Malta: Merger Control Comparative Guide

Last Updated: 13 November 2019
Article by Andrew J. Zammit
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1 Legal and enforcement framework

1.1 Which legislative and regulatory provisions govern merger control in your jurisdiction?

The Maltese Competition Act (Chapter 379 of the Laws of Malta) is the main legislative instrument that regulates competition law in Malta - in particular, Articles 5 and 9 thereof, which implement Articles 101 and 102 of the Treaty on the Functioning of the European Union respectively.

In addition to the general Competition Act, merger control in Malta is governed by the Control of Concentrations Regulations, which were adopted as subsidiary legislation (Subsidiary Legislation 379.09) under the Competition Act.

1.2 Do any special regimes apply in specific sectors (eg, national security, essential public services)?

While, in accordance with Article 30(1) of the Competition Act, the actions of public or state-owned entities are not immune from the Competition Act, undertakings entrusted with the operation of services of general economic interest or with the character of a revenue-producing monopoly shall not be subject to the Competition Act insofar as the application of such rules obstructs the performance, in law or in fact, of the particular tasks assigned to them. In this respect, the minister responsible for competition matters may, by order in the Government Gazette, declare a specific service entrusted to a particular undertaking to be a service in the general economic interest.

Furthermore, pursuant to Article 8 of the Competition Act, the minister may, after consultation with the board, exempt from Article 5(1) particular categories of agreements, decisions and concerted practices, where the latter satisfy the requirements of Article 5(3).

1.3 Which body is responsible for enforcing the merger control regime? What powers does it have?

The regulatory body responsible for merger control is the Office for Competition, within the Malta Competition and Consumer Affairs Authority (MCCAA), which is headed by the director general (DG).

The DG is competent to examine concentrations between undertakings in terms of their effect on the market and to clear or prohibit such concentrations, depending on whether he or she is satisfied that the acquisition will have the effect of substantially lessening competition on the market.

The Control of Concentrations Regulations confer numerous powers upon the DG to be able to carry out his or her duties and undertake all necessary investigations into undertakings and associations of undertakings. Thus, the DG has the power to:

  • examine the books and other business records;
  • take or demand copies of or extracts from the books and business records;
  • request oral explanations on the spot; and
  • enter any premises, land and means of transport of undertakings.

Similar investigative powers are also provided in the Competition Act, which allows the DG to request any undertaking or association of undertakings to furnish him or her with any information or document in its possession that the DG may have reason to believe is relevant to the matter under investigation.

In this respect, the DG's power is limited only where disclosure of the documents or information could impinge on the duty of professional secrecy.

2 Definitions and scope of application

2.1 What types of transactions are subject to the merger control regime?

A transaction will be subject to the Maltese merger control regime if it fulfils two criteria:

  • It constitutes a ‘concentration' as defined in the Control of Concentrations Regulations; and
  • The entities involved in such transaction meet the turnover thresholds laid down in the same regulations, as detailed below.

In the first step, pursuant to the regulations, a ‘concentration' occurs where:

  • two or more previously independent undertakings merge; or
  • one of more undertakings acquire control of the whole or parts of one or more other undertakings, whether through the purchase of securities or assets, by contract or by any other means.

The second step requires that:

  • the combined aggregate turnover in Malta in the preceding financial year of the undertakings concerned exceed €2,329,273.40; and
  • each of the undertakings concerned have a turnover in Malta equivalent to at least 10% of the combined aggregate turnover.

2.2 How is ‘control' defined in the applicable laws and regulations?

Pursuant to Article 2 of the Control of Concentrations Regulations, the term ‘control' is defined as having the possibility to exercise decisive influence on an undertaking, in particular:

  • through ownership or the right to use all or part of the assets of an undertaking; or
  • through rights or contracts that confer decisive influence on the composition, voting or decisions of the organs of an undertaking, provided that even persons or undertakings not holding such rights or entitled to such rights under the contract concerned are deemed to have acquired control if they have the power to exercise the rights deriving therefrom.

