Cyprus: CPC Still Busy During Covid-19
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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 2020 and March 2021.
- Competences of the Cyprus Commission for the Protection of Competition
- Infringement and non-infringement decisions that have been 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
- Decision No. 4/2020 regarding airport parking services
- Decision No. 20/2020 regarding tobacco for roll-your-own cigarettes
- Decision No. 53/2019 regarding heavy-duty detergents
- Decision No. 30/2020 regarding pay television services
- Current investigations and other matters
The Cyprus Commission for the Protection of Competition (CPC) is the competent authority for applying com-petition rules in Cyprus. In this regard, there are two applicable laws relating to antitrust enforcement and M&A control:
- the Protection of Competition Law No. 13(I)/2008, as amended by Law No. 41(I)/2014 (the Competition Law); and
- the Control of Concentrations between Undertakings Law No. 83(I)/2014 (the Concentrations Law).
The CPC is also one of the competent authorities for the application of Law No. 77(I)/2018 on interchange fees for card-based payment transactions, which was enacted for the purpose of harmonisation with Regulation (EU) 2015/751.
The CPC is an independent administrative authority comprising a chair and four members, who are appointed by the Council of Ministers based on a proposal by the Minister of Energy, Commerce and Industry. The chair and the members have a five-year term of office, which is renewable, and they 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 in accordance with the Public Service Law and procedures.
The CPC, being an administrative body, is bound by administrative law. All decisions of the CPC can be appealed to the Administrative Court, and decisions of the Administrative Court can be reviewed by the Supreme Court.
Between April 2020 and March 2021, the CPC issued 56 decisions, 40 of which concerned examination of notifications of concentrations between undertakings. Of those 40, 38 resulted in clearance decisions being issued in Phase I, one resulted in amendment of commitments, and one decision resulted in an infringement of the law owing to implementation of the merger prior to notification.
The CPC also issued 16 decisions under the Competition Law: nine concerned a non-infringement conclusion, two concerned the rejection of a complaint, three concerned findings of infringements, and two concerned the imposition of commitments.
Some of the antitrust decisions issued by the CPC are described below in further detail.
Decision No. 4/2020 regarding airport parking services
In Decision No. 4/2020, issued 4 August 2020, the CPC imposed an administrative fine of €475,761.47 on Hermes Airports Ltd (Hermes) for infringements of section 6(1)(a) of the Competition Law.
The case concerned a complaint filed by the companies A Princess Airport Parking Ltd, C&A Stop and Fly Ltd and X Xanthos Airport parking services against Hermes Airports Ltd. Those companies provide valet parking services, namely parking for customers departing from Larnaca International Airport and who choose to use their own vehicle to and from the airport.
The customer hands over his or her car at the airport. The company transfers the car to a special storage space and may also provide other services at the customer’s request. It then returns the vehicle to the airport and delivers it to the customer once he or she returns to Cyprus.
The companies rent parking spaces in the Larnaca International Airport premises on the basis of an agreement signed with Hermes. Hermes also provides parking services for long-term or short-term parking directly to travellers, having designated those parking areas within the airport perimeter.
The CPC, having examined all the evidence before it (ie, the relevant financial data and analysis submitted by the undertakings), and having conducted its own economic analysis, concluded that Hermes holds a dominant position in the market as the operator and manager of the Larnaca International Airport, as well as in the market of providing parking space in the airport to other companies for the provision of their services. The CPC noted that, through its behaviour and practices, such as relocating the airport’s designated areas for the drop off and pick up passengers without consulting the undertakings, and through the imposition of unfair excessive prices to the companies providing valet parking services, Hermes aimed to exclude and exploit those companies, which competed with Hermes in the provision of parking services for passengers and travellers.
The CPC concluded that Hermes had infringed section 6(1)(a) of the Competition Law and ordered Hermes to avoid repeating the infringement in the future.
Decision No. 20/2020 regarding tobacco for roll-your-own cigarettes
In Decision No. 20/2020, issued on 31 July 2020, the CPC issued a decision on 28 Aril 2020 accepting commitments offered by Fereos Ltd, Cosmos Trading Ltd, Giorgos Katsafalos Ltd, BAT (Cyprus) Ltd and Cassandra Trading Ltd.
The case concerned concerted practice between the companies operating in the provision of fine-cut tobacco products intended for roll-you-own (RYO) cigarettes. Those companies had distributed price lists of wholesale and retail prices and exchanged sensitive information. The object or effect of that conduct was to limit, directly or indirectly, the mark up of their clients and, as a result, restrict the inter-brand and intra-brand competition in the market for fine-cut tobacco products for RYO cigarettes in Cyprus.
