This article was written by Dr Annalies Muscat and Dr Laura Spiteri
The Competition Act and Consumer Affairs Act and other Laws (Amendment) Act (“the Amendment Act”) was enacted on 31 May 2019.
Parliament had first proposed amendments to the Competition Act (Cap 379 of the Laws of Malta) (the ‘Act’) following the Constitutional Court decision Federation of Estate Agents v Direttur Generali (Kompetizzjoni) et of 3 May 2016.After a public consultation and the Constitutional Court decision in Thake et vs Electoral Commission of 8 October 2018, a bill was presented to Parliament (see here [https://www.mamotcv.com/resources/news/parliament-tables-bill-amending-the-competition-act-and-consumer-affairs-act]) with proposed amendments intended to reflect the principles that the Constitutional Court established in both judgements.
This article highlights the salient amendments enacted by virtue of the Amendment Act to the Competition Act, which mainly concern the procedure to be adopted in competition law cases.
- i. Civil Court (Commercial Section) to determine competition law infringements
Since the Constitutional Court in Federation of Estate Agents decided that the proceedings and fines imposed under the Act are of a criminal nature, and therefore have to be determined by a court, the Competition Act had to be amended to provide that decisions on infringements are taken by a court.
Therefore, by virtue of the Amendment Act, any reference to the Competition and Consumer Appeals Tribunal (the ‘Appeals Tribunal’) or the Director General (Competition) (the ‘Director General’) being able to impose such fines has been removed from the Act. It is now the Civil Court (Commercial Section) (the ‘Court’) that is vested with the authority to determine that an undertaking has breached competition rules and to impose penalties.
The Director General can, thus, no longer find an infringement of competition rules. If, after carrying out an investigation (more on which below), the Director General considers that an infringement has taken place, he is to file a sworn application in Court. The Director General may also include a report with the findings of the investigation carried out by him.
Moreover, certain powers of the Director General have been qualified or restricted. One such instance concerns commitments. It is now the Court that may issue a judgment declaring the commitments offered by the undertaking to be binding on it, as opposed to delivering a judgment finding that an undertaking breached competition rules. The Act as it stood prior to these amendments left it up to the Director General to make such commitments binding on an undertaking instead of adopting a decision requiring that that undertaking’s infringement be brought to an end.
The Director General is also given the right to demand that the investigation or proceedings before the Court be terminated by means of a settlement procedure. While the Act as it stood before the amendments provided for a settlement procedure, this only applied to cartel cases. The amendments have now introduced a settlement procedure for any breach of competition rules. The amendment also includes a list of information the settlement submissions are to contain, including a clear and unequivocal admission of the undertaking’s participation in the anti-competitive behaviour it was investigated for.
- ii. Investigations
Article 12 of the Act has been amended extensively. It provides for the right against self-incrimination for any person, undertaking, or association of undertakings that is asked questions during the course of an investigation. While principles emerging from judgments of the Court of Justice of the European Union granted undertakings and/or persons being asked questions pending an investigation the right to not incriminate themselves, the amendments now explicitly spell this out in the law.
As the law stood prior to these amendments, the Director General and/or his officials could enter into and search any premises, land, and means of transport by simply producing a written authorisation signed by the Director General himself. A warrant was only needed when entering into and searching residential premises. With these amendments, the Director General and/or his officials would need to be duly authorised by a warrant signed by a Magistrate before entering any premises whether residential or otherwise. The warrant is to also specify the subject-matter, purpose of the inspection, the date on which the inspection is to begin, and the relative penalties that may apply.
- iii. Appeal on points of law and fact
The Director General and any party to the proceedings before the Court may appeal on points of law or of fact before the Court of Appeal within twenty days from the date of the judgment of the Court. Prior to these amendments, an undertaking could appeal from any infringement decision, cease and desist order, administrative fine, and daily penalty imposed by the Director General before the Appeals Tribunal. Any party to that appeal that is aggrieved by the decision of the Appeals Tribunal could have further appeal to the Court of Appeal on points of law only.
- iv. Penalties that may be awarded
As per the amendments, the Competition Act will no longer refer to the penalties that may be imposed by the Court as administrative fines – they are now simply referred to as “penalties”.
In determining the amount of penalty to be paid, which shall amount to up to 10% of the undertaking’s total turnover, the Court shall consider any aggravating or attenuating circumstances. As the Act stood prior to the amendments, the Director General had complete discretion in determining what is considered to be an aggravating or an attenuating circumstance. The amendments now include an indicative list of what the Court is to consider an aggravating or an attenuating circumstance, thereby providing for more transparency.
The Court may also impose a penalty if any person or undertaking is of a hinderance during the course of an investigation. While the Director General could previously impose a penalty in such circumstances, the amendments provide for much higher penalties ranging from €1,500 to €50,000.
These amendments are to be welcomed given the increase in transparency that they aim to instil in the investigation process. Having the authority to determine whether competition rules have been breached and to impose fines migrate from the Appeals Tribunal to the Court will also ensure that the undertakings being investigated benefit from certain safeguards that apply during legal proceedings, including the safeguards for a fair hearing provided for in the Constitution. The amendments also seek to ensure that the human rights and fundamental freedoms that apply in competition law proceedings are upheld.
This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr Annalies Muscat and Dr Laura Spiteri.