Therefore, a change of control occurs when an undertaking has the possibility to exercise decisive influence on another undertaking, such as through the acquisition of shares. However, control can also be achieved in other ways, such as on the basis of rights or contracts which confer decisive influence on the composition, voting or decisions of the organs of an undertaking. Control may be in the form of exclusive or joint control and direct or indirect control. Internal restructuring between a group of companies, for example, would not constitute a concentration, as there is no change in control or in the ability to vote or make decisions of the organs of the undertaking.

2.3 Is the acquisition of minority interests covered by the merger control regime, and if so, in what circumstances?

Minority and other interests are not specifically addressed in the legislation. However, if such a transaction brings about a change in control, as defined in the Control of Concentrations Regulations, the Office for Competition will consider such a transaction as a concentration within the meaning of the regulations.

2.4 Are joint ventures covered by the merger control regime, and if so, in what circumstances?

The Control of Concentrations Regulations specifically provide that the creation of a joint venture performing, on a lasting basis, all functions of an autonomous economic entity, namely a ‘full-function joint venture', is considered to be a ‘concentration'. Consequently, such joint ventures and the acquisition of control of joint ventures are also caught by the regulations and the Competition Act.

2.5 Are foreign-to-foreign transactions covered by the merger control regime, and if so, in what circumstances?

Yes, the merger control regime applies a priori to concentrations which occur within or outside Malta where such transactions constitute a ‘concentration' as defined in the Control of Concentrations Regulations and the entities involved in such transaction meet the turnover thresholds in Malta, as detailed in question 2.1.

2.6 What are the jurisdictional thresholds that trigger the obligation to notify? How are these thresholds calculated?

According to the Control of Concentrations Regulations, a concentration occurs where:

  • two or more previously independent undertakings merge or one or more undertakings acquire control of the whole or parts of one or more other undertakings. The latter may take place through the purchase of securities or assets, by contract or by any other means; and
  • the combined aggregate turnover in Malta in the preceding financial year of the undertakings concerned exceeded €2,329,273.40 and each of the undertakings concerned has a turnover in Malta equivalent to at least 10% of the combined aggregate turnover.

The undertakings concerned are those participating directly in the merger or acquisition. Furthermore, although in an acquisition or merger the undertakings concerned will be the acquirer and the target, or each of the merging entities respectively, the regulations also require that the turnover of all undertakings with a link to the undertakings concerned be taken into account. This includes other undertakings forming part of the same group of undertakings as the undertakings concerned in the merger or acquisition, such as subsidiaries of the undertakings concerned and their parent companies.

Article 3(2) of the regulations states that, in the case of concentrations consisting of the acquisition of parts, whether or not constituted as legal entities, of one or more undertakings, only the turnover relating to the parts that are the subject of the transaction are taken into account with regard to the seller or sellers. Nonetheless, where two or more such transactions take place within a two-year period between the same persons or undertakings, they are treated as one and the same concentration, arising on the date of the last transaction.

Specific rules regarding the calculation of turnover for credit and other financial institutions as well as insurance undertakings are provided in the regulations.

2.7 Are any types of transactions exempt from the merger control regime?

No, all transactions which meet the criteria identified in question 2.1 - namely, those that constitute a concentration as defined in the Control of Concentrations Regulations and that meet the relevant turnover thresholds - fall within the scope of the merger control regime.

3 Notification

3.1 Is notification voluntary or mandatory? If mandatory, are there any exceptions where notification is not required?

The notification process is mandatory. All transactions that give rise to a concentration, as defined in the Control of Concentrations Regulations, must be notified to the director general (DG) before they are implemented. A concentration notification form, referred to as ‘Form CN', must be completed and submitted within the specified time limits.

Although there are no exemptions per se, in order to simplify and speed up the examination of concentrations that are unlikely to raise competition concerns, the notifying parties may avail of a short-form notification. This applies solely to the acquisition of joint control by two or more undertakings where:

  • the turnover of the joint venture and/or the turnover of the contributed activities is less than €698,812.02 in the Maltese territory; and
  • the total value of assets transferred to the joint venture is less than €698,812.02 in the Maltese territory.

