Cyprus: Commission for the Protection of Competition

In summary

This article sets out the main developments and decisions made in cases dealt with by the Competition Authority of Cyprus. The period of reference taken into account is between April 2019 and March 2020.

Discussion points

• The Cyprus Commission for the Protection of Competition competences
• Infringement and non-infringement decisions issued

Referenced in this article

• Section 3 of the Competition Laws of 2008 and 2014
• Section 6 of the Competition Laws of 2008 and 2014
• Complaint against the Community Council of Kouklia
• Complaint against the Community Council of Kokkinotrimithia
• Complaint against the Cyprus Theatre Organisation
• Complaint by Autotechnica (Cyprus) Ltd against the Cyprus Hire and Rejected Risks Pool
• Complaint by Golden Telemedia Limited against MTN Cyprus Limited
• Ex officio investigation regarding JCC Payment Systems Ltd
• Court cases and court interim applications regarding the Commission’s decisions
• Ongoing investigations and other matters

The Cyprus Commission for the Protection of Competition (CPC) is the competent authority for applying competition rules in Cyprus. In this regard, there are two applicable laws relating to antitrust enforcement and mergers and acquisitions control:

• the Protection of Competition Laws of 2008 No. 13(I)/2008, as amended by Law No. 41(I)/2014 (the Competition Law); and
• the Control of Concentrations between Undertakings Law of 2014, No. 83(I)/2014 (the Concentrations Law).

The CPC is an independent administrative authority. The Commission comprises the chairperson and four members who are appointed by the Council of Ministers based on a proposal of the Minister of Energy, Commerce and Industry. The term of office of the chairperson and members is five years and can be renewed. The chairperson and members serve on a full-time basis. The Commission is assisted by its Service. The staff of the Service are public service members and are appointed as per the Public Service Law and procedures.

The CPC, being an administrative body, is bound by administrative law and all decisions of the CPC can be appealed to the Administrative Court (established on 1 January 2016 – previously reviewed by the Supreme Court of Cyprus) and be reviewed by the Supreme Court.

Between April 2019 and March 2020, the CPC issued 68 decisions, 53 of which concerned examination of notifications of concentrations between undertakings, issuing clearance decisions to 50 of them in Phase I, and three decisions relating to notifications that were held not to fall under the Merger Law provisions.

The CPC also issued 15 decisions under the Competition Law: four concerned a non-infringement conclusion, five concerned the rejection of a complaint and six concerned findings of infringements.

Some of the antitrust decisions issued by the CPC are described below in further detail.

Decision relating to the Community Council of Kouklia

The CPC issued a decision imposing on the Community Council of Kouklia in the Pafos Region (CCK) a fine of €78,889.28 for infringements of section 6(1)(a) of the Competition Law (corresponding to Article 102 of the Treaty on the Functioning of the European Union(TFEU)) following the examination of a complaint filed by two individuals, who were owners of holiday residences at Aphrodite Hills Resort, in Kouklia (Decision No. 13/2019, issued on 12 March 2019). The case related to alleged water supply overcharges imposed by the CCK. The complaint concerned alleged violations by the CCK of sections 3(1)(a),(d), 6(1)(a),(c) and 6(2) of the Competition Law. The CPC, having examined all the evidence before it, namely the relevant financial data and analysis submitted by the CCK, and having conducted its own economic analysis, unanimously concluded that between 2013 and 2015 the CCK abused its dominant position being the sole provider of water supply services for household use within the Kouklia Community by applying unreasonably excessive pricing on the supply of water for the tourist establishments and resorts of Kouklia. In particular, the CPC concluded that the CCK abused its dominant position by overcharging the residents of the aforementioned tourist areas of Kouklia for the provision of water supply by 32 per cent in 2013, by 43 per cent in 2014 and by 39 per cent in 2015, compared to other areas within the Kouklia municipality where the prices being charged were lower. In addition, the CPC concluded that the selling prices were not justified. The CPC therefore concluded that the CCK had infringed section 6(1)(a) of the Competition Law and ordered the CCK to avoid any repetition of the infringement in the future. The CPC also imposed an administrative fine of €78,889.28 regarding the infringement of section 6(1)(a) of the Competition Law by CCK as a result of the imposition of unfair pricing (ie, overcharging for water supply services). No other infringements were found.

