime, the Nationalist Party has been repeatedly pushing government into taking concrete action on this matter, namely through Chris Said and Clyde Puli. Like them, I take this opportunity to urge the government to take immediate action on a matter which can no longer be left on the back burner at the detriment of all consumers and their rights.

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