The constitutional case The Federation of Estate Agents v. Direttur Ġenerali (Kompetizzjoni) et. [87/2013 JPG] decided on 3rd May 2016, triggered important legal discussions which culminated in an overhaul of the enforcement procedures of competition and consumer laws in Malta, almost three years later to the date.
The judgement found the process applied by the Director General (Competition) in terms of the Competition Act, in breach of Article 39 of the Constitution and rendered null and without effect the procedures against the Federation undertaken by the Director General (Competition). Act XVI of 2019, amending the Competition Act, the Consumer Affairs Act and other laws, brought forward amendments in order to remedy the situation in order to ensure proper application of these laws by the authorities empowered to enforce them.
The enforcement of both laws falls within the remit of the Malta Competition and Consumer Affairs Authority (MCCAA), although in practice the power to implement these laws is vested in two separate and distinct offices within the MCCAA, namely the Director General (Competition) and the Director General (Consumer). There are obvious similarities in the way these two laws were changed, intended to streamline the procedures applied by these two offices, yet retaining distinct features.
The Consumer Affairs Act
The Director General (Consumer) retained its investigative powers in terms of the Consumer Affairs Act and its subsidiary legislation. The revised Consumer Affairs Act will now impose a 45-day deadline on the Director General to publish a response, stating how he proposes to deal with the complaint, and whether an investigation will be initiated. The Director General is obliged to notify the investigated party upon commencement of an investigation and the person has 20 days to present his submissions. Upon conclusion of an investigation, if there is prima facie infringement, the Director General shall institute judicial proceedings before the Civil Court (Commercial Section). The procedure will then continue before the Civil Court, where the other party has 20 days within which to file a sworn reply. In case of breach, the Civil Court may impose a penalty which ranges from €470 to €47,000 and the possibility of daily fines. The law also provides for undertakings, interim measures and also compliance orders, as an alternative or complimentary remedy in case of breach.
The Competition Act
The amendments to the Competition Act, provide an increased level of detail on the process of an investigation. The Director General (Competition) has powers to investigate breaches of articles 5 and 9 of the Competition Act but also of Articles 101 and, or 102 of the TFEU. The Director General is required to always state the legal basis and purpose and fix a time limit, when requesting information from an undertaking. Furthermore, a person subject to an investigation is not obliged to answer to any question which might involve an admission of an infringement. The Director General has powers to search and seize documents or material, subject to a warrant issued by a Magistrate, where is reason to believe that information relevant to an investigation is to be found. If after the conclusion of an investigation, the Director General considers that an infringement may have occurred, he shall file a sworn application to the Civil Court (Commercial Section).
The Director General may request the Court to impose a penalty and or any other remedy on the undertaking. The undertaking has 20 days to file a sworn reply. The undertaking shall have full access to the file of the investigation, except for any business secrets or other internal documents. The Competition Act provides for a detailed settlement procedure, which may be requested either during an investigation or at a later stage pending proceedings before the Civil Court. In finding an infringement, the Civil Court may also issue a cease and desist order or a compliance order, setting behavioural or structural remedies. In certain cases, the Civil Court may also issue a judgement declaring commitments by an undertaking, instead of a judgement finding an infringement. The penalties that may be imposed by the Civil Court can be of up to 10% of the total turnover of an undertaking in the preceding business year.
Judgements by the Civil Court (Commercial Section) finding an infringement under both laws, may be appealed to the Court of Appeal on any point both of law and or of fact, and the case needs to be appointed for hearing within 6 months from when it is served on all parties. Proceedings are generally public but may be heard behind closed doors where business secrets or confidential matters are involved.
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