Competition is beneficial within any market and tends to lead to more choice, better quality and lower process for consumers. For competition to be healthy, however, traders’ behaviour must be regulated with the objective of curbing unjust ways of competing and creating restrictions so that the trader’s right to compete is not overstepped. Both on an EU level and within Maltese legislation, namely the Commercial Code (Chapter 13 of the Laws of Malta), a number of regulations aim to achieve this goal, as described further below. These are not to be confused with Competition Law or Antitrust Regulation, which is discussed here.
Maltese law provides for a number of instances where the trader’s right to compete may be abused to the detriment of other traders and leading to the loss of market efficiency. Amongst these instances, Maltese law deals with matters of trademarks, comparative and misleading advertising, false indication of origin of goods, and direct actions against other traders, mainly. The spreading of false news and persuading the employees of other traders to act against their employer’s interest. If any of the prohibitions which deal with the above mentioned matters, are contravened by a trader, the injured trader has the right to hold the said trader liable for damages or even to pay a penalty, which is stipulated by the Civil Courts.
For a case of unfair competition to exist, two elements must subsist: firstly, it is necessary to determine that damage actually occurred; secondly, it is necessary to examine whether this existing damage is derived through unlawful means. Thus if one enjoys the use of his own right within the proper limit, one will not be liable for unfair competition.
The Commercial Code clearly prohibits the use of any name, mark or distinctive device that might be used by other traders, even if not registered in accordance with the Trademarks Act (Chapter 416 of the Laws of Malta) (information relating to trademark registration can be found here). The main objective of this clause is to protect unregistered trademarks which have obtained some form of distinction through their use: thus the use of mark similar to such unregistered trademarks which may create confusion between the products or services may be unlawful.
Deceiving other traders or the public in general is expressly prohibited by the Commercial Code which deals with comparative and misleading advertising. The Commercial Code also renders a number of other actions illegal, namely:
- Discrediting a trademark or taking unfair advantage off another trademark;
- Creating false indications of the origins of goods;
- Spread news capable of prejudicing the business or trade carried on by other persons;
- making use of honours, patents, medals, prizes or other distinctions to which they have no claim or which have been obtained for some other branch of business or trade;
- Issuing certificates of honesty or competency contrary to the facts as known to him; and
- Bribing the employees of a competitor in order to exploit either the competitor’s customers or to acquire any knowledge which is to be in the confidence of the employees.