Acting on the principle of proportionality and pursuant to article 25(1) of the Competition Law, and after having examined and evaluated the commitments initially offered by the undertakings under investigation, the CPC unanimously decided to accept the commitments undertaken by the undertakings as sufficient to meet the doubts and concerns raised in the statement of objections in relation to prima facie infringement of section 3(1)(a) of the Competition Law.
The commitments undertaken by the companies concerned:
- not exchanging information or documents containing information on the prices of fine-cut tobacco products;
- terminating the publication and circulation of price lists containing wholesale prices on fine-cut tobacco products;
- making it abundantly clear to customers that the recommended retail price (RPP) on fine-cut tobacco products is merely a suggestion that and each retailer is free to sell the tobacco at a lower or higher price than the RRP; and
- appointing an independent person or member of its governing board to submit to the CPC a written report, accompanied by an affidavit, during the first trimester of each year, stating that the companies in the preceding year had acted in accordance with the commitments undertaken.
The commitments undertaken concern present and future fine-cut tobacco products for RYO cigarettes and the territory of Cyprus.
The CPC recommended that the undertakings adopt internal procedures to inform their employees, through the issuance of relevant instructions or written information, of the commitments undertaken and, in particular, of the prohibition of exchanging, distributing or acquiring their competitors’ price lists.
Decision No. 53/2019 regarding heavy-duty detergents
In Decision No. 53/2019, issued on 22 May 2020, the CPC issued a decision imposing an administrative fine of €3,302,000 on Henkel AG & Co KGaA, jointly and severally with its subsidiary in Cyprus GPM-Henkel, for infringements of section 6(1)(b) of the Competition Law (corresponding to article 102(b) of the Treaty on the Functioning of the European Union (TFEU)), following the examination of a complaint lodged by KAC Constantinides Trading Ltd (KAC).
KAC complained that GPM-Henkel’s actions aimed to prevent retailers from buying parallel import products, despite being genuine Henkel products, which led many customers of KAC to avoid buying parallel import products, even though the prices of those products were lower.
The CPC, in the course of the preliminary investigation procedure, performed an unannounced inspection (dawn raid) at the premises of GPM-Henkel and five retail stores that sold Henkel’s products. During the inspection, the representatives of the retail stores, as well as officers and employees of GPM-Henkel, were asked to answer questions related to the investigation. Among the evidence the CPC gathered were statements of the representatives of the retail stores, internal correspondence between officers of Henkel AG & Co KGaA and its subsidiaries, GPM-Henkel’s letters of notice addressed to retail stores and to wholesalers and importers of parallel products, executive meetings presentations, notes, sales invoices, credit notes and other documents and replies of third parties to the questionnaires of the Commission.
The CPC concluded that GPM-Henkel obstructed, by various means, the sale of parallel imports of Henkel products in Cyprus. More specifically, GPM-Henkel sent a letter of notice to importers and wholesalers demanding that they stop importing Henkel products, reserving GPM-Henkel’s and Henkel AG & Co KGaA’s rights to take any and all legal action necessary against them. Similar letters of notice were also sent to specific retail stores that sold Henkel products of parallel import, and individual meetings took place between Henkel’s directors and the owners and employees of retail stores, demanding them to terminate the sale of those products. It was established that Henkel AG & Co KGaA was aware of the actions of GPM-Henkel.
The CPC established that Henkel applied exclusionary and obstructive practices to parallel importers in the market, as well as exclusive purchasing practices of Dixan products, by attempting to impose an obligation to its customers to exclusively purchase Dixan products from GMP Henkel and by intimidating and threatening its customers by not supplying them with any Henkel products, threatening them with legal action. The CPC stated that those actions resulted or may have resulted in limiting the distribution of products in the market and distorting effective competition to the detriment of consumers in accordance with the provisions of section 6(1)(b) and article 102 of the TFEU.
Decision No. 30/2020 regarding pay-TV services
In Decision No. 30/2020, issued on 20 July 2020, the CPC examined a complaint by PrimeTel Co Ltd against Cyta and Forthnet alleging violations of article 6(1)(a) and (d) of the Competition Law. PrimeTel Ltd accused Cyta of tying its internet services (DSL Access and Net Runner) and its pay-TV services (Cytavision) and offering it to consumers at below cost. Further, it complained about the exclusivity agreement between Cyta and Forthnet that gave Cyta exclusivity to broadcast on its platform (Cytavision) content bought from Forthne, as well as, among other things, exclusivity to broadcast not only sports channels that are licensed to broadcast the Super League and the Euro League but also other channels that broadcast films and TV series.
