Court declares Competition Act articles unconstitutional

The disputed articles authorise the Director General of the Competition Office and the appeals tribunal, which falls under its remit, to hear and decide cases of alleged breaches of the Competition Act. 

The First Hall of the Civil Court in its Constitutional jurisdiction has held that several articles in the Competition Act are in conflict with the Constitution.

This was the focal point of a judgment delivered earlier this week by Judge Jacqueline Padovani Grima in a case brought before the First Hall of the Civil Court in its Constitutional jurisdiction by the Federation of Estate Agents against the Prime Minister, Director General (Competition) and the Attorney General, after the Director General (Competition) instituted legal proceedings against The Federation of Estate Agents under the Competition Act, alleging breaches of the said act.

The disputed articles authorise the Director General of the Competition Office and the appeals tribunal, which falls under its remit, to hear and decide cases of alleged breaches of the Competition Act.

The Competition office and its Director General are responsible for the investigation and control of anticompetitive practises, but it also has the faculty of imposing a fine of up to ten percent of the enterprise’s gross income for the preceding year.

According to this law, the penalties and sanctions that could be imposed on the association may reach a crippling €1,250,000. If unpaid, this “administrative sanction” then triggers fines and criminal proceedings.

The federation argued that the Constitution dictates that criminal offences are to be handled soley by the courts and point out that neither the Appeal Tribunal nor the Director General are independent and impartial courts, but simply administrative authorities. This constitutes a breach of the right to a fair trial, they claimed.

On its part, the Malta Competition and Consumer Affairs Authority argued that the proceedings were premature as the office had not even reached a final decision. There were other avenues of redress which had not been explored by the association.

The Director General’s decision was subject to review by a dedicated Appeals Tribunal, whose decisions themselves are, in turn, subject to review by the Court of Appeal on points of law.

The judge noted that prior to the introduction of the Competition Act in 2011, the law had established the Office of the Director of Fair Competition who had the power to investigate breaches, but under that system the fines could be imposed by the Court of Magistrates, after the conclusion of criminal proceedings.

Judge Padovani Grima quoted European jurisprudence which established the so-called “Engel criteria” on the basis of which the courts are to ascertain whether parties were the subject of a ‘criminal charge’ within the definition in the European Convention.
The three criteria used are firstly how it the charge is classified according to the law of the Member State, secondly the nature of the offence, and thirdly, the severity of the potential penalty which the defendant risks incurring. 

The court disagreed with the plaintiff’s argument that as the offence was classified under Maltese law as an administrative one it could not be adjudged to be criminal in nature, but expressed concern about recently introduced laws allowing administrative authorities to impose very serious fines which “resembled criminal punishment”, saying that these laws do not grant legitimacy to the fines imposed under Competition Act.

To the contrary, it said, this increases its concern that this is a step down a slippery slope, chipping away the fundamental rights and liberties of the person.

“The court appreciates the great difficulties faced by the Maltese legislator...to ensure greater efficiency in the justice system and honour its international obligations...but the right to a fair hearing cannot be sacrificed for the purpose of efficiency and conformity.”

It had been argued that the fines were administrative and not criminal in nature, but Padovani Grima noted that a simple change in the nomenclature of an offence, in tandem with an increase in the usual punishment to a level normal reserved for the worst crimes such as drug trafficking, money laundering and contraband, does not justify the sacrifice of the Constitutional right to a fair hearing before an impartial and independent court. 

“The concept of prematurity [of constitutional actions] should not be stretched to become in itself a form of injustice against the citizen, who must put up with the breach of his rights for a substantial amount of time only for a definitive pronouncement that the injustice took place and then be compensated on his deathbed.

This is not justice that the Maltese people can understand or deserve”.

Whilst the court agreed with the Federation’s claim that the disputed articles of the Competition Act conflict with the dictates of the European Convention, it did not award any moral damages requested, holding that the fact that the breach of its rights was successfully prevented was in itself “sufficient just satisfaction”.

The court ordered the Director General (Competition) to bear the costs of the case.