In such instances, the notifying parties may be authorised to dispense with the obligation to provide certain information. Notifying parties are therefore encouraged to consult with the Office for Competition with regard to what information is required from it. A notification in short form is made by providing that information expressly stipulated in Form CN, to the exclusion of other information.

3.2 Is there an opportunity or requirement to discuss a planned transaction with the authority, informally and in confidence, in advance of formal notification?

There is no requirement to do so, but it is certainly possible to hold a pre-notification discussion with the authority before formal notification. Indeed, in practice, pre-notification meetings are recommended and are considered extremely valuable to both the notifying parties and the DG in:

  • determining the precise amount of information required in a notification;
  • understanding the undertakings' products or services, competitors and customers;
  • determining the applicability or otherwise of the simplified procedure;
  • identifying key issues and possible competition concerns;
  • ascertaining deadlines; and
  • understanding the Office for Competition's procedure.

3.3 Who is responsible for filing the notification?

Notification is incumbent on the person or undertaking acquiring control of the whole or parts of one or more undertakings. This means that in the case of the acquisition of a controlling interest in one undertaking by another, the acquirer must complete the notification; whereas in the case of a public bid to acquire an undertaking, the bidder must complete the notification.

However, where the concentration consists of a merger or the acquisition of joint control, the notification must be made jointly by the parties to the merger or by those acquiring joint control.

Each party completing the notification form is responsible for the accuracy of the information that it provides.

3.4 Are there any filing fees, and if so, what are they?

Yes, pursuant to Part I of the Schedule (Regulation 5) to the Control of Concentrations Regulations, a notification fee of €163.06 must be paid by the notifying party or parties on submission of the duly completed notification form.

3.5 What information must be provided in the notification? What supporting documents must be provided?

The information to be provided in the notification is listed in the Schedule (Regulation 5) to the Control of Concentrations Regulations. This information may be grouped as follows:

  • background information;
  • details of the concentration;
  • ownership and control;
  • personal and financial links and previous acquisitions;
  • supporting documentation;
  • market definitions;
  • information on affected markets;
  • general conditions in affected markets;
  • general market information;
  • cooperative effects of a joint venture;
  • general matters; and
  • the declaration.

Supporting documentation includes:

  • copies of the final or most recent versions of all documents bringing about the concentration, whether by agreement between the parties to the concentration, acquisition of a controlling interest or a public bid;
  • in a public bid, a copy of the offer document;
  • copies of the most recent annual reports and accounts of all the parties to the concentration; and
  • where at least one affected market is identified, copies of analyses, reports, studies and surveys submitted to or prepared for any member(s) of the board of directors, the supervisory board or the shareholders' meeting for the purpose of assessing or analysing the concentration with respect to competitive conditions, competitors (actual and potential), and market conditions. 

3.6 Is there a deadline for filing the notification?

Article 5 of the Control of Concentrations Regulations states that concentrations are to be notified to the DG prior to their implementation and within 15 working days of conclusion of the agreement, announcement of the public bid or acquisition of a controlling interest.

3.7 Can a transaction be notified prior to signing a definitive agreement?

In principle, concentrations must be notified within 15 working days of conclusion of the agreement, announcement of the public bid or acquisition of a controlling interest - not least because one of the documents to be assessed by the Office for Competition is the agreement itself. This notwithstanding, the office would entertain the idea of having an informal pre-notification meeting even prior to the signing of definitive agreements.

3.8 Are the parties required to delay closing of the transaction until clearance is granted?

Yes, a transaction cannot be put into effect before it is notified to the DG and until it has been declared lawful by the DG. However, the DG may, either before notification or after the transaction has closed, grant a derogation from this provision after considering, among other things, the effects of the suspension on the undertakings concerned or on third parties and the threat to competition posed by the concentration.

