Competition Rules

Source: Marilyn Mifsud LL.D¸ PKF Malta¸ March 2013

Our competition legislation contains various restrictions which continue to apply and which potential clients should be aware of in order to ensure compliance with the same. The two main competition rules are those contained in Articles 5 and 9¸ which largely transpose TFEU articles 101 and 102 into local legislation. Article 5 specifies the prohibited agreements and practices¸ and basically cites incidents whereby undertakings act so as to prevent¸ restrict or distort competition in Malta. The off-shoots of such mal-practices include vices such as price-fixing¸ market sharing and unfair contract conditions. Exceptions to the foregoing do exist where it can be proven that the practice in question would have contributed to consumer welfare through a heightened service in the manners and subject to the restrictions described at law¸ namely that consumer choice is bettered without such act bringing with it unjustified restrictions and without the same act eradicating competition. Generally speaking therefore an exemption lies where the market impact is not significant[1]. Article 9 goes on to expound upon the restriction on abuse of a dominant position which comprises unfairly high or low prices¸ refusal of supply or discriminate services¸ among others. It is worthy to note parenthetically in this brief overview that both of these provisions apply to joint ventures[2].

Maltese competition law contains a rebuttable presumption that any entity holding 40% or more of a relevant market is deemed to be abusing a dominant position. Of course¸ evidence may be brought to the contrary but the burden of the presumption hangs heavily on such market player. The law is careful in detaching itself from any capping that could be interpreted as impunity in the sense that the law later goes on to say that entities holding less than 40% of a relevant market may just as easily be deemed to be abusing a dominant position.

Even non-cliché market types such as those located in cyber space may develop a dominant position which in turn can be abused¸ and such has in fact been the case with online gambling markets where such market position abuse has emerged and has been investigated. One such recent case was the OPAP Greek case in January 2013 where the monopoly held was found by the ECJ to be unlawful and following this decision other licensed operators were given the opportunity to make online gaming applications themselves in Greece[3]. In 2007¸ the Placanica case saw the ECJ state that “a member state may not apply a criminal penalty for failure to complete an administrative formality where¸ in breach of Community law¸ such completion is refused or rendered impossible by that member state[4]”. This resonates of the unjustified barriers to trade that act as hindrances to the common aim of the single European market and that consequently are sought to be forestalled and where existent obliterated. A trader taking his business across borders does well to arm himself with the comfort of this knowledge in that it could serve as a good foundational defense to any unjustified barriers.

Before a trader decides to take the plunge¸ one should ask himself whether the intended activity has the potential of affecting cross-border trade. If the agreement as a whole qualifies here then the provisions of Arti