When Is a Public Authority an “Undertaking”? Insights from Maltese and EU Competition Law
In a recent decision, the Competition and Consumer Tribunal upheld the position of the Office for Competition. It confirmed that a public authority is not considered an “undertaking” under Maltese competition law unless it performs a commercial function.
The Case: Tourism Subsidies and Alleged Discrimination
The dispute concerned a subsidy granted by the Malta Tourism Authority (MTA) to various tourism operators. One operator claimed it had been unfairly treated in comparison to others. However, the Office for Competition concluded that the MTA did not qualify as an undertaking under Articles 5 and 9 of the Competition Act (Chapter 379, Laws of Malta). This was because the MTA’s role is regulatory in nature, not commercial.
Legal Framework and EU Law Perspective
EU case law, including decisions by the Court of Justice of the European Union (CJEU), defines an “undertaking” as any entity engaged in an economic activity, regardless of legal status or funding method. Economic activity means offering goods or services in a market.
According to Article 5(2) of the Malta Travel and Tourism Services Act, the MTA must follow government policy to promote tourism and may only invest with ministerial approval. These functions are inherently public, regulatory duties—not economic or commercial ones.
Distinguishing Regulatory from Commercial Functions
Although public authorities can sometimes be considered undertakings under EU law, this only applies if they are conducting economic activities. If their actions are linked to the exercise of public authority, they fall outside the scope of competition law.
One relevant case is the CJEU’s Corinne Bodson v Pompes Funèbres case. Here, the court emphasised that tasks serving the public interest and forming part of essential State functions do not amount to economic activity.
The Tribunal agreed that MTA, in managing these subsidies, acted in the public interest and not in a commercial capacity. As such, its actions were not subject to competition law provisions.
Past Precedents and Final Ruling
The complainant referenced a previous case which had concluded that the MTA was an ‘undertaking’. However, the Tribunal clarified that the earlier decision was specific to a different context—relating to board composition involving private entities—and could not apply here.
Citing authoritative texts like Jones & Sufrin’s work on competition law, the Tribunal reiterated that activities linked to public authority powers are not economic in nature. Thus, it held that the MTA is not an ‘undertaking’ and dismissed the complaint.
Final Thoughts: Competition Advocacy Still Matters
The Office for Competition continues to play an advocacy role. It regularly reminds public authorities to ensure that their policies and measures do not distort or hinder competition, particularly in sector-wide initiatives.