In the case of a public bid which has been notified to the DG, where such derogation is granted, the acquirer must not exercise the voting rights attached to the securities in question or must exercise the voting rights only insofar as they are intended to maintain the full value of those investments.

3.9 Will the notification be publicly announced by the authority? If so, how will commercially sensitive information be protected?

Yes, the Office for Competition will publish a notification in the Government Gazette and a daily newspaper and call interested parties to submit comments within seven days of publication.

Part F of the Schedule (Regulation 5) to the Control of Concentrations Regulations grants the possibility, in the event that a notifying party believes that its interests would be harmed by the publication or divulgation to other parties of any of the information supplied to the Office for Competition, to submit sensitive information in a separate document clearly marked as ‘business secrets', together with the reasons why this information should not be divulged or published.

In the case of mergers or joint acquisitions, or in other cases where notification is completed by more than one of the parties, business secrets may be submitted under separate cover and referred to in the notification as an annex. All such annexes must be included in the submission for a notification to be considered complete.

4 Review process

4.1 What is the review process and what is the timetable for that process?

In order to establish whether the concentration will lead to a substantial lessening of competition in Malta, the Office for Competition's review process will consider the following factors, among others:

  • the need to maintain and develop effective competition in the Maltese market in view of, among other things, the structure of all markets concerned and the actual or potential competition from undertakings located either within or outside Malta;
  • whether the business of a party to the concentration has failed or is likely to fail;
  • the nature and extent of development and innovation in a given market;
  • the market position of the undertakings concerned and their economic and financial power, the alternatives available to suppliers and users, their access to supplies or markets and any legal or other barriers to entry; and
  • supply and demand trends for the relevant goods and services, the interests of the intermediate and ultimate consumers, and the development of technical and

economic progress.

The Control of Concentrations Regulations provide strict time limits for the assessments of concentrations. The office's procedure is divided into two phases.

During Phase I, a Regulation 6 decision must be taken within six weeks of the date of complete notification or within two months from the date of complete notification where the undertakings concerned offer commitments, as follows:

  • The concentration does not fall within the scope of the regulation (Regulation 6(1)(i));
  • The concentration does not raise serious doubts as to its lawfulness: approval (Regulation 6(1)(ii)); or
  • The concentration raises serious doubts: Phase II (Regulation 6(1)(iii)).

If the office's investigations in Phase I warrants further in-depth investigations of the market, the concentration will be subject to a Phase II investigation. During Phase II, a Regulation 8 decision must be taken at the latest within four months, as follows:

  • The concentration is lawful: may be approved with conditions and obligations (Regulation 8(2));
  • The concentration is unlawful (Regulation 8(3));
  • The merger is dissolved in case of premature implementation (Regulation 8(4)); or
  • A clearance decision is revoked in case of incorrect information or breach of obligation (Regulation 8(5)).

4.2 Are there any formal or informal ways of accelerating the timetable for review? Can the authority suspend the timetable for review?

Yes, pre-notification meetings between the notifying party and the Office for Competition are encouraged and considered valuable to both the notifying parties and the office. These very often include discussions on deadlines, among other things.

There may also be instances where notifying parties may be authorised to dispense with the obligation to provide certain information, saving them time. For this reason, notifying parties are encouraged to consult with the office regarding what information is required from them through such pre-notification meetings.

Furthermore, a concentration may, in certain instances, be notified in short form, notably where:

  • the acquisition of joint control by two or more undertakings and the turnover of the joint venture and/or the turnover of the contributed activities is less than €698,812.02 in the Maltese territory; and
  • the total value of assets transferred to the joint venture is less than €698,812.02 in the Maltese territory.

With respect to suspension of the review, in the event that the undertakings concerned submit commitments with a view to rendering the concentration lawful following the initiation of proceedings envisaged by a Regulation 6(1)(iii) decision, and by no later than the end of the third month following the initiation of proceedings, they may request that the four-month time limit be suspended for a period of up to one month for proper consideration of such commitments. The director general (DG) may refuse this request only in exceptional circumstances.