Decision relating to the Community Council of Kokkinotrimithia

A decision concerning similar facts to the decision relating to the Community Council of Kouklia was issued by the CPC, whereby it concluded that an infringement occurred in regard to water supply overcharges, in violation of section 6(1)(a) of the Competition Law. The decision concerned the Community Council of Kokkinotrimithia (CCKo) following the examination of a complaint lodged with the CPC by an individual, who was the owner of a farming unit in Kokkinotrimithia. The complaint concerned alleged violations by the CCKo of sections 6(1)(a),(b),(c) and 6(2) of the Competition Law. The CPC, having examined all the evidence before it, namely the relevant financial data and analysis submitted by the CCKo, and having conducted its own economic analysis, unanimously concluded that in 2011, 2012 and 2014 the CCKo abused its dominant position in applying unreasonably excessive pricing for the provision of water supply services to the farming unit areas of Kokkinotrimithia, with selling prices amounting to 41.72 per cent, 34.57 per cent and 34.57 per cent, respectively, above standard water supply costs. The CPC unanimously concluded that there was an infringement of section 6(1)(a) of the Competition Law by CCKo for imposing unfair purchase prices to owners of farming unit areas in Kokkinotrimithia. The CPC ordered CCKo to avoid any repetition of the infringement in the future and imposed an administrative fine of €33,843.81. No other infringements were found.

Decision relating to the Cyprus Theatre Organisation

The CPC issued infringement Decision No. 42/2019 on 27 August 2019 against the Cyprus Theatre Organisation (THOC), a semi-governmental organisation, in the course of the investigation of a complaint lodged with the CPC by a private theatre company named Theatre Ena.

The complaint concerned an alleged abuse of THOC’s dominant position in allocating subsidies to the theatres in Cyprus without using objective criteria. The CPC, having examined all the evidence before it, namely the financial data and analysis submitted by THOC, and having conducted its own economic analysis, unanimously concluded that THOC – in its dual capacity as being responsible for the implementation of the Thymeli Scheme (under which it was given the power to approve and distribute public funding to the other independent theatres in Cyprus that constituted its competitors, but also to receive subsidies itself without any criteria) and engaging in the relevant market itself for the production and presentation of theatrical performances in Cyprus, thus competing with the independent theatre units – had abused its dominant position, under section 6. Furthermore, the CPC unanimously held that THOC did not establish the exemption criteria of section 7 of the Competition Law (similar to article 106(2) TFEU), concluding that access to financial information about its competitors and distribution of subsidies under the Scheme, leading to the determination of the economic stance of THOC’s competitors, could be achieved by other financial or technical ways, compatible with the Competition Law’s provisions. Therefore, on the basis of the data before it, the CPC unanimously considered that THOC had infringed section 6(1) of the Competition Law, ordering THOC to immediately cease the infringement and to avoid repetition of such practices in the future, and imposing an administrative fine of €342,221.35.

Decision relating to the Cyprus Hire and Rejected Risks Pool

The CPC issued Decision No. 54/2019 following a complaint submitted by Autotechnica (Cyprus) Ltd to the Commission against the Cyprus Hire and Rejected Risks Pool, which deals with motor vehicle insurance. On the basis of the data before it, the CPC concluded that no infringement had been established, despite finding that Cyprus Hire and Rejected Risks Pool constituted an association of undertakings holding a dominant position in the relevant markets of the provision of third-party motor insurance coverage to vehicles hired for private use, both short-term and long-term. In particular, the complaint concerned practices and rules governing the association, which allegedly vested the association with a monopoly on insurance of short-term hire vehicles, infringing the relevant provisions of the Competition Law, resulting in the imposition of unfair prices and terms on consumers (sections 3, 6(1)(a),(b),(c) and 6(2)). The CPC concluded, taking into consideration all the evidence before it, that the prices imposed by the association on consumers for the provision of risk coverage were within reasonable limits (being 5.85 per cent above standard costs for the years 2011 to 2015) and therefore could not constitute an abuse of the association’s dominant power under section 6(1)(a). The CPC also noted that the terms of the insurance agreement conducted between the association and the consumers for risk coverage were effectively the same to all consumers and, therefore, neither was there any infringement of section 6(1)(c).

