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Office for Competition Issues its First Commitments Decision

November 2018 - EU & Competition. Legal Developments by Mamo TCV Advocates.

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The Office for Competition has adopted what appears to be its first commitments decision, in a case where it raised concerns about exclusivity agreements lasting for five years or more.

This article was written by Dr. Annalies Muscat and Dr. Laura Spiteri.

On the 29 May 2018, the Office for Competition ('the Office') issued a decision to accept commitments offered by St Edward's College and In Design (Malta) Limited. This appears to be the first commitments decision taken by the Office since the introduction of this procedure in 2011.

The decision was taken under Article 12C(1) of the Competition Act ('the Act'), which states that where the Director General intends to adopt a decision requiring that an infringement be brought to an end and the undertaking concerned offers commitments to meet the concerns expressed to it, the Director General may make those commitments binding on that undertaking.

The case started when a complaint was lodged with the Office by a uniform supplier after St Edward's College ('the school') had informed the parents of students that school uniforms are to be purchased from In Design (Malta) Limited, indicating that the latter was the sole distributor of such uniforms. The school had entered into a five-year, automatically-renewable contract with In Design (Malta) Limited to provide uniforms to students attending St Edward's College. In its preliminary assessment after receiving the complaint, the Office raised the concern that the contract would be capable of foreclosing the market, thereby hindering competition, particularly due to the long duration of the contract (5 years), and the fact that its duration could be further prolonged through automatic renewal for five years.

The commitments offered consist in:

-Amending the contract by removing the automatic renewal clause;

-The school having to issue a new Request for Quotations at the end of the contract, with the duration of the new contract not being longer than four years;

-Circulating an email to the parents and placing a notice on the school's website stating that school uniforms could be purchased from other suppliers, provided such uniforms meet the school's specifications.

The Office considered that the following measures addressed the issue, without being disproportionate. By adopting the decision, the Office made the commitments binding upon the parties and concluded that there are no longer grounds for action. 

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