On the 7th of December 2023, the Malta Communications Authority (“MCA”) published a decision notice mandating requirements for providers of publicly available electronic communications services implementing new measures on contracts having price indexation clauses, further to an earlier ruling by the Court of Justice of the European Union (“CJEU”).

The decision applies to electronic communications services with the exception of number independent interpersonal communications services and machine-to-machine transmission services.

Price indexation is a practice whereby companies increase bills based on certain measures such as inflation or consumer price indices, in turn, price indexation clauses restrict the consumer from terminating a contract (without paying a termination fee) irrespective of any such increase in billing. In this regard, the CJEU had ruled that price indexation clauses shall constitute a modification to the contractual conditions, therefore, allowing the consumer the right of withdrawal. Moreover, competition law was also concerned because due to such clauses the consumer was unable to benefit from the basic privileges found in a competitive market since the total costs were being masked. Consequently, the MCA expressed its concerns on the protection of the consumer, due to the consumer’s lack of knowledge and lack of power in the contractual relationship.

The measures issued by the MCA Decision will give the consumers the right to withdraw from their contracts without incurring early termination fees if 6 months have lapsed and an increase in price is due to an indexation clause. Additionally, in virtue of the said Decision, the approach to price indexation clauses will be:

• Price indexation clauses may only be included in contracts limited to a 6-month period;
• Price indexation clauses may only be included in contracts longer than 6 months if there is the explicit consent of the consumer prior to the conclusion of the contract, explicitly to the price indexation clause;
• Service providers may offer contracts of up to 24 months which do not include price indexation clauses; and
• Greater obligations imposing transparency on service providers with respect to making contracts with price indexation clauses more publicised.

The effects of this Decision with respect to the requirement of obtaining explicit consent from the consumer in respect of price indexation clauses and transparency obligations shall have become effective from the 30^th of January 2024. While all the remaining measures found in the Decision shall become effective immediately.

For further information on Technology, Media & Telecommunications Law, kindly contact Dr Ian Gauci and Dr Terence Cassar.