On 29 May 2019, the Malta Parliament approved the 3rd reading of a Bill to amend the Competition Act (Chapter 379 of the Laws of Malta) and various other laws. This was passed as law on 31 May 2019, as Act XVI of 2019, with the assent of the President of Malta. The law is not yet in force, but should be in the coming days once the Minister for Justice, Culture and Local Government, publishes a notice in the Government Gazette.
These long-awaited amendments will finally address the chilling effect on public enforcement of competition law in Malta caused by two constitutional law cases in the past few years.
Under the amended Competition Act, the Malta national competition authority, i.e. the Office for Competition (OC), will no longer be able to issue infringement decisions imposing fines. Rather, if after an investigation, the OC considers that a breach of competition law has taken place, the OC will have to file a lawsuit before the Civil Courts (Commercial Section) to obtain a judgment confirming its finding.
The OC will maintain its power to investigate an alleged breach on its own motion or following a complaint by a third party. Moreover, it will still be able to carry out dawn raids (supported, by a warrant issued by a Magistrate) without the intervention of the Civil Court (Commercial Section).
The amendments have introduced the following changes to the investigation carried out by the OC:
- Express recognition that any person is able to rely on the right against self-incrimination during an investigation before the OC.
- The OC may wait a “reasonable time” for the undertaking’s legal counsel to arrive before initiating a dawn raid, however, this will not suspend the dawn raid, although it may delay it.
- The OC must seek the assistance of the Civil Court (Commercial Section) to fine undertakings for offences relating to requests for information and production of documents or conduct during dawn raids.
- Settlements with the OC, whereby the parties acknowledge their participation in an infringement of competition law and make settlement submissions during an investigation, now need to be approved by the Civil Court (Commercial Section), and this, upon a joint application by the OC and the undertaking/s concerned. The settlement procedure may now be resorted to not only pending an investigation before the OC, but also when proceedings before the Civil Court (Commercial Section) are underway.
- The investigation can no longer be closed on the basis of commitments offered by the undertaking/s under investigation to the OC. Commitments can now only be offered where proceedings have been filed before the Civil Court (Commercial Section) against the undertaking/s under investigation. In its judgement, the Court will then make these commitments binding upon the undertaking/s.
Proceedings before the Civil Court (Commercial Section)
If the OC, following an investigation, considers that a breach of competition law has occurred, the OC cannot issue a decision itself, but it will have to file a sworn application (that is, a statement of claim confirmed on oath) before the Civil Court (Commercial Section) against the suspected undertaking/s concerned. The sworn application must contain the following:
- a summary of the facts which led the OC to find a suspected infringement of competition law;
- a demand for a finding that the undertaking/s concerned have breached competition law;
- a demand to impose a fine (penalty) or other remedy on the undertaking/s concerned for that breach;
- any supporting documents as the OC may deem necessary at that stage, including, a report of its findings following the investigation; and
- an exhaustive list of witnesses that the OC intends to produce.
The undertaking/s concerned will be able to reply to the sworn application by means of a sworn reply (that is, a statement of defence confirmed on oath) within 20 days of service of the sworn application. The sworn reply must contain the undertaking/s’ defences as well as an exhaustive list of witnesses that it intends to produce.
During the pendency of proceedings before the Civil Court (Commercial Section), the OC may apply for the issue of interim measures in cases of urgency due to the risk of serious and irreparable harm to competition and on the basis of a preliminary (prima facie) finding of a breach of competition law. The request for interim measures may also be made by the OC to the Court during the course of an investigation.
The procedure before the Civil Court (Commercial Section) is adversarial, so that the OC will have to produce evidence, while the respondent undertaking/s may challenge that evidence and produce evidence of its/their own. Certain parts of the proceedings may be heard behind closed doors if the evidence or submissions contain confidential information or business secrets.
The Civil Court (Commercial Section) will then pronounce itself on the matter in a judgment. Where it upholds the OC’s sworn application, it will find the respondent undertaking/s to have breached competition law, and to this end, it may impose fines (penalties) as well as behavioural and structural remedies.
A non-confidential version of the judgment will be available publicly. The Civil Court (Commercial Section) will determine what is confidential or otherwise after it hears submissions from the respective parties.
Both the OC and the undertaking/s concerned may appeal on points of fact and of law against any judgment of the Civil Court (Commercial Section) within 20 days from the date of judgment (without the need of service of that judgment). The appeal application is to be lodged before the Court of Appeal, Malta’s superior court, composed of the Chief of Justice and two senior Judges. The appeal proceedings will be on an expedite track and the Court of Appeal is bound to appoint the appeal application for hearing within 6 months from date of service on the last party.
Victims of competition law breaches, such as competitors, suppliers, customers and consumers of the undertaking/s allegedly breaching competition law, will still be entitled to file a complaint with the OC. Should the OC reject their complaint, they are entitled to challenge the decision of the OC before the Civil Court (Commercial Section) by filing a sworn application within 20 days from the OC’s decision. Where the Court considers that the complaint is justified or that an investigation should be undertaken, the Court may order the OC to start an investigation. Again an appeal on both points of fact and of law lies from such a decision.