|
On the 12 July 2019, the Constitutional Court handed down judgment in Falzon Group Holdings Limited et v Director General (Competition). Plaintiffs were seeking to have competition proceedings struck out on the basis that the investigation conducted by the Director General (Competition) under the dispositions of the Competition Act (Cap 379 of the laws of Malta and hereinafter the ‘Act’) breached their right to a fair hearing under article 39(1) of the Constitution and article 6 of the European Convention on Human Rights. |
This case was filed in the wake of Federation of Estate Agents v Director General (Competition), by virtue of which competition proceedings leading to the imposition of a penalty were deemed to be criminal in nature and, consequently, in breach of the constitutional right to a fair hearing as proceedings were not heard by a court (read more here).
In this case, the Director General had investigated the conduct of the plaintiffs and issued a decision finding that the plaintiffs had entered into an agreement that distorts competition. However, the Director General had explicitly stated – prior to issuing a decision – that no penalty would be imposed on the undertakings given that this faculty was previously deemed unconstitutional. The First Hall (Constitutional Court) judgment had found for the plaintiffs on the basis that the decision of the Director General to not impose a fine did not make the procedure administrative as opposed to criminal, noting that such a decision did not come without consequences. In fact, the plaintiffs argued that the Director General’s decision had other repercussions since, in terms of the Public Procurement Regulations (LN 352 of 2016 and as subsequently amended) the Director of Contracts could blacklist them from participating in tender offers.
The Director General appealed this decision arguing, inter alia, that for the competition proceedings in question to be considered as being of a criminal nature, there had to be the possibility of the imposition of a severe penalty on the offending undertakings. The Constitutional Court agreed with the argument of the Director General. The Court claimed that while the severity of the penalty attached to an offence can confer on that matter a criminal nature, procedures which aim to protect the general interest are not necessarily of a criminal nature. Furthermore, the Court held that the authority of the Director of Contracts to blacklist an economic operator was independent of any investigation conducted by the Director General and claimed that the investigation aspect of competition proceedings under the Act does not have a criminal nature.
Disclaimer
This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr Annalies Muscat and Dr Laura Spiteri.