Competition law

Competition law

Do sector-specific or general competition rules apply to aviation?

There are no sector-specific competition rules that apply to aviation in Malta. The general competition rules found in the Competition Act apply.

Regulator

Is there a sector-specific regulator, or are competition rules applied by the general competition authority?

There is no sector-specific regulator for aviation in Malta. The responsibility for the application of competition rules in Malta lies principally with the Office for Competition as established by article 13 of the Malta Competition and Consumer Affairs Authority Act.

Market definition

How is the relevant market for the purposes of a competition assessment in the aviation sector defined by the competition authorities?

So far, there has been no competition assessment by the Office for Competition regarding the aviation sector. It is therefore not certain that the ‘small but significant and non-transitory increase in price’ test would be applied in Malta to define the relevant market for the purposes of a competition assessment in the aviation sector. What is certain is that the Office for Competition is bound to apply the decisions of the European Commission.

Code-sharing and joint ventures

How have the competition authorities regulated code-sharing and air-carrier joint ventures?

Regulation (EU) No. 965/2012 on air operations regulates code-sharing. Joint ventures are allowed within the parameters of EU competition rules.

Assessing competitive effect

What are the main standards for assessing the competitive effect of a transaction?

The criteria for assessing the competitive effect of a transaction are those that would be applied by the European Commission in assessing a similar transaction, including but not limited to:

  • the welfare effects of the transaction on the consumer;
  • whether the market entry by a new party is commercially viable; and
  • the market dominance by two or more carriers.
Remedies

What types of remedies have been imposed to remedy concerns identified by the competition authorities?

The Competition Act empowers the director general of the Office for Competition to investigate, and in the case of a finding of an infringement, to impose an administrative fine of up to 10 per cent of the total turnover of the undertaking or association of undertakings concerned in the preceding business year.

In view of the fact that the Office for Competition is bound by the decisions of the European Commission, other possible remedies can be based on recent decisions of the European Commission.

Financial support and state aid

Rules and principles

Are there sector-specific rules regulating direct or indirect financial support to companies by the government or government-controlled agencies or companies (state aid) in the aviation sector? Is state aid regulated generally?

In the case of financial support by the government or government-controlled agencies or companies (state aid) in the aviation sector, an assessment would be made on the basis of the rules emanating from the Treaty on the Functioning of the European Union (TFEU). The aviation sector-specific state aid guidelines issued by the European Commission would also be followed.

What are the main principles of the state aid rules applicable to the aviation sector?

The principles are the same as those that are allowed by the European Commission, such as the ‘one time, last time’ principle, the proportionality principle, the market economy investor principle, the restructuring principle, the common interest objective, and so on.

Exemptions

Are there exemptions from the state aid rules or situations in which they do not apply?

In general, the exemptions and exceptions are those envisaged in article 107 TFEU. Moreover, Commission Regulation (EC) No. 800/2008, the General Block Exemption Regulation, exempts the states from the commission notification requirement in 26 categories of state aid.

Clearance of state aid

Must clearance from the competition authorities be obtained before state aid may be granted? What are the main procedural steps for doing so?

In the case of state aid that does not fall within the 26 categories of the General Block Exemption Regulation, clearance must be obtained from the European Commission.

If no clearance Is obtained, the procedures are those decided upon by the European Commission, which may require the member state to suspend any unlawful aid pending its final decision and to provisionally recover the aid. If, after final assessment, it is found that the aid is incompatible, the member state will have to take measures to recover the aid, including interest at the rate fixed by the European Commission.

Recovery of unlawful state aid

If no clearance is obtained, what procedures apply to recover unlawfully granted state aid?

The procedures are those decided upon by the European Commission, which may require the member state to suspend any unlawful aid pending its final decision and to provisionally recover the aid. If after final assessment it is found that the aid is incompatible, the member state will have to take measures to recover the aid including interest at the rate fixed by the European Commission.

Law stated date

Correct on:

Give the date on which the above content is accurate.

2 July 2020.