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Cyprus: Commission for the Protection of Competition
Chairperson of the Commission for the Protection of Competition
The Cyprus Commission for the Protection of Competition (CPC) is the competent authority for applying competition rules in the Republic of Cyprus. In this regard, there are two applicable laws:
- the Protection of Competition Laws of 2008 and 2014; and
- the Control of Concentrations between Enterprises Law No. 22(I)/99.
The Commission is an independent administrative body and has a unified administrative structure: a single administrative authority which investigates cases and takes enforcement decisions. However, the investigative and decision-making activities are separated functionally. Investigations are carried out by the investigative body of the Commission and the decision is taken by the Commission.
The Commission comrpises the chairperson and four members who are appointed by the Council of Ministers based on a proposal by minister of energy, commerce, industry and tourism. The appointment is for five years and can be renewed for one more five-year term. The current Commission was appointed in May 2013.
All powers rest with the Commission and are bestowed to the investigative body for the investigation of complaints or ex officio investigations.
The Commission, being an administrative body, must abide by administrative law. The decisions of the Commission may be appealed to the Supreme Court of Cyprus.
The CPC is a small authority. The investigative body comprises 12 case handlers supported by a chartered sccountant who is seconded by the Accountant General’s Office and by a small number of consultants on annual contracts (five at present). As of July 2014 there will be just three consultants with contracts until the end of the year.
2013 can be characterised as a milestone for the Commission: the memorandum of understanding signed by the Republic of Cyprus with the ‘troika’ (the European Commission, the European Central Bank and the IMF) included a clear commitment to enhance the independence and effectiveness of the Commission through the adoption of certain measures and commitments by the state, the most important of which is ‘guaranteeing sufficient and stable financial means and qualified personnel to ensure its effective and sustained operation’.
In 2014, the CPC has proceeded with amendments to the Competition legislation and with the replacement of the merger legislation, in line with more convergence with EU legislation.
The amendments of the Protection of Competition Law 2008 improved the effectiveness of the competition law enforcement by enhancing the powers of the Commission and providing further convergence with the EU legal framework. The most important changes concerned the following:
- the ability of the Commission to conduct sector inquiries;
- the prioritisation of cases;
- criteria for issuing Interim Measures;
- the collection of forensic IT evidence;
- cooperation with other authorities; and
- the calculation of administrative fines.
The newly amended competition law introduces, for the first time, the power to conducting sector inquiries. The CPC will now have at its disposal one more important tool to help it safeguard competition in the markets. The new competence for the prioritisation of cases also provides the Commission with a flexibility that will enable it to focus on the more pressing competition issues and the most important markets that may warrant the examination of the conditions of competition, especially in these times of severe economic crisis for the Cypriot economy.
The new merger law, which will replace the current Control of Concentrations between Enterprises Law No. 22(I)/99, is expected to be approved by parliament before the end of June 2014 and will bring about the following important changes:
- notification of a concentration is obligatory when at least two of the participating undertakings engage in commercial activities in the Republic of Cyprus;
- the obligation for notification within one week from the date of conclusion of the relevant agreement or the publication of the relevant offer of purchase or exchange or the acquisition of a controlling interest, whichever of the said events occurs first, is abolished, and the new timing frame for the notification is before the concentration is put into effect;
- the compatibility test is the substantial lessening of competition instead of the creation or strengthening of a dominant position; and
- introduction of a fee of €1,000 for notification and a second fee of €6,000 is required if the Commission decides to set in motion the procedure for a full investigation.
During the first six months of 2014, the Commission has been busy concluding some important investigations and has so far issued 16 statements of objections to enterprises.
The first statement of objections, relating to prima facie infringements of national law, was issued in early January 2014 against the milk producers organisation, which holds a dominant position in the supply of raw milk, relating to the fixing of prices and exclusivity in supply, excessive pricing of raw milk by its members and the restriction of the supply of raw milk to a market already characterised by production quotas. This case is an ex officio investigation by the CPC.
In late January 2014, two statements of objections, relating to prima facie infringements of national law as well as article 101 of the TFEU, were issued to Daimler AG and its local distributor of Mercedes-Benz cars and spare parts, Cyprus Import Corporation Ltd, following the investigation of a complaint by two distributors of motor vehicle spare parts. The statements of objections relate to the application of selective distribution of genuine motor vehicle spare parts bearing the brand of Mercedes-Benz in the Cypriot market.
