Malta: Amendments To The Consumer Affairs Act – New Procedural Safeguards For Traders In Public Enforcement Proceedings

On the 31 May 2019, Parliament enacted the Competition Act and Consumer Affairs Act and other Laws (Amendment) Act ("the Amendment Act").As the name implies, the Amendment Act amends not only the Competition Act ( read more here), but also the Consumer Affairs Act ("the Act").

It is clear that following the Constitutional Court judgments in Federation of Estate Agents v Direttur Generali (Kompetizzjoni) et of 3 May 2016 and Thake et vs Electoral Commission of 8 October 2018 the need to amend the Consumer Affairs Act was felt. These Constitutional Court judgments clarified that any fine termed an administrative fine, but which has the nature of a criminal penalty, is to be imposed by a court at every stage of the proceedings, and not by a tribunal or an administrative entity like the Director General (Consumer Affairs) ("the Director General").Given that the procedure for public enforcement in the Consumer Affairs Act relied heavily on the Director General, it is likely that the amendments to the Consumer Affairs Act were a pre-emptive measure to ensure that the law continues to safeguard consumers, whilst respecting the fair hearing provisions in the Constitution.

This article highlights the salient amendments made by the Amendment Act to the Consumer Affairs Act.

i. Civil Court to determine consumer law infringements

Since the aforementioned Constitutional Court judgments brought to light the issue that it is a court that should deal with cases of a criminal nature, the amendments have abolished the Competition and Consumer Appeals Tribunal. It is now the Civil Court (Commercial Section) (the 'Civil Court') that determines whether there has been an infringement of the Act and which imposes penalties on the infringer. This has led to some of the powers of the Director General being qualified or restricted.

Under article 12 of the Act as amended, the Director General retains the power to carry out investigations on his own motion as well as the power of entry of inspection and the power to request and obtain information. However, once it is prima facie apparent to the Director General that an infringement of the Act has been made, he is to institute judicial proceedings before the Civil Court. The Director General can no longer issue a decision finding an infringement himself.

ii. Judicial proceedings

Since the competence of determining that an infringement has taken place has now migrated to the Civil Court, a major amendment made to the Act was the introduction of a new part regulating the judicial proceedings before the Civil Court and the Court of Appeal. Proceedings are instituted before the Civil Court by means of a sworn application and article 12C(1) lists the contents the sworn application needs to contain.

It is also the Civil Court that now orders the issue of interim measures. According to article 12E of the Act as amended, in cases of urgency and prior to the conclusion of an investigation, the Director General can file an application before the Civil Court requesting the issue of interim measures. If the Civil Court decides that the case merits the issue of interim measures, it will order their issue by decree and it will also have the right to revoke such interim measures or to renew them for further periods. Similarly, compliance orders can only be issued by the Civil Court.

The Director General and any party to the proceedings before the Court may appeal on points of law or of fact before the Court of Appeal within twenty days from the date of the judgment of the Court. Article 12I places an obligation on the Court of Appeal to appoint the case for hearing within six months from when the appeal application is served on all the parties to the case. Prior to these amendments, an undertaking could appeal from any infringement decision, order, or measure imposed by the Director General before the Competition and Consumer Appeals Tribunal.

iii. Penalties

Any person found guilty of an offence against the Act will, on conviction, be liable to a fine between €470 and €47,000. While the amount of the penalty that can be imposed remains the same under the new amendments, in light of the abovementioned Constitutional Court judgments, it is the Civil Court that has the authority to impose such a penalty. It should also be noted that the fine that may be imposed is no longer referred to as an administrative fine, but as a penalty.

With these amendments, discretion as to whether a person has committed an offence in breach of the Act is not left wholly in the hands of the Director General. The amendments also provide for more transparency and ensure that any person against whom proceedings may be brought in terms of the Act will benefit from certain safeguards that apply in legal proceedings, especially considering the high penalties they might face.

It should be noted that these amendments do not affect the provisions in the Act concerning the Consumer Claims Tribunal. The Consumer Claims Tribunal remains competent to hear and determine claims made by consumers against traders where the value of the claim does not exceed €3,500 and where the claim relates to the purchase or hire of goods or to the provision of services by a trader to a consumer.

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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