Decision relating to MTN Cyprus Limited

The CPC, following the completion of a preliminary investigation of a complaint submitted by Golden Telemedia Limited (GT) and having evaluated the evidence before it, issued infringement Decision No. 19/2019, whereby it unanimously decided that MTN Cyprus Limited (MTN) had infringed section 6(1)(b) of the Competition Law. The subject matter of the complaint lodged by GT against MTN concerned restriction of the provision of its services in a way that prevented the activities of GT in the market, in the form of a vertical restraint between MTN and the complainant. The CPC decided that MTN, as a mobile telephony services provider, held a dominant position in its mobile telephony network both in relation to its subscribers and to the premium rate service providers who offer premium rate services (PRS) to MTN’s subscribers. PRS are electronic communications services relating to the transmission of content to electronic communications networks, by using code numbers in the national numbering plan, which include, inter alia, (1) premium voice services (premium IVR) and (2) premium messaging services. Since the beginning of its cooperation with GT, in early 2005, MTN has refused to provide GT with call termination services for post-paid subscribers, by blocking calls to premium IVR. As a result, these services could not be provided to MTN’s post-paid subscribers. Specifically, from 2005 to 2007, MTN post-paid subscribers did not have access to premium IVR, and from 2007 until July 2015, MTN essentially imposed restrictions to its post-paid subscribers on the use of premium IVR, as they had to pay €170 euros as a financial guarantee to have access to the services. The complete lifting of the restriction that led to the uninterrupted provision of the service was achieved in July 2015. As a result of MTN’s decision to block and to impose restrictions on calls made by its mobile post-paid subscribers to premium IVR, between 2005 and early July 2015, GT was unable to offer them premium IVR. The CPC concluded that MTN’s decision led to the restriction of premium IVR services to the detriment of consumers for 10 years (from 2005 to 2015). The CPC, on the basis of the evidence before it, unanimously decided that MTN had infringed section 6(1)(b) of the Competition Law and decided to (1) oblige MTN to avoid any repetition of the infringement of section 6(1)(b) of the Law in the future and (b) impose an administrative fine of €237,181.76 on MTN regarding the infringement of section 6(1)(b) of the Law.

Decision relating to JCC Payment Systems Limited

Following the completion of a preliminary investigation and having evaluated the evidence before it, the CPC unanimously issued non-infringement Decision No. 47/2019 regarding an ex officio investigation concerning the possible infringement of section 3 or section 6, or both, of the Competition Law and of article 101 or article 102, or both, of the TFEU by JCC Payment Systems Limited (JCC). The case involved an examination of the imposition of unfair commercial transaction clauses in regard to JCC’s customers and of JCC’s retrospective imposition of rent charges to customers at point of sale (POS) terminals. The CPC concluded that JCC constituted an undertaking holding a dominant position in the relevant market of acquiring processing services of payment cards and of processing payment transactions in Cyprus and defined the relevant geographical market as the market of Cyprus and the European Union. The CPC, on the basis of the data before it, unanimously concluded that no infringement had been established. It also concluded that the discounts granted to its customers on POS terminals rents, provided they achieved a certain turnover, were objective and that the amount was small and, therefore, would not deter future competitors from entering the market. Furthermore, the CPC concluded that, consequently, no unfair terms have been imposed by JCC based on section 6(1) of the Competition Law and or article 102 of the TFEU. The CPC has also concluded that, since JCC’s discount policy was the product of a unilateral act by JCC and, therefore, did not derive from agreements or practices mutually adopted by JCC and its customers, there was no infringement based on section 3 of the Law and or article 101 of the TFEU.

Court decisions

An administrative recourse was filed by the Cyprus Telecommunications Authority (CYTA) to the Administrative Court (Case No. 741/2013) relating to CPC Decision 6/2013, whereby the CPC held that CYTA had infringed section 6(1)(a) of the Competition Law by charging high prices regarding the supply or assignment of rights of international capacity through the SMW-3 sub­marine fibre-optic cable system to other competitors, hindering competitors’ ability to charge their customers lower prices for the same services offered by CYTA. More specifically, the CPC concluded that CYTA abused its dominant position in the market for the supply or assignment of rights of international capacity through the submarine cable systems for the route between Cyprus and London, for the period between 2006 and 2013, and imposed a fine of €295,277.

