Month: October 2016

Public Consultation – Antitrust Damages Directive

The Office for Competition has launched a public consultation on implementing the Antitrust Damages Directive in Malta.

The draft legislation relates to Malta’s obligation to transpose Directive 2014/104/EU (the “Antitrust Damages Directive”). This Directive sets rules for actions for damages under national law when competition law is infringed. It applies to both individual and collective actions in EU Member States.

Current Legislation

Maltese law already allows businesses to recover damages for competition law violations under Article 27A of the Competition Act. This is supported by procedural rules in the Code of Organisation and Civil Procedure. Recently, a court has awarded damages in a case involving abuse of competition law.

The Directive and the draft legislation aim to better align private and public enforcement of competition law.  The changes will allow private enforcement of decisions by national competition authorities across all EU Member States.

Key changes

Key changes that the Directive and draft legislation introduce, include:

  • Easier access to evidence: Parties can now obtain court orders to access evidence held by other entities. Courts will ensure that disclosure is proportionate, protecting confidential information.

  • Proof of infringement: A final decision by a national competition authority will serve as full proof of the infringement in that country’s courts. In other Member States, it will be prima facie evidence.

  • Clear limitation periods: Victims of antitrust infringements will have at least 5 years to file claims for damages, starting from when they could have discovered the harm. This period pauses if a competition authority starts an investigation. Once an infringement decision is final, claimants have at least 1 year to file.

  • Passing-on of harm: If an infringer raises prices, indirect customers may be entitled to compensation. The Directive assumes indirect customers suffered harm unless the infringer can prove otherwise.

  • Full compensation: Victims may claim full compensation, covering actual losses, lost profits, and interest from the time the harm occurred.

  • Rebuttable presumption of harm in cartels: Cartels are presumed to cause harm, based on the finding that 90% of cartels lead to price increases. In rare cases where this is not true, infringers can prove no harm occurred.

  • Joint and several liability: All participants in an infringement are liable for the full harm caused, with the possibility of recovering a share from others. However, leniency programme participants who cooperate with authorities will be liable only to their direct and indirect customers. SMEs facing bankruptcy can apply for a narrow exception from joint and several liability

Fuel Sector – Violation of Competition Law

A recent decision of the Office for Competition found there to be a violation of the competition law rules in a vertical agreement, which took effect when a fuel station, having reduced its price for diesel from a particular supplier, later raised its price again, having succumbed to pressure from that supplier in order to do so.

The Office found there to be a violation of competition law in terms of there being an agreement to maintain high prices for the said diesel. The supplier violated the law in submitting the fuel station owner to raise its prices (and thus to reverse the price reduction). The fuel station owner, to a lesser extent, was declared to have violated competition law by succumbing to that pressure.

This, and other decisions of the Office for Competition, can be downloaded Decisions of the Office for Competition.

Such decisions are subject to appeal to the Consumer and Competition Appeals Tribunal.

By virtue of a recent Constitutional Court judgment, the Office for Competition is currently unable to impose fines when finding infringements of competition law.