One of the most fundamental concepts upon which the European Union is founded is that of a free market, which rests on the notion of competition. The question following from this is: why is competition important? Competition encourages efficiency, innovation, and reduced prices, which are all elements benefitting the consumer and businesses themselves. For these three elements to be present, companies are required to act independently of each other while at the same time being subject to the competitive pressure exerted by their competitors. Malta Competition Law seeks to implement all relevant EU regulations on competition as well as provide the fairest interpretation of concepts left to the discretion of Member States.
Legal Basis – EU Level
At EU level, the Treaty provisions dealing with competition are Articles 101 (antitrust) and 102 (abuse of dominance) of the Treaty on the Functioning of the European Union (TFEU), implemented through Council Regulation 1/2003, allowing for competition rules previously applied by the European Commission to be enforced on a decentralised basis by the EU Member State’s competent competition authorities.
Legal Basis – Malta Competition Law
- The role of the Director General for Competition
Malta Competition Law which enables the application of Council Regulation 1/2003 is the Competition Act, Chapter 379 of the Laws of Malta. The Competition Act regulates competition and provides for fair trading in Malta. This act confers upon the Director General of the Office for Competition (in short, Director General for Competition) exclusive competence to apply the provisions of the act which may be delegated to officers or employees of the same authority. The Director General’s powers include the power to carry out investigations in ensuring that the provisions are not being breached. In case of an infringement, he/she may also order a cease and desist order, a compliance order, as well as hold the company liable to administrative fines.
- What does the Competition Act provide on antitrust and abuse of dominance?
The relevant TFEU articles on competition, 101 and 102, provide for antitrust and abuse of dominance respectively. In Malta Competition Law, these two articles manifest themselves in articles 5 and 9 of the Malta Competition Act. Article 5 provides for prohibited agreements and practices between competitors aimed at preventing, restricting or distorting competition within Malta including cartels, i.e. when prices are fixed and/or markets are shared between competitors, putting other parties at a competitive disadvantage. In addition, article 9 provides that any abuse of a dominant position in the market is prohibited. This includes price discrimination for equivalent transactions with different trading parties, and limiting production to the prejudice of consumers, amongst others. These articles ensure that Malta Competition Law is fully compliant with EU legislation.
The Roche Bolar Exemption
The Roche Bolar Exemption (or the Bolar Provision) originated in the United States in the Roche Products v Bolar Pharmaceutical judgement, a case instituted by Roche Products, in an attempt to stop Bolar Pharmaceutical (a competitor) from starting the Food and Drug Administration approval process before the relevant patent expired. The important resultant judgement declared that although the patent holder for a drug can protect it for 20 years, generic companies can do testing and clinical trials (experimental use) before the patent expires. This judgement resulted in the subsequent enactment by Congress of the Hatch-Waxman Act allowing the use of patented material when reasonably related to developing and submitting information concerning laws regulating the use or sale of drugs. Furthermore, as regards the EU’s position on the Roche Bolar Exemption, it leaves what constitutes experimental use to the discretion of individual EU Member States.
The implementation of the Roche Bolar Exemption into Malta Competition Law
Malta has been very proactive in the implementation of the exemption into Malta Competition Law and has embraced the extensive reach of the provision. The exemption was implemented into Malta Competition Law in 2003, even prior to EU accession. Malta’s Patents and Designs Act provides that the owner of a patent has no right to prevent third parties from performing certain acts. The exemption provision thus extends to:
- acts done privately and for non-commercial purposes
- making or using the product for purely experimental purposes and scientific research
- acts done for the development and presentation of information as required under Maltese or foreign law which regulates the production, use or sale of medicinal or phytopharmaceutical products
From a comparative perspective, Malta has interpreted the exemption provision quite widely. This is evidenced by looking at the introduction of the Roche Bolar exemptions in the legislation of other jurisdictions and contrasting it with Malta Competition Law. For example, the UK Patents Act 1977 interprets “experimental purposes” as those “relating to the subject matter of the invention”, and this restrictive approach was demonstrated in the Mosanto v Stauffer case, wherein testing in order to demonstrate that a product works as claimed was not deemed an experiment under the exemption. Contrastingly, the Maltese scenario quite differs from this: under Malta Competition Law, generic companies may carry out experiments and clinical trials for the purposes of obtaining regulatory approval prior to the expiration of the lifetime of the patent concerned.
How does Malta’s implementation of the Roche Bolar Exemption affect Competition?
The incorporation of the full extent of the Roche Bolar Exemption into Malta Competititon Law means that when the patent of a competitor’s product expires and the generic company obtains regulatory approval, the latter may market the product with no unnecessary delay. The approach which Malta has taken embraces competition, fair trade, and the free market, giving Malta a considerable competitive edge over countries which have been more restrictive in their adoption of the exemption, explaining the substantial number of pharmaceutical companies which relocate to Malta annually.
How can we help?
The Competition Law service involves various matters of competition that affect the market industry such as anti-trust, regulatory, intellectual property, privatisations and public procurement issues. Chetcuti Cauchi is conscious of the European Commission’s modernisation programme for EU Competition Law and the extended powers granted to National Competition Authorities as a consequence of this. Chetcuti Cauchi's Competition Law department advises on competition and regulatory aspects of mergers, acquisitions and joint ventures. Our lawyers are particularly careful to highlight the economics of aspects of Malta Competition Law in advising on commercial contracts, especially in view of the imminence of an enlarged Europe and the opportunities but also barriers which may be encountered in the process. We also act on behalf of our clients in competition litigation cases.