Suspension shall also occur where information requested by the DG is not provided or is not provided in full within the timeframe fixed by the DG.

4.3 Is there a simplified review process? If so, in what circumstances will it apply?

Yes, the Control of Concentrations Regulations also provide for a simplified procedure in the case of certain concentrations which are listed below. These concentrations are deemed not to raise serious doubts as to their legality. The Office for Competition will base its decision to grant the simplified review procedure on the information provided by the notifying party. It is therefore imperative to provide complete information which substantiates the conclusion that the concentration will lead to no competition problems. If the office considers that the concentration qualifies for a simplified procedure, it shall issue a Regulation 12 short-form decision within four weeks of notification.

The categories of concentrations to which the simplified procedure may be applied are the following:

  • acquisition of joint control by two or more undertakings, where:
    • the turnover of the joint venture and/or the turnover of the contributed activities is less than €698,812.02 in the Maltese territory; and
    • the total value of assets transferred to the joint venture is less than €698,812.02 in the Maltese territory;
  • mergers or acquisitions that do not involve horizontal overlap or vertical links between the parties to the concentration; or
  • mergers or acquisitions that involve horizontal overlaps or vertical links, but where the parties' combined market share does not exceed 15% or 25% respectively.

4.4 To what extent will the authority cooperate with its counterparts in other jurisdictions during the review process?

The Office for Competition cooperates with the European Commission and other member state national competition authorities within the European Competition Network (ECN).

Since national competition authorities must apply Articles 101 and 102 of the Treaty on the Functioning of the European Union concurrently with national substantive competition law provisions, the ECN provides the means to ensure the effective and consistent application of the EU competition rules. The Office for Competition therefore attends regular meetings organised by the ECN under the auspices of the European Commission.

The office also attends meetings organised by the Competition Division of the Organisation for Economic Co-operation and Development and the International Competition Network, and seminars organised by other national competition authorities, to keep abreast with the latest developments in competition policy.

4.5 What information-gathering powers does the authority have during the review process?

Pursuant to Article 10 of the Control of Concentrations Regulations, the DG may obtain all necessary information from undertakings and persons controlling such undertakings and associations of undertakings.

When sending a request for information to a person, an undertaking or an association of undertakings, the DG shall state in the request the legal basis and the purpose for the request, as well as the penalties for supplying incorrect information, as detailed in question 7.1.

Furthermore, in carrying out the duties assigned to him or her by the regulations, the DG may undertake all necessary investigations into undertakings and associations of undertakings and to this end shall have all the powers conferred on him or her by Article 12 of the Competition Act, including the power to:

  • examine the books and other business records;
  • take or demand copies of or extracts from the books and business records;
  • request oral explanations on the spot; and
  • enter any premises, land and means of transport of undertakings.

4.6 Is there an opportunity for third parties to participate in the review process?

Yes, where the DG deems it necessary, he or she may also hear other persons or undertakings showing a sufficient interest. In such instances the third parties must apply to the DG in writing to be heard; the DG will inform them in writing of the nature and subject matter of the procedure, and set a time limit within which they may make known their views in writing. The DG may also give third parties the opportunity to develop their arguments orally, if they so request in their written submissions.

Third parties and other persons may also request a separate and individual meeting with the DG. Furthermore, the DG may, on his or her own initiative, and as he or she considers appropriate, invite third parties and other persons who have submitted written observations to a meeting at which they may develop their arguments and make counter-submissions in each other's presence and reply to questions posed by the DG, with due regard being given to the protection of business secrets and other confidential information

4.7 In cross-border transactions, is a local carve-out possible to avoid delaying closing while the review is ongoing?

The merger control regime does not specifically regulate the possibility of a local carve-out.

In principle, a concentration - even if it involves cross-border transactions - shall not be put into effect either before its notification or until it has been declared lawful. However, the Competition Act provides that the DG may grant a derogation from this rule, upon a reasoned request before notification or after the transaction, after taking into account the effects of the suspension on one or more undertakings concerned by a concentration or on a third party and the threat to competition posed by the concentration, among other things.