In April 2014, 10 statements of objections were issued to the major payment cards acquirer in Cyprus, JCC Payment Systems Limited, and to Bank of Cyprus Public Company Ltd, Marfin Popular Bank Public Co Ltd, Hellenic Bank Public Company Limited, USB Bank Plc, Alpha Bank Cyprus Ltd, Emporiki Bank Cyprus Limited, National Bank of Greece (Cyprus) Ltd, Societe Generale Cyprus Ltd and Piraeus Bank (Cyprus) Ltd, concerning prima facie infringements of national law as well as of articles 101 and 102 of the TFEU, following the investigation of a complaint submitted by FBME Card Services Ltd against the above-mentioned enterprises. The prima facie infringements relate to the fixing of prices by an association of enterprises, unfair pricing relating to merchant service charges, excessive pricing relating to domestic interchange fees, restrictive agreements and refusal to supply in the market of processing of payment card transactions.
In May 2014, two statements of objections were issued to the Cyprus Telecommunications Authority (CYTA) – the telecoms incumbent in Cyprus and to Forthnet AE for prima facie infringements of national law and articles 101 and 102 of the TFEU for the conclusion of restrictive agreements in the market of pay-TV and content for pay-TV.
In June 2014, a statement of objections was sent to Lalizas AE for prima facie infringements of national law and article 101 of the TFEU in the market of supply of equipment for marine activities, following a complaint by a retailer of such equipment.
In the first half of 2014, there were 11 new notifications of concentrations. The Commission further examined and cleared 17 concentrations between enterprises based on Law No. 22(I)/99. In one merger concerning the creation of a joint venture in the printing sector, following a second phase investigation, the Commission imposed various remedies. Also, two statements of objections were issued to two enterprises that failed to notify their concentrations within the time frame prescribed by the national merger law.
In 2013, the Commission issued 11 decisions in which it imposed fines totalling €2.1 million in relation to infringements of antitrust and merger laws. Seven infringement decisions related to antitrust, one related to non-compliance with an interim order and three decisions related to infringements of merger law. The fines imposed in relation to infringements of antitrust law concerned various sectors of the economy, such as the telecommunications market and in particular the supply of international private leased lines and the supply of international capacity in submarine cables, the market for cereal grains, the supply of raw milk, the distribution of goods to convenient stores and small kiosks and shipping services for the transportation of goods. The Commission also issued two commitment decisions in the markets of VAT refund and airport cleaning services.
The Commission cooperates closely with regulators – in particular the Regulator for Telecommunications and Postal Services and the Regulator for Energy – and also gives its opinion to other public bodies on issues of its competence, such as other government departments and the House of Representatives, on new legislation or other activities.
The Commission also designed an advocacy programme which will enable it to reach out to stakeholders in a different way rather than through infringement decisions and ‘punishing’ fines. The programme includes the following:
- publicising the issuing of statements of objections sent to enterprises in order to increase the awareness of the public and the media on issues of competition;
- holding a press conference after the amendments to the competition law and the new merger law come into effect in order to enlighten the business and legal communities as well as the public at large on the new legislation;
- the signing of memorandums of understanding with other competition authorities to strengthen the cooperation between the authorities – this will create an opportunity to organise competition seminars in which representatives of the other competition authorities will participate;
- the promotion of the leniency programme as well as of a Compliance Guide, addressed to businesses and informing them of their obligations, responsibilities and rights as regards competition rules;
- organising conferences and seminars on key competition issues with the participation of law firms, judges, businesses, economists and academics in collaboration with or with the participation of experts from Cyprus and abroad;
- organising visits to local universities (eg, schools of law, economics, business, etc) and other organisations and fora (eg, consumers’ organisations) to offer useful information on competition issues and to promote a competition culture; and
- urging public bodies (eg, ministries, departments, etc) to inform the CPC about proposed legislation that is likely to raise competition issues so as to give its opinion on the compatibility of legislative acts or secondary legislation or other actions with competition law. The Commission also constantly updates its website.
The Commission is committed to the public enforcement of competition rules to punish offenders and to deter the infringer as well as any other potential infringer that may be tempted to cartelise or abuse its dominant position, for the benefit of consumers and the economy at large. Being an administrative body, the Commission has to investigate all complaints submitted to it and this obligation has to a large extent, due to the limited resources available to the Commission, restricted the areas of enforcement. However, with the recent amendments to the competition law, the Commission will be able to prioritise its cases and conduct sector inquiries into sectors of the economy that warrant investigation in order to assess whether intervention is required. These will enable the Commission to use its scarce resources with a more targeted approach.
The Commission is hopeful that its intervention does benefit consumers and society at large, albeit indirectly. As far as the Commission is aware, there have been no awards of damages by Cypriot Courts in relation to competition infringements. However, the proposed directive on private damages of the European Commission will probably lead to more direct benefits to those harmed by competition infringements in Cyprus.
Chairperson of the Commission for the Protection of Competition
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