CONSULTATION OUTCOME: FINAL REPORT
Consultation Report - Bill Competition Amendments FINAL.pdf
Original Consultation
1. Background
On the 23 May 2011, the Malta Competition and Consumer Affairs Authority Act entered into force amending the Competition Act and the Consumer Affairs Act to introduce administrative proceedings.
On the 3rd May 2016, the Constitutional Court delivered a judgement in the names, Federation of Estate Agents v Direttur Ġenerali (Kompetizzjoni) et, where it concluded that the competition proceedings as currently found in the Competition Act involved a criminal charge and should therefore comply with Article 39(1) of the Constitution.
The proposed Bill aims to address the considerations made by the Constitutional Court.
The salient features of the proposed Bill are as follows:
Abrogation of the Competition and Consumer Appeals Tribunal and extension of the competence of the Civil Court (Commercial Section) to hear Competition and Consumer cases
The Civil Court (Commercial Section) will replace the Competition and Consumer Appeals Tribunal. Currently, cases which relate to matters regulated by the Companies Act are assigned to the Civil Court (Commercial Section). With the proposed amendments, the competence of the Civil Court (Commercial Section) shall be extended to matters regulated by the Competition Act, the Consumer Affairs Act, the Malta Competition and Consumer Affairs Authority Act and any regulations made thereunder.
Full Review of the DG’s Decision by the Civil Court (Commercial Section)
The undertaking and, or association of undertakings or the trader / person concerned, as the case may be, may file a sworn application for review before the Civil Court (Commercial Section) on both points of law and fact, regarding any infringement decision, cease and desist or compliance order, interim measure, administrative fine and/or daily penalty payment or daily administrative fine adopted or imposed by the Director General (Competition) in terms of the Competition Act or by the Director General (Consumer Affairs) in terms of the Consumer Affairs Act.
The Court shall have the power to substitute its discretion for that of the respective Director General and substitute the economic and legal appraisal contained in the decision with its own assessment this includes the power to either confirm or modify in whole or in part or quash or annul the decision and/or order or interim measure of the respective Director General. The Court may also confirm, revoke or vary the administrative fine and/ or daily penalty payment or daily administrative fine imposed by the respective Director General.
Appeal to the Court Appeal on both points of law and fact
Currently, an appeal shall only lie from the decision of the Competition and Consumer Appeals Tribunal on points of law. The amendments propose that the respective Director General and any party to the proceedings before the Court who feels aggrieved by the judgement of the Court, may appeal on both points of law and fact before the Court of Appeal by means of an application filed in the registry of that court within twenty days from the date of the judgement.
Suspensory effect of the sworn application on the fine
The filing of the sworn application before the Civil Court (Commercial Section) shall have the effect of suspending the administrative fine imposed by the Director General pending the final determination of the review.
Settlement
The 2011 amendments to the Competition Act introduced settlement for cartel cases when the parties admit to have infringed the law, and in return they receive a 10% reduction in the fine. Under the proposed amendments, the settlement will no longer remain limited to cartel cases but applies to all competition law infringements including abuse of dominance cases and other types of restrictive practices.
Moreover, it is being proposed that in the case of settlement, the current 10% fixed reduction in the fine is changed to a range of between 10% and 35% in order to incentivise and encourage settlements over court disputes.
In addition, settlement discussions can be launched both prior to the Statement of Objections and after the Statement of Objections. This contrasts with the present scenario contemplated in the competition Act, where settlement discussions can only occur prior to the Statement of Objections.
Dawn raids
The amendments remove the power of the Director General, introduced in 2011, to order inspections in business premises upon his written authorization. Inspections are now to be conducted solely following a warrant issued by the Court of Magistrates.
The right against self-incrimination
One of the new provisions of the draft Bill concerns undertakings’ rights of defence in connection with investigations carried out by the Office for Competition. The right against self-incrimination was always recognised by the Office for Competition as a right pertaining to undertakings during investigations as it is a right which stems from the European case law. However, this protection against self-incrimination will now be explicitly included in the proposed amendments to clarify the position of an undertaking that is the subject of an investigation.
Imposition of fines in the course of an investigation
Besides introducing administrative fines for substantive breaches of the Competition Act, the 2011 amendments introduced administrative fines which were imposed by the Director General for any procedural infringement of the Competition Act such as, in the case of a person who gives false or misleading information. Under the new proposed amendments, these procedural infringements are considered a criminal offence and the penalties contemplated by the Competition Act can only be imposed following successful prosecution before the Court of Magistrates.
Aggravating and Attenuating circumstances
The current Competition Act provides that in fixing the amount of the fine, the Director General shall have regard in particular to any aggravating or attenuating circumstances. In order to promote further clarity and transparency to undertakings, the draft Bill introduces non-exhaustive examples of aggravating and mitigating factors taken into consideration by the Director General when setting the amount of the fine.
Amendments to the Consumer Affairs Act
Despite the fact that the judgement delivered by the Constitutional Court in Federation of Estate Agents v Direttur Generali (Kompetizzjoni) u L-Onorevoli Prim Ministru u L-Avukat Generali referred solely to the administrative proceedings instituted by the Director General (Competition) in terms of the Competition Act, it was considered that the decision of the Court was similarly relevant to the administrative proceedings instituted by the Director General (Consumer Affairs) in terms of the Consumer Affairs Act. In this regard, amendments are being proposed to delete any reference to the ‘Appeals Tribunal’ in favour of the newly established review procedure before the Civil Court (Commercial Section). This necessitated amendments to the Consumer Affairs Act and to the Subsidiary Legislation made thereunder. Other related amendments are also being proposed. These include:
- Granting the power to the Director General to extend the operative period of an undertaking (‘commitment’) to a period longer than the present 3 year period - This ensures that the terms and conditions of the undertaking entered into between a trader and the Office can be made to remain effective for a period longer than 3 years.
- Granting the Director General (Consumer Affairs) the power to publish his decision –This contributes to the principle that ‘not only must Justice be done; it must also be seen to be done.’ This is in line with similar administrative measures issued by other regulators under their respective legislation.
2. Documents