Cyprus: Latest moves from the 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 2021 and March 2022.

Discussion points

• The Cyprus Commission for the Protection of Competition competences
• The Protection of the Competition Law of 2022 (Law No. 13(I)/2022)
• Infringement and non-infringement decisions issued

Referenced in this article

• Section 3 of the Competition Law of 2022
• Section 6 of the Competition Law of 2022
• Decision relating to telephone and broadband services
• Decision relating to the fresh pasteurised, high pasteurised and long-lasting cow milk market
• Decision relating to the storage and management of LPG (liquefied petroleum gas)
• Decision relating to agreement-cooperation protocol between associations of undertakings
• Current 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 Law of 2022 No.13(I)/2022 (the Competition Law); and
• the Control of Concentrations between Undertakings Law of 2014, No. 83(I)/2014 (the Concentrations Law).

The CPC is also one of the competent authorities for the application of the Interchange fees for card-based payment transactions Law No. 77(I)/2018, which was enacted for the purposes of harmonisation with Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange fees for card-based payment transactions.

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 Competition Law

On 10 February 2022, the Cyprus parliament voted into law the Bill entitled ‘The Protection of Competition Law of 2022’.

The 2022 Law replaced the former Protection of Competition Laws of 2008 and 2014 and led to the harmonisation with Directive (EU) 2019/1 of the European Parliament and 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.

Directive (EU) 2019/1 and consequently the amendments effected to the existing legal framework governing competition law introduced the following changes:

• to ensure that national competition authorities, including the CPC, have adequate investigative tools to help identify and deal with infringements of EU competition law, and that they can impose effective fines on undertakings and associations of undertakings;
• to ensure that national competition authorities, including the CPC, act with complete independence and impartiality in the implementation of EU competition law and simultaneously, have sufficient resources and the necessary staff, required for their work; and
• to ensure that national competition authorities, including the CPC, have detailed leniency programmes that encourage companies to adduce evidence regarding cartels.

As a result, the newly enacted Protection of the Competition Law of 2022:

• maintains the provisions relating to the powers for investigations and imposition of administrative fines and introduces provisions relating to deadlines for payment of administrative fines and imposition of interest in payment delays;
• maintains the provisions relating to the prohibition of collusions and abuse of a dominant position or position of economic dependence and introduces the authority to interview persons to collect information and statements in connection with its investigations;
• reinforces the procedural guarantees relating to the CPC’s procedures, such as the complaint submission procedure, the procedure relating to case file access and the procedures relating to the protection of business secrets, confidential information and persona data;
• strengthens the CPC’s powers with the authority of issuance of announcements, recommendations and guidelines in relation to the matters of its competency, access to the file procedures, personal data processes, the assessment of gravity and duration of the infringement and mitigating and aggravating factors for the imposition of administrative fines;
• reinforces the responsibilities of the CPC’s Service as the latter may submit a report with suggestions in relation to business secrets and confidential information as well as in relation to commitments proposed by the undertakings;
• improves the cooperation of the CPC with other national competition authorities and introduces new provisions for the mutual assistance for investigations and disclosure of documents related to the cross-border implementation of articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) and the enforcement of administrative fines; and
• simplifies and introduces instructions for the submission of complaints before the CPC.

Cases examined by the CPC^[1]

Between April 2021 and March 2022, the CPC issued 85 decisions, 73 of which concerned examination of notifications of concentrations between undertakings, issuing clearance decisions for 71 of them in Phase I. The CPC also issued 13 decisions under the Competition Law: four concerned non-infringement findings, five concerned the rejection of complaints and four concerned findings of infringements.

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

Antitrust decisions

Decision relating to broadband services and Pay TV

The CPC imposed an administrative fine on the Cyprus Telecommunications Authority (CYTA) for infringements of section 6(1)(a) and section 6(1)(d) of the Competition Law and corresponding article 102(a) and article102 (d) of the TFEU (Decision No. 3/2021, issued on 1/2/2021 and published on the CPC’s website on 3 August 2021)

Primetel Plc (Primetel) filed a complaint against CYTA, the telecommunications incumbent, alleging that the combination of provided products of fixed telephony and broadband services along with Pay-Tv services creates a competitive advantage over its competitors, in attracting new subscribers. This is contrary to the competition rules and thus violates section 6(1)(d) of the Competition Law. The complaint also alleged that CYTA takes advantage of its dominant position in the market in order to financially eliminate its competitors, including, inter alia, Primetel, through the subsidy and cross-subsidisation of the Cytavision platform by the fixed telephony services in violation of section 6(1)(a) of the Competition Law.

The CPC, having examined all the available evidence, such as financial data and analyses, unanimously concluded that CYTA had infringed section 6(1)(a) of the Competition Law and corresponding article 102(a) of the TFEU, as well as section 6(1)(d) of the Competition Law and corresponding article 102(d) of the TFEU.

To this end, the CPC ordered CYTA to take actions to avoid repeating violation of section 6(1)(a) and 6(1)(d) of the Competition Law and corresponding article 102(a) and article 102(d) of the TFEU in the future. In addition, the CPC imposed on CYTA an administrative fine of €434,261 for infringements of section 6(1)(a) of the Competition Law and corresponding article 102(a) of the TFEU for the implementation of predatory pricing for retail Pay-Tv service Cytavision in 2013 and an administrative fine of €434,261 for infringements of section 6(1)(d) of the Competition Law and corresponding article 102(d) of the TFEU regarding product bundling in relation to Cytavision, DSL Access and Net Runner services as a service package for 2013.

Decision relating to fresh pasteurised, high pasteurised and long-lasting cow milk market

The CPC imposed an administrative fine on Charalambides Christis Ltd (Charalambides Christis) for infringements of section 6(1)(a) of the Competition Law and corresponding article 102(a) of the TFEU (Decision No. 5/2021, issued on 2 February 2021 and published on the CPC’s website on 1 February 2022).

The CPC initiated an ex officio investigation into the fresh pasteurised, high pasteurised and long-lasting cow milk market for the period from 1 January 2008 until 24 October 2014.The CPC, in the course of the preliminary investigation procedures, performed an unannounced inspection (a dawn aid) at the premises of Charalambides Christis and another milk production company and gathered evidence such as statements, internal correspondence, sales invoices, credit notes and other documentation.

The CPC having examined all the available evidence, namely economic data, analyses and replies of third parties to the CPC’s questionnaires in the course of conducting its own investigation, unanimously concluded that Charalambides Christis held a dominant position in the market of chocolate-flavoured milk and that its selling prices at the examined time period (1 January 2008 until 24 October 2014) were excessive, resulting in an infringement of section 6(1)(a) of the Competition Law.

As a result, the CPC ordered Charalambides Christis to avoid any repetition of the infringement of section 6(1)(a) of the Competition Law in the future and imposed an administrative fine of €271,385.11 for the aforementioned infringements of section 6(1)(a) of the Competition Law and corresponding article 102 (a) of the TFEU.

Decision relating to cooperation agreement between association of undertakings

The CPC imposed an administrative fine on the Association of Contractors of Mechanical and Electrological Works of Cyprus (SEMEEK), the Association of Engineering Electrical, Engineering and Energy Consultants (ACEEME), the Cyprus Electrical Contractors Association (SEHK), the Association of Licensed Electrical Contractors POSEH Limassol District (SEE) and the Federation of Associations of Electrical Contractors Cyprus (OSEHK) for infringement of section 3(1)(b) of the Competition Law and of corresponding article 101(1)(b) of the TFEU.

The CPC conducted an ex officio investigation in relation to the practices, actions and behaviour of OSEHK, SEE, SEHK, SEMEEK and ACEEME that