Following the administrative recourse filed by CYTA, the Administrative Court quashed CYTA’s arguments of an alleged error on the determination of the relevant market by the CPC, upholding the CPC’s findings in regard to CYTA’s dominant position, and the relevant market, as sufficiently justified on the basis of the criteria set by the Competition Law. However, with regard to the CPC’s conclusions of an abuse of CYTA’s dominant position in the supply of international capacity by the imposition of excessive pricing to Primetel (which constituted a newly established competitor) in Cyprus, the Court ruled that, despite the legality of the method used by the CPC to determine CYTA’s abusive behaviour through the imposition of excessive pricing ‘in itself’, as determined from the United Brands case, it had not sufficiently justified the legal reasoning for not considering the use of alternative methodologies, despite CYTA’s objections. In light of the last ground set by CYTA, the Administrative Court determined that the recourse against the CPC’s decision was successful. An appeal has been filed by the CPC to the Supreme Court.

An Administrative Court interim Decision (Case No. 1123/2015) was issued in the course of an administrative recourse filed by Hermes Airports Ltd (Hermes) against the CPC’s decision, following an application requesting the discovery, disclosure and inspection of confidential documents and correspondence in the CPC’s possession (CPC Decision No. 20/2015, issued on 23 June 2015). The CPC filed an objection to Hermes’ interim application, and the Court, following an examination of the submission of the parties’ written statements, issued a decision rejecting the interim application on the basis of non-establishment of the criteria required by the Competition Law, namely the establishment of the necessity and relevance of the disclosure of the documents with the recourse, and the effect with regard to the right of fair trial and to Hermes’ right of defence. The recourse was filed against the CPC’s findings, following the submission of a complaint by Demstar Automotive Ltd, of an infringement of Hermes’ dominant position as the managing operator of the international airports of Paphos and Larnaca under section 6(1)(a) of the Competition Law and article 102 of the TFEU, as a result of its practices, terms and conditions imposed on the complainant in the provision of parking space facilities, whereby the CPC by a majority decision had imposed an administrative fine of €750,000.

Similarly an interim decision was issued by the Administrative Court, in Case No. 65/2015 on 4 December 2019, concerning another application requesting the discovery, disclosure and inspection of confidential documents and correspondence in the CPC’s possession with regard to its decision against the Pancyprian Organisation of Cattle Farmers (POCF) Public Ltd (Decision No. 42/2014, issued on 17 October 2014), following an ex officio investigation, whereby administrative fines of €2.1 million were imposed for infringement of sections 3(1)(a), 3(1)(b) and 3(1)(c) of the Competition Law. The Court rejected the application, concluding that the POCF did not establish the criteria required by the Law, namely the necessity and relevance of the disclosure of the documents with the administrative recourse filed, and the effect with regard to the right of fair trial and to the POCF’s right of defence.

Current investigations and other matters

The CPC decided on 14 February 2020 to initiate proceedings, following the completion of an ex officio preliminary investigation against Charalambides Christis Ltd, on the basis of section 23(2) of the Competition Law, for an alleged infringement of section 6(1)(a) of the Law or of article 102 of the TFEU, or both, between 1 January 2008 and 24 October 2014. The alleged infringement concerns a possible abuse of Charalambides Christis’ dominant position as a result of charging excessive prices in the market of the supply of chocolate and scented milk and lactose-free milk. The proceedings are continuing.

Furthermore, the CPC is actively involved in the national preparations and groundwork in relation to the transposition of Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the member states to be more effective enforcers and to ensure the proper functioning of the internal market.

The CPC continues to cooperate closely with regulators and in particular with the Regulator for Telecommunications and Postal Services and the Energy Regulator, and provides reasoned opinions to public bodies, such as government departments and the House of Representatives, on issues of its competence and on new or older legislation or other activities.

The CPC is committed to the public enforcement of competition rules to prevent and deter infringements for the benefit of the economy and consumers. Being an administrative body, the CPC must investigate all complaints submitted, despite the limited resources it has available, and has the power to initiate ex officio investigations and to conduct sector inquiries.