The CPC did not examine the allegations regarding Forthnet as it had already examined Forthnet’s conduct in 2015, finding Forthnet to be in breach of article 101(1)(a), (b) and (c) of the TFEU and imposing an administrative fine of €2.25 million (Decision No. 13/2015).
Having examined all the evidence before it (ie, the financial data and analyses submitted by Cyta) and having conducted its own economic analysis, the CPC concluded that Cyta sold the pay-TV service Cytavision at a price below cost from 2011 to 2012. It concluded that this practice of predatory pricing had, as an effect, the probable exclusion of one or more of Cyta’s real or potential competitors in the pay-TV market, as well as the internet-access market. It also concluded that Cyta bundled its internet and pay-TV products Cytavision, DSL Access and Net Runner in a way such that the price contravened section 6(1)(d) of the Competition Law (corresponding to section 102(d) of the TFEU). The CPC took into account Cyta’s internal reports and decisions in reaching its conclusion.
The CPC imposed on Cyta an administrative fine of €564,703.75 for infringing article 6(1)(a) of the Competition Law and the corresponding article 102(a) of the TFEU from 2011 to 2012, as well as an administrative fine of €564,703.75 for infringing article 6(1)(d) of the Law and the corresponding article 102(d) of the TFEU for the bundling of Cytavision, DSL Access and Net Runner from 2011 to 2012.
Current investigations and other matters
Another case that ended with a commitment decision is the case relating to the Cyprus Pharmaceutical Association (CPA). The CPA, through its practices in relation to its members, allegedly by object or effect infringed article 3(1)(a) of the Competition Law (corresponding to article 101(1) of the TFEU). A statement of objections was issued in June 2020, and a commitment decision was issued. The commitment decision has not yet been published at the time of writing.
On 19 June 2020, the CPC issued a statement of objections to undertakings operating in the production and distribution of ready-mix concrete. The preliminary investigation prima facie revealed a cartel between the undertakings from 2011 to 2014 with the aim of sharing sensitive information that had the object or effect of fixing prices and limiting the production of concrete and the aggregates used for the production of ready-mix concrete. Furthermore, prima facie, the cartel’s objective was to divide or allocate new customers (market sharing) and rig public procurement issued in the Limassol district and regarding renovations carried out in the district’s port.
Amendments to national legislation
A public consultation ran from 11 May 2020 to 12 June 2020 in relation to amendments of national law to harmonise with 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 was and is involved in the national preparations and groundwork in relation to the transposition of the Directive. The measures undertaken include:
- the drafting of the new Competition Act of 2021 to replace the existing Competition Acts of 2008 and 2014.
- The drafting of a new directive on the leniency programme: the Directive of 2021 on immunity from fines or the reduction of fines in cases where undertakings participate in an alleged cartel in violation of article 3 of the Law or article 101 of the TFEU.
Digitisation of the CPC
On 4 December 2020, the CPC introduced e-OASIS, a new software that will digitalise the way it receives merger notifications and complaints. The software will also digitise the way the CPC stores its archive files and, in general, it will digitise the CPC’s file management, therefore leading to a paperless office.
CPC and ECN
The CPC, being a member of the European Competition Network (ECN) and being fully aware of the social and economic consequences triggered by the covid-19 pandemic in the European Union and the European Economic Area, issued a joint statement with its counterparts, taking into account the extraordinary situation that may trigger the need for companies to cooperate to ensure the supply and fair distribution of scarce products to all consumers and stating that, in the current circumstances, the ECN will not actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply.
Promoting cooperative culture
The CPC continues to cooperate closely with regulators, in particular with the Regulator for Telecommunications and Postal Services, the Public Procurement Authority and the Energy Regulator, and to provide reasoned opinions to public bodies, such as government departments and the House of Representatives, on matters of its competence and on new or older legislation or other activities. The CPC has also renewed the Memorandum of Cooperation signed with the Greek Competition Authority.
The CPC is committed to the public enforcement of competition rules, also keeping in mind the fast-moving developments in the digital world, so that it can be vigilant in preventing and deterring infringements for the benefit of the economy and consumers.