Such derogation may be made subject to conditions and obligations in order to ensure conditions of effective competition.

4.8 What substantive test will the authority apply in reviewing the transaction? Does this test vary depending on sector?

The Office for Competition applies the substantial lessening of competition test to any given merger or acquisition.

In determining whether a concentration is deemed to be legal, the DG must take into account, among other things:

  • the need to maintain and develop effective competition in the Maltese market;
  • the geographical (with respect to the Maltese market, when distinct from the EU market, it is generally considered as one single geographical area) and product markets (conditions of competition, prices and cross-prices); and
  • potential competition from other undertakings.

4.9 Does a different substantive test apply to joint ventures?

No, the same test applies where the joint venture falls within the scope of the Control of Concentrations Regulations.

However, in case of a joint venture, the director general will also consider factors such as:

  • whether two or more parent companies retain significant activities in the same market as the joint venture or in a market which is neighbouring, downstream or upstream from that of the joint venture; and
  • whether the coordination resulting from the joint venture affords the undertakings concerned the possibility of eliminating competition in respect of a substantial part of the products or services in question.

4.10 What theories of harm will the authority consider when reviewing the transaction? Will the authority consider any non-competition related issues (eg, labour or social issues)?

Generally, the Office for Competition will assess whether there has been any harm to the interests of consumers.

Other factors taken into account in the assessment of a notified concentration may include:

  • whether the business or part of the business of a party to the concentration has failed or is likely to fail;
  • the market position of the undertakings concerned and their economic and financial power;
  • the alternatives available to suppliers and users and their access to supplies or markets;
  • any legal or other barriers to entry;
  • supply and demand trends for the relevant goods and services;
  • the interests of intermediate and ultimate consumers;
  • the development of technical and economic progress if it is to consumers' advantage and does not form an obstacle to competition; and
  • the nature and extent of development and innovation in a relevant market.

The office will also consider whether the benefits derived from the merger outweigh the effects on competition in Malta. However, the company must prove that these efficiency gains cannot otherwise be attained, are verifiable and are likely to be passed on to consumers in the form of lower prices or greater innovation, choice or quality of products or services.

Furthermore, undertakings entrusted with the operation of services of a general economic interest or with the character of a revenue-producing monopoly shall not be subject to the Maltese Competition Act insofar as the application of such rules obstructs the performance, in law or in fact, of the particular tasks assigned to them.

The Maltese authorities generally adopt an approach which is similar to that adopted by the European Commission and the European courts.

5 Remedies

5.1 Can the parties negotiate remedies to address any competition concerns identified? If so, what types of remedies may be accepted?

Notifying parties that are informed by the director general (DG) that the concentration they notified raises serious doubts as to its lawfulness under the Control of Concentrations Regulations may, within the prescribed timeframes, enter into negotiations with the DG and effect modifications or otherwise submit commitments and restrictions to which the concentration will be subjected in case of clearance. There are no restrictions as such as regards the method to be proposed by the notifying parties, and the undertakings concerned are given adequate opportunities to remedy the situation by proposing remedies, which can be structural as well as behavioural (eg, divestments). However, clearance will be given only if the remedies have been agreed to by the DG and the concentration will not lessen effective competition.

5.2 What are the procedural steps for negotiating and submitting remedies? Can remedies be proposed at any time throughout the review process?

The national merger legislation allows for structural as well as behavioural remedies, which may be offered by the parties at any time during the Office for Competition's review period. The conditions will generally be stipulated by the director general and may include a timeframe within which remedies must be implemented.

5.3 To what extent have remedies been imposed in foreign-to-foreign transactions?

Although foreign-to-foreign mergers are notified to the Maltese authorities from time to time, no such mergers have as yet been objected to in Malta. Generally, where the Maltese authorities may have had cause to object to any such merger, this would also have been stopped or objected to by authorities elsewhere, such as the European Commission.

