Enemalta, GRTU ordered to pay €250,000 in compensation for 'anti-competitive practices'

A petrol station owner has been awarded nearly €250,000 in compensation after a court held that Enemalta corporation, the Energy and Water Services Regulator, the Ministry for Energy and Health and the GRTU had colluded to restrict fair competition.

In 1997, the GRTU and Enemalta had entered into an agreement whereby the commission paid on every litre of fuel sold would increase to €0.0388, as long as automated pumps were installed and would only operate during certain hours of the day. Owners of fuel stations who did not submit to this agreement were to be penalised by the deduction of €0.0093 from the commission paid on every litre.

In 2000, Hompesch Station Limited had purchased a petrol station in Zabbar from Velga Brothers Limited, which had pioneered a “semi-automatic” fuel selling system. This system worked by having customers fill their own vehicles, after which they would pay for the fuel at the cashier. This system had proved wildly popular with customers in the past and the station had registered a substantial increase in sales, when compared to stations which only operated automated pumps. 

It also went counter to a 1999 GRTU circular prohibiting its members from manning petrol pumps after 6pm or on Sundays and public holidays, during which times only automatic pumps would be permitted to operate.

The success of the petrol station drew the ire of its competitors. Enemalta, under pressure from the GRTU, had declared the company to be in breach of the 1997 agreement, as a result of which the company became ineligible for an increase in commission.

The petrol station’s previous owners had complained to the Malta Resources Authority about the agreement between the GRTU and Enemalta and their complaint had been upheld, the authority holding it to be anti-competitive. In fact, in 2002, the MRA had ordered Enemalta to stop discriminating between methods of distribution and pay the same commission to all vendors, but the corporation had ignored this directive.

Bizarrely, the same arrangement regarding the hours of manned operation of fuel pumps which had been held to be anti-competitive then entered into law through Legal Notice 102 of 2002.

2005 saw the owners file a complaint with the European Commission, which referred the case to the Commission of Fair Trading, who recommended the lifting of these rules, four years later. However, as the legal notice did not affect trade between member states, the Commission was precluded from declaring Legal Notice 1 of 2006 (which had replaced legal Notice 102 of 2002) anti-competitive.

In 2010 the Maltese Commission for Fair Trading declared the 1997 agreement, as well as the subsequent legislation, as an obstacle to fair trade. LN 1/2006 was held to be “in contempt of all principles of fair competition as understood in the EU,” requesting the Maltese authorities take the appropriate action.

The owners of Hompesch Station Ltd filed a case before the civil court, arguing that the defendants had acted in a discriminatory and anti-competitive manner, which resulted in loss of commission and profits. They requested the court liquidate damages accordingly.

In his judgment, delivered in the First Hall of the Civil Court yesterday, Mr Justice Mark Chetcuti upheld Hompesch Station Limited’s arguments and declared their rights to have been unfairly prejudiced.

In spite of the MRA’s insistence that there was no clear correlation between the changeover from the partial to the fully automatic system and the level of sales, the court estimated the lost revenue between 2003 and 2010, when the station was sold to be €32,700 per year. In total, the court awarded the plaintiffs €242,000 in damages to be paid by Enemalta, the MRA, the Energy Ministry and the GRTU.