10.1 The Concept of Sustainability

The concept of "sustainability" is not defined under Maltese law, but there are a number of acts of parliaments and subsidiary legislation for different sectors that use the term "sustainability"

The closest definition in the law is found in the Sustainable Development Act, which defines "sustainable development" as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs". 1 This definition has been lifted from the Report on the World Commission on Environment and Development of 1987.2

The Constitution of Malta does provide for a positive obligation on the Government of Malta to "protect and conserve the environment and its resources for the benefit of the present and future generations and shall take measures to address any form of environmental degradation in Malta, including that of air, water and land, and any sort of pollution problem and to promote, nurture and support the right of action in favour of the environment".3 Unfortunately, this "positive obligation" is not judicially enforceable, but it remains "fundamental to the governance of the country and it shall be the aim of the State to apply these principles in making laws".4

This provision was only introduced in 2018,5 and prior to that, the Constitution of Malta had no provision on environmental protection or sustainable development; however, a similarly worded obligation of the State has already been imposed by an act of parliament since 1991.6

Further, sustainable development is specifically mentioned in the Treaty of the European Union as an objective of the European Union,7 and it is also mentioned in the Treaty on the Functioning of the European Union (TFEU)8 and the Charter.9 Malta, as a Member State of the EU, has a duty of sincere cooperation in the pursuit of Union objectives.10

There is a general consensus that "sustainability" is relevant to all sectors and industries, and more recently, there is much talk of "ESG" factors of sustainability being the (i) environmental, (ii) social, and (iii) governance factors—the concept of ESG has been expressly endorsed by the Government of Malta in its policy11 but not in its law.

10.2 Competition Law and Sustainability

10.2.1 Complementary Objectives

The Competition Act does not make any express reference to "sustainability" or "sustainable development".12 Neither does any other law in Malta.

It is submitted that sustainable development, environment protection and the protection of competition in the markets are not concepts and objectives that are necessarily incompatible with each other. Rather, there are objectives pursued by sustainable development and competition law that are complementary to each other.13

In practical terms, it is submitted that sustainability can be a part of the assessment to be made by the Office for Competition within the Malta Competition and Consumer Affairs Authority (hereinafter the "Malta NCA"),14 and by the Civil Court (Commerce Section) and other courts and tribunals where applicable (hereinafter the "Malta courts"), when assessing claims of breaches of competition law and proposed concentrations—as illustrated below. For the readers' benefit, the public enforcement of competition law is vested in Malta NCA, as the prosecutor, and in Malta courts, specifically the Civil Court (Commerce Section), which will decide on whether there is a competition law infringement, as well as on the extent of any fines.15

However, there may be instances where the conduct of undertakings and even laws or government policies are anti-competitive, and their effect is capable of undermining the objectives pursued by competition law.

10.2.2 Sustainability and the Enforcement and Advocacy of Competition Law

Firstly, and as a matter of principle, coordinated conduct that pursues a sustainability objective has the potential to fall within the scope of Article 101(1) TFEU and its national counterpart, Article 5(1) of the Competition Act. However, sustainability can be invoked by undertakings as a defence against an allegation or claim of coordinated conduct as an efficiency under subparagraph 3 of both Article 101 TFEU and Article 5 of the Competition Act.

This is the line that the position the European Commission took in the Guidelines on vertical restraints16 and the one which it appears to be taking with the draft Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements. 17 Once the latter guidelines are implemented, it is envisaged that they would apply to Malta NCA and the Malta courts. The Competition Act also imposes a duty as such by requiring that either Malta NCA or the Malta courts, as the case may be, "shall have recourse [...] to relevant decisions and statements of the European Commission including interpretative notices on the relevant provisions of the TFEU and secondary legislation relative to competition [...]". 18

Secondly, sustainability may also be invoked as a defence against claims of abuse of dominance conduct under Article 102 TFEU and its national counterpart, Article 9 of the Competition Act, by way of an "objective justification". Elsewhere, the case was made for Article 102 TFEU to be used as an enforcement tool where a dominant undertaking engages in unsustainable business practices19 —it is submitted that the same case can be made for Article 9 of the Competition Act to the extent that they can be characterised as "abuses".

Thirdly, sustainability may also be invoked as an efficiency gain in merger control cases where the Malta NCA is reviewing a notifiable concentration in terms of the law.20

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1. (Chapter 521 of the Laws of Malta), Article 3(1)

2. Available at https://digitallibrary.un.org/record/139811?ln=en. Accessed 16 August 2022.

3. Constitution of Malta, Article 9(2).

4. Constitution of Malta, Article 21.

5. Act XXII of 2018. There is no mention of "competition law" or "markets" in the parliamentary debates leading up to the adoption of this amendment to the Constitution.

6. Act V of 1991, entitled An act to protect the environment, promulgated on 26 February 1991. Interestingly, and at this time, there was no mention that such an obligation imposed on the State was not judicially enforceable. However, later, iterations of the "Environment Protection Act" qualified that such an obligation on the State was not judicially enforceable.

7. Treaty on the European Union, Article 3(3).

8. Article 11 TFUE.

9. Charter of Fundamental Rights of the European Union, Article 37.

10. Treaty on the European Union, Article 4(3).

11. See https://sustainabledevelopment.gov.mt/esg-reports-2020/. Accessed 16 August 2022.

12. Chapter 379 of the Laws of Malta.

13. For example, the breach of environmental legislation by dominant undertakings can be classified as an abuse within Article 9 of the Competition Act and/or Article 101 of the TFEU.

14. See https://mccaa.org.mt/Section/index?sectionId=1060. Accessed 16 August 2022.

15. The decision of the Civil Court (Commerce Section) is subject to a second and last stage of review before the Court of Appeal.

16. European Commission, Commission Notice Guidelines on vertical restraints, JO2022, C 248, p.1), para 9.

17. Para 555. Available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022 XC0419%2803%29. Accessed 16 August 2022.

18. Competition Act, Articles 12A (7) and 13(7).

19. M. Iacovides and C. Vrettos, 'Falling through the cracks no more? Article 102 TFEU and sustainability: the relation between dominance, environmental degradation and social injustice', Journal of Antitrust Enforcement 2022, 10, 32-63. Available at https://academic.oup.com/antitrust/ article/10/1/32/6352604. Accessed 16 August 2022.

20. Control of Concentrations Regulations (Subsidiary Legislation 379.08), Regulation 4(4): "Concentrations that bring about or are likely to bring about gains in efficiency that will be greater than and will offset the effects of any prevention or lessening of competition resulting from or likely to result from the concentration shall not be prohibited if the undertakings concerned prove that such efficiency gains cannot otherwise be attained, are verifiable and likely to be passed on to consumers in the form of lower prices, or greater innovation, choice or quality of products or services."

Originally published by LIDC .

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