6 Appeal

6.1 Can the parties appeal the authority's decision? If so, which decisions of the authority can be appealed (eg, all decisions or just the final decision) and what sort of appeal will the reviewing court or tribunal conduct (eg, will it be limited to errors of law or will it conduct a full review of all facts and evidence)?

On 31 May 2019 a new law, Act XVI of 2019, amending the Competition Act entered into force, which has changed the landscape for the issuing of decisions and subsequent judicial review thereof.

In essence, if the Office for Competition, following an investigation, considers that a breach of competition law has occurred, the office can no longer issue a decision itself. Rather, it must file a sworn application (ie, a statement of claim confirmed on oath) before the Civil Court (Commercial Section) against the suspected undertaking/s concerned. The sworn application must contain the following:

  • a summary of the facts which led the office to find a suspected infringement of competition law;
  • a demand for a finding that the undertaking/s concerned have breached competition law;
  • a demand to impose a fine (penalty) or other remedy on the undertaking/s concerned for that breach;
  • any supporting documents as the office may deem necessary at that stage, including a report of its findings following the investigation; and
  • an exhaustive list of witnesses that the office intends to produce.

The undertaking/s concerned can reply to the sworn application by means of a sworn reply (ie, a statement of defence confirmed on oath) within 20 days of service of the sworn application. The sworn reply must contain the undertaking/s' defences, as well as an exhaustive list of witnesses that they intend to produce.

During the pendency of proceedings before the Civil Court (Commercial Section), the office may apply for the issue of interim measures in urgent cases, due to the risk of serious and irreparable harm to competition and on the basis of a preliminary (prima facie) finding of a breach of competition law. The request for interim measures may also be made by the office to the court during the course of an investigation.

The procedure before the Civil Court (Commercial Section) is adversarial. The office must produce evidence, while the respondent undertaking/s may challenge that evidence and produce evidence of their own. Certain parts of the proceedings may be heard behind closed doors if the evidence or submissions contain confidential information or business secrets.

The Civil Court (Commercial Section) will then pronounce itself on the matter in a judgment. Where it upholds the office's sworn application, it will find the respondent undertaking/s to have breached competition law, and to this end it may impose fines (penalties) as well as behavioural and structural remedies.

A non-confidential version of the judgment will be publicly available. The Civil Court (Commercial Section) will determine what is confidential or otherwise after it hears submissions from the respective parties.

Both the office and the undertaking/s concerned may appeal on points of fact and of law against any judgment of the Civil Court (Commercial Section) within 20 days of the date of judgment (without the need for service of that judgment). The appeal application is to be lodged before the Court of Appeal, Malta's superior court, composed of the chief justice and two senior judges. The appeal proceedings will be on an expedited track and the Court of Appeal is bound to appoint the appeal application for hearing within six months of date of service on the last party.

6.2 Can third parties appeal the authority's decision, and if so, in what circumstances?

Yes, any third party entitled to a hearing in accordance with the Control of Concentrations Regulations may, within 20 days of notification or publication of the final decision of the director general (DG), file an application before the Civil Court (Commercial Section) on points of law and, or of fact, requesting an appeal from the decision of the DG.

The application shall be notified to the DG and the DG shall file his or her reply thereto within 20 days of the date of notification of the application

Furthermore, victims of competition law breaches - such as competitors, suppliers, customers and consumers of the undertaking/s allegedly breaching competition law - will still be entitled to file a complaint with the Office for Competition. Should the office reject their complaint, they are entitled to challenge the decision of the office before the Civil Court (Commercial Section) by filing a sworn application within 20 days of the office's decision. Where the court considers that the complaint is justified or that an investigation should be undertaken, it may order the office to start an investigation. Again, an appeal on both points of fact and of law lies from such a decision.

7 Penalties and sanctions

7.1 If notification is mandatory, what sanctions may be imposed for failure to notify? In practice, does the relevant authority frequently impose sanctions for failure to notify?

