Tribunal revokes Competition Office order

The appeal was lodged after the Parliamentary Secretary responsible for competition filed a complaint to be investigated by the Office for Competition that Liquigas was abusing its dominance of the market since it was refusing to supply LPG cylinders to distributors until the distributors honoured an agreement between the distributors and Enemalta Corporation. This agreement included a clause that the distributors could not purchase, distribute or sell cylinders which are not Liquigas cylinders.

On 24 December, 2010 the office concluded that this action by the company was in breach of Art. 9 of the Competition Act and ordered the company to stop immediately any measures concerning the exclusive purchase and distribution of cylinders and to supply these gas cylinders. This was to avoid any prejudice to consumers.

This decision was appealed since the procedure used by the Office for Competition was not in conformity with the law. The company listed the timeline of what had taken place.

On the morning of 23 December, 2010 the company was called for a meeting at 12 noon at the offices of the Office of Competition. No copy of the complaint was given although it was asked for. At 2.15 pm on the same day the company was asked to reply to a number of questions the Office put to them and was allowed to present submissions. The submissions were presented on the same day. On the next day, Christmas Eve of 2010, the order was issued by the office. By that time the company was not informed of any specific alleged breach of law.

The company argued that these facts showed that the rules of natural justice were not adhered to and it also went contrary to Article 27(1) of the Council Regulation 1/2003 and of Article 10(1) of the Commission Regulation 773/2004, since it was not allowed to prepare adequately a defence and it was not given sufficient information on the nature of the allegations.

The Appeals Tribunal examined the evidence and from the timeline it showed that the office received the complaint from the Parliamentary Secretary on 23 December, 2010. This was internally discussed by the office and a meeting took place with Liquigas at midday. Submissions were presented by the company and further meetings were held at the GRTU.

It was confirmed that the office’s decision was issued the next day. The Office for Competition dealt with the issue as to whether the gas distributors were bound to exclusively purchase and sell gas from the company’s cylinders.

A meeting took place with the GRTU and Malta Resources Authority where the complaint was read out to the company, but copies were not forwarded. The office had explained to Mr Justice Chetcuti that this case was very urgent since there were a number of shops and catering establishments which claimed they were without gas for the Christmas period.

In the last five years this was the most urgent case that the office dealt with. The distributors had stopped distributing upon the GRTU’s directives. The action in fact kicked off when the distributors of gas cylinders had gone out on strike on 22 December, 2010, because they had insisted that they should distribute also the gas cylinders of the company’s competitors.

The Tribunal held in its judgement that the Office for Competition was obliged by law to follow the principles of natural justice, which includes that the company should have the opportunity to understand the complaint against it and to reply to this complaint.

This is laid down in Article 469A of the Code of Organisation and Civil Procedure. This was laid down in a previous judgement Hon Joe Mizzi -v- Office for Competition delivered on 27 February, 2013, which held that the Tribunal was bound to safeguard the local laws of procedure of competition proceedings, especially when the Competition Act does not lay down a particular procedure.

The Tribunal ruled that the short time in which the order was issued does not necessarily breach the company’s rights. If the case was of an urgent nature then it should have been dealt with speedily. This is provided for in Art. 15 of the Competition Act.

However, the Office had informed the company of the complaint an hour and a half before the meeting and therefore, the company was unable to prepare a reply. This went contrary to the European Court of Justice decision in the Trensoceen case 17/74 decided on 23 October, 1974 where it held that the company should be “clearly informed, in good time, of the essence of the conditions to which the Commission intends to subject an exemption and it must have the opportunity to submit its observations to the Commission”.

Therefore, the company should not only have been notified of the complaint but also been given sufficient time to prepare itself.

From the evidence of the case before the Tribunal, the company was not given access to the office’s file and informed of all the evidence the office had in hand.

On this ground the Tribunal upheld the appeal and ordered the order to be revoked.

Malcolm Mifsud, Partner, Mifsud & Mifsud Advocates