Authors: Adriana Brincat, Chantelle Mercieca – WH Partners
On 6 February 2026, Malta’s Office for Competition (“Office”), within the Malta Competition and Consumer Affairs Authority (MCCAA), published its Guidelines on the Methodology for Determining the Penalty Amount (“Guidelines”).
The Guidelines set out the framework that the Office will apply when proposing to the Civil Court (Commercial Section) the penalty to be imposed for infringements of the substantive provisions of the Competition Act, namely Articles 5 and 9, as well as Articles 101 and 102 TFEU where applicable. While the Guidelines do not bind the Court, they significantly improve transparency and give businesses clearer insight into the potential financial consequences of enforcement action.
Legal and Historic Context
Under Malta’s current competition law public enforcement regime, the Office does not itself impose administrative fines. Article 12A of the Competition Act requires that where the Director General considers that an infringement may have occurred, a sworn application must be filed before the Civil Court (Commercial Section), which is alone empowered to determine the existence of an infringement and to impose any penalty. Under Article 12A(c), such a sworn application shall, where appropriate, contain a request by the Director General for the Court to impose a penalty.
The current competition law public enforcement regime has been in place since 2019 following a 2016 Constitutional Court judgment (See Federation of Estate Agents v Director General (Competition) et (Constitutional application number 87/2013/2)) that found the Office’s power to impose administrative fines to be unconstitutional. The current court-based model was introduced to ensure that the right to a fair trial, as set out in the Maltese constitution, was afforded to undertakings, particularly given the significant penalties – up to 10% of the total worldwide turnover of an undertaking in the preceding business year – that may be imposed for substantive breaches of the Competition Act. So far, no penalties have been imposed under this regime.
Objective of the Guidelines
The Guidelines clarify the methodology underlying the penalty that the Office will request the Court to impose.
The stated objective of the Guidelines is to promote predictability, consistency and proportionality in the application of Article 21 of the Competition Act. In particular, they seek to ensure that penalties are effective, proportionate and dissuasive, reflecting the gravity and duration of the infringement while remaining subject to the statutory cap of 10% of the undertaking’s total worldwide turnover in the preceding business year.
Methodology in the Guidelines
The methodology follows a structured six-step approach.
The first step consists in determining a basic amount by reference to the undertaking’s “value of relevant sales”. This is ordinarily the turnover derived from the goods or services to which the infringement directly or indirectly relates, generally calculated on the basis of the last full financial year of participation in the infringement, before the deduction of sales rebates, VAT and other taxes directly related to sales. The value of relevant sales is then multiplied by a percentage reflecting the gravity of the infringement. The Guidelines provide for a range between 0% and 30%, with the precise figure depending on a case-by-case assessment of factors such as the nature of the conduct, market coverage, geographic scope, and the actual or potential harm to competition and consumers.
For the most serious restrictions of competition, including cartel conduct, the gravity percentage will be situated at the higher end of the scale. In addition, the Office may include in the basic amount a separate entry fee of between 15% and 25% of the value of relevant sales in order to deter undertakings from entering into cartel agreements such as horizontal price-fixing, market-sharing and output-limitation agreements, as well as in cases of other very serious infringements.
The second step consists of adjusting the amount to reflect the duration of the infringement. The gravity-adjusted amount is multiplied by the number of years of participation. Periods of less than six months are generally treated as half a year, while periods exceeding six months but less than a year are counted as a full year, subject to the Office’s discretion.
The third step addresses aggravating and mitigating circumstances. The Guidelines outline a non-exhaustive list of factors that may justify an increase, including the relevant undertaking taking a leadership role, re-offending, obstruction of the investigation, intentional conduct, or coercion of other undertakings. Conversely, reductions may be considered in circumstances such as limited participation, effective cooperation beyond legal obligations, or where the conduct was encouraged by public authorities. The approach reflects Article 21(4) of the Competition Act and aligns conceptually with established EU fining principles.
The fourth step permits a further adjustment to ensure specific deterrence. If an undertaking’s overall financial strength means that a penalty based solely on relevant sales would not be sufficiently discouraging, the Office may increase the amount to make it more proportionate and effective. Likewise, if relevant sales do not adequately reflect the undertaking’s role in the infringement or the harm caused, a correction may be warranted.
At the fifth step, the Office reviews proportionality and verifies compliance with the statutory maximum. In no case may the final penalty exceed 10% of the undertaking’s total worldwide turnover, as provided under Article 21(1) of the Competition Act. This stage may also involve adjustments to ensure that the penalty does not exceed what is necessary to achieve deterrence, while still reflecting the seriousness of the infringement.
It is worth noting that the term “undertaking” for the purpose of calculating penalties encompasses the highest parent held liable and all its subsidiaries, in line with the approach taken by the Court of Justice of the European Union (which Article 21(10) of the Competition Act requires the Office to adhere to).
Finally, the sixth step concerns potential reductions through leniency or settlement. Undertakings benefiting from immunity or reduction under the relevant subsidiary legislation may obtain immunity or a reduction in accordance with the applicable framework. In addition, where a settlement is concluded under Article 12B of the Competition Act, the Director General may reward the undertaking with a reduction typically ranging between 10% and 35%. In exceptional circumstances, and upon substantiated request, the Office may also consider reductions on grounds of long-term inability to pay, provided that the evidence demonstrates that imposition of the penalty would irretrievably jeopardise the undertaking’s economic viability.
Concluding Remarks
The publication of the Guidelines suggests a renewed focus on due process and transparency by the Office.
Although the Civil Court ultimately retains full discretion, the clear articulation of the methodology to be followed by the Office in calculating the penalty it requests is to be welcomed, as it enables businesses to better assess the potential risks of infringing the substantive competition law provisions contained in the Competition Act.
