In this day and age, after Malta’s entry into the EU, the role of public authorities is that of a regulator – a catalyst, so to speak – in their respective areas. But unfortunately, such authorities are not delivering and many of them exist only to serve the members of the authorities, and not the public. We have a Competition Act, a law which does not allow on paper any dominant position in any market. But the members selected on certain authorities are being selected against the Competition Act because many of them have a conflict of interest and are using their seat to get inside information on how the market is going to develop in the future.
This is putting the other competitors at a disadvantage and I am still not sure why the organisations representing our entrepreneurs and businessmen have so far said nothing or complained in this regard. Take the Malta Tourism Authority for example, it has many of its members, including its Chairman, in the tourism industry.
The members know before their competitiors the marketing strategy that the Authority will be taking in the coming years and what funds will be available; something that their competitors from outside do not have the opportunity to know.
On 17 Otober 2005 the Commission for Fair Trading ordered the Director of Fair Trading to investigate this complaint, but so far, four years later, the Department has not concluded its investigations.
The EU makes its clear that the board members in any public authority have to be independent experts and they must not have any conflict of interest. This is, after all, what fair trading is all about – that there will be no person dominating a particular market. In fact insider trading is a mortal sin in all developed countries but not in Malta and I cannot understand how insider trading is prohibited by the EU, and allowed in Malta.
What is inside trading? Insider trading occurs when a trade has been influenced by the privileged possession of information from the department or the company that is issuing a tender which information has not yet been made public. Because the information is not available to other investors or to the other persons bidding for the tender, a person using such information gains an unfair advantage over the rest of the other bidders and over the rest of the market. This applies not only to tender but to any marketing strategy of the public authorities in various sectors.
In Malta, we are witnessing the saga of the Enemalta tender the funds allocated to the business of the Malta Tourism Authoritychairman by the same authority he chairs; but that is all considered here to be perfectly in line with EU laws and with our Competition Act.
The government does not love the Fair Trade Commission as otherwise it would have given it the resources it needs to operate. Whereas fair trading is the considered by Brussels as to be the fundamentals of a free market economy, in Malta we consider fair trading as a threat to our traditional monopolies and sees the Commission as a threat to these monopolies. So much so that the decisions of the Fair Trade Commission are still not public and the Commission has to beg for the authorisation of the parties for the publication of its decisions.
The case of the Garden of Eden Garage is a case in point, where the Commission rightly ruled that the ADT’s role was not to try to manipulate the public transport market, but to open to those who wanted to invest. It criticised the role of the Authority in taking an adjudicating role on who could or could not operate in a commercial market, rather than its proper role of one of a regulator to ensure that consumer rights were safeguarded. Needless to say, the government did not like the intrusion from the Commission and hastily issued a legal notice which defies this decision.
And if you ever wondered how the authorities in Malta function, the case of the Garden of Eden Garage is a case in point. Rather than welcoming the decision of the Commission for Fair Trade as a breath of fresh air, for fear of losing their seat in the Commission, the ADT let the ministry do the job and started legal action impugning the decision of the commission. And in the meantime this businessman is not allowed to compete in the market and is leaving his investment idle in the garage waiting for Brussels to wake up and investigate how fair trading and inside information are dealt with in this EU member state.
If you were to analyse the composition of the boards of certain authorities, you will understand what I mean. Take the Broadcasting Authority, and you will note that the members who have inside information are those representing the political parties (which also own their own TV stations) and the government of the day only. The private, non-political stations are not represented.
Take the Malta Tourism Authority: it is composed of members who are in the tourism industry when as authority members they are supposed to have no conflict of interest. Take the Malta Environment & Planning Authority (Mepa): most of its members are practising architects. Take the Malta Communications Authority, some of whose members work for telecommunications companies. It is very hard to find in the list of authorities as published by our Department of Information a member who has no conflict of interest.
In other EU member states, the functions of the authorities are all subject to the Commission for Fair Trading. In Malta the Commission has no power at law to take action on its own accord and no Authority has so far reported to the commission any breach of fair trading or market dominance.
In the UK, for example, the Financial Services Authority reports to the Commission for Fair Trading any breach of the competition rules in the financial market. In Malta, as we all know, the big banks have the monopoly and any complaints that I know of and that have been made against the big banks at our Malta Financial Services Authority, never gave the complainants any redress.
We cannot allow the authorities to function as parrots of the government of the day and we cannot continue to allow that their members continue to be paid from our taxes when they are not living up to their expectations and instead of acting as regulators in the market they more tend to please the government and themselves.
Brussels must wake up and investigate. There is not only hunting in this country!
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We have a Competition Act, a law which does not allow on paper any dominant position in any market. But the members selected on certain authorities are being selected against the Competition Act because many of them have a conflict of interest and are using their seat to get inside information on how the market is going to develop in the future.
