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Julian Manduca
The Office of Fair Competition had its eyes on the Priceclub chain from the time when the supermarket giant was first purchased from its original owner, Mr Marcel Pizzuto told the court when giving evidence in the case instituted by liquidator Dr Andrew Borg Cardona against the directors of Priceclub.
Pizzuto, the current Director General for Consumer Affairs and Competition was Director of the Office for Fair Competition and told the court it started investigating the Priceclub on its own initiative when it heard that Frans Gauci, the original owner of Priceclub wanted to sell its two supermarkets to Price Club Holdings Ltd.
The investigation began after Pizzuto’s office got wind of the idea that was being bandied about, and also letters in the media that such a transaction would go against the Competition Act.
“What we were looking at was whether there was a case of market dominance which would have been in contravention of the Competition Act,” Mr Pizzuto said in court. The law stipulates that for there to be an abuse of a dominant position, a market would already have to be dominated, and then by way of a merger or another transaction, dominate the market more.
Pizzuto told the court that in its investigations his office did not find that by buying the Priceclub supermarkets from Frans Gauci any of the companies would be achieving market dominance. He however stated: “From our investigations we found there was no company that dominated except that Joe Gauci through the Day to Day supermarket had a share of the market, but he did not have a dominant position and for that reason we found no objection to the sale.
“A report was drawn up to state that the Commission for Fair Trading found that the purchase of the Priceclub supermarkets was not in contravention of the Competition Act.”
However, at this stage the GRTU intervened, and Pizzuto told the court: “the commission accepted the GRTU’s intervention and the Commissioner asked us to review our conclusions in the light of submissions put forward by the same GRTU.”
Pizzuto said the GRTU never indicated on whose behalf they were making a case, and after considering the GRTU’s representations, the Office for Fair Competition once again asked the Commission to declare that there was no contravention of the Competition Act.
According to Pizzuto’s testimony this was confirmed by the Commission of Fair Trading on 18 October 1999.
“The Office of Fair Trading did not involve itself in the question until 23 May 2000 when Priceclub Holdings asked for clearance so that it takes over the supermarkets known as Happy Saver.”
Marcel Pizzuto said his office looked at the shareholding of Happy Saver and its position in the market and gave the go-ahead for Price Club Holdings to purchase Happy Saver. “However, we imposed certain conditions, among them that they could not sell certain products from Happy Saver including frozen fish, frozen meat, stationery and other items,” Pizzuto added. The decision was taken on 3 November 2000.
“When investigations like this are taken we have accountants that examine the management accounts of the companies involved. This is done to examine the turnover of the company.
“We were not involved in any other way except that we monitor prices to ensure there would be no exploitation of the market, especially if prices are to be very low – although if prices are low for a short period for particular reasons we do not intervene.”
Pizzuto explained to the court that it was not his job to examine the accounts of the company, as that was something done by the office lawyer. “The lawyer prepares a report, but it was not my job to analyse it, since that was done by the accountant.”
julian@newsworksltd.com
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