With the entry into force of Regulation 1/2003 on May 1, 2014, the National Competition Authorities (“NCAs”) of the 27 Member States and the European Commission became the “European Competition Network”. This network aims at ensuring the effective enforcement of EU Competition Law, namely Articles 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”).15 years after entry into force of this Regulation, Directive 2019/1[1],  commonly referred to as the ECN+ Directive, was adopted to standardise the status of the NCAs and empower them to be more effective enforcers so as to ensure the proper functioning of the internal market thereby unifying the enforcement of EU competition law across the 27 Member States. This Directive must be transposed into Maltese law by 4th February 2021.

The national implementation of the ECN+ Directive will take place through the introduction of amendments to the Competition Act and the Malta Competition and Consumer Affairs Authority Act, while also introducing two new subsidiary legislations, (i) the Immunity from Penalties and Reduction of Penalties in Cartel Investigation Regulations and (ii) the Mutual Assistance between National Competition Authorities Regulations.

In anticipation of the transposition of the ECN+ Directive into Maltese law, the Office for Competition (“the Office”) within the Malta Competition and Consumer Affairs Authority (‘MCCAA’) has issued a public consultation and is requesting feedback on the national implementation of this Directive into Maltese law by the end of October 2020.

WHAT THE ECN+ DIRECTIVE DOES

1. Independence and Resources

Pursuant to Article 4 of the ECN+ Directive the Office will have the discretion to set its priorities for the application of Competition Law and to reject any non-priority complaints it receives and decide not to prosecute.

Importantly for Malta, the ECN+ Directive requires that the Office be given sufficient resources and “full independence” in the spending of its budget for the purpose of carrying out its duties.

1. Powers

Pursuant to Articles 6 to 12 of the ECN+ Directive, the Office must be able “to conduct all necessary unannounced inspections of undertakings and associations of undertakings for the application of Articles 101 and 102 TFEU” including the power to enter premises, to examine any documents related to the business of the company, to take or obtain copies of or extracts from information in that respect, to seal premises, books or records, etc..

The Office will also be able to conduct “unannounced inspections” in the homes of staff or management of the company under investigation to obtain any company documents kept there, with the prior approval of the Court.

The Office will now be able to access any technological device to seize evidence of competition infringements including external servers and cloud services which are accessible from the premises, land or means of transport of the undertaking being inspected.

The Office will also be able to send requests for information to any persons who are or were concerned in the management or control of the undertaking or association of undertakings concerned – and not simply the undertakings themselves. This includes for example any individual which used to work for the undertaking under investigation including temporary or permanent employees, consultants, volunteers and professional advisors.

Furthermore, the Director General of Competition (“DG”) within the Office shall have the option to issue commitments decisions declaring commitments binding on undertakings and, or association of undertakings, instead of instituting Court proceedings to initiate a commitments procedure.

1. Fines

In order to ensure the actions of the Office have an increased deterrent effect, the Office will be able to impose fines of up to 10% of a company’s worldwide turnover for infringements of Competition Law, as opposed to the turnover generated in Malta on the affected market.

1. Leniency

Finally the much anticipated leniency rules will be introduced into Maltese law, whereby the DG may decide not to impose penalties or to reduce the amount of penalties in respect of undertakings and, or association of undertakings which, due to their cooperation with the Office, contribute to uncover infringements of Article 5 of the Competition Act and/or Article 101 TFEU.

In this respect the ECN+ Directive harmonizes the “leniency programs” that are designed to encourage businesses to disclose their participation in a cartel, by offering them the possibility, for example, to reduce the amount of the fine.

Our Competition Law experts at GVZH Advocates are preparing a consolidated position from different industries and sectors to be submitted to the Office. If you are a stakeholder and wish to make your position heard, get in touch with us on [email protected] The public consultation will run until the 30th October 2020.

[1] Directive 2019/1 of the European Parliament and of the Council to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market  into Maltese Competition law.