Pursuant to Article 13 of the Control of Concentrations Regulations, failure to notify may be sanctioned by a penalty of not less than €1,000 and not more than €10,000, as well as various remedies, including divestment.

Furthermore, the penalty for putting into effect a concentration before its notification or until it has been declared lawful is a fine of up to 10% of the total turnover of the undertaking or association of undertakings concerned in the preceding business year.

With respect to the frequency of sanctions imposed, the Office for Competition has been in an impasse since May 2016, when the Maltese Constitutional Court adopted its judgment in Federation of Estate Agents v Director General (Competition) (3 May 2016). This judgment held that certain provisions of the Competition Act breached the right to a fair hearing enshrined in the Constitution and therefore legislative amendments were required for the office to be able to adopt any decisions finding infringements or impose sanctions.

On 31 May 2019, Act XVI of 2019 entered into force, amending the Competition Act so that the imposition of sanctions can resume and will be subject to the new procedural rules, as detailed in question 8.1.

7.2 If there is a suspensory obligation, what sanctions may be imposed if the transaction closes while the review is ongoing?

A fine of up to 10% of the relevant turnover, referred to in question 7.1, also applies to any failure to comply with any obligations imposed pursuant to Article 7(3) or 8(2) of the Control of Concentrations Regulations (ie, conditions and obligations imposed in suspensions of concentrations).

7.3 How is compliance with conditions of approval and sanctions monitored? What sanctions may be imposed for failure to comply?

The Office for Competition, through its Enforcement Directorate, monitors all activity across various economic sectors to ensure compliance with competition law.

Specifically, the Control of Concentrations Regulations foresee a penalty of up to 10% of the relevant turnover, referred to in question 7.1, where the director general finds that persons or undertakings intentionally or negligently put into effect a concentration in breach of Article 7(1), put into effect a concentration declared unlawful or have not taken the measures ordered by decision pursuant to Article 8(4).

8 Trends and predictions

8.1 How would you describe the current merger control landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

On 31 May 2019 Act XVI of 2019 was adopted amending the Competition Act (Chapter 379 of the Laws of Malta) and various other laws.

The amendments have introduced the following changes to the investigation carried out by the Office for Competition:

  • It is expressly recognised that any person can rely on the right against self-incrimination during an investigation before the office.
  • The office may wait a "reasonable time" for the undertaking's legal counsel to arrive before initiating a dawn raid; however, this will not suspend the dawn raid, although it may delay it.
  • The office must seek the assistance of the Civil Court (Commercial Section) to fine undertakings for offences relating to requests for information and production of documents or conduct during dawn raids.
  • Settlements with the office, whereby the parties acknowledge their participation in an infringement of competition law and make settlement submissions during an investigation, must now be approved by the Civil Court (Commercial Section), upon a joint application by the office and the undertaking/s concerned. The settlement procedure may now be resorted to not only pending an investigation before the office, but also when proceedings before the Civil Court (Commercial Section) are underway.
  • The investigation can no longer be closed on the basis of commitments offered by the undertaking/s under investigation to the office. Commitments can now be offered only where proceedings have been filed before the Civil Court (Commercial Section) against the undertaking/s under investigation. In its judgment, the court will then make these commitments binding upon the undertaking/s.

9 Tips and traps

9.1 What are your top tips for smooth merger clearance and what potential sticking points would you highlight?

The trick for successful merger clearance in Malta lies in collaborating with the Office for Competition as early in the process as possible. The office welcomes and encourages undertakings to meet with it prior to making formal submissions. Indeed, the importance of such open discussions has been embodied in the Control of Concentrations Regulations themselves, which expressly provide that "pre-notification meetings are extremely valuable to both the notifying parties and the Director General in determining the precise amount of information required in a notification and, in the large majority of cases, will result in a significant reduction of the information required".

In our experience, these meetings are indeed essential to establishing a good working relationship with the office and ensuring as smooth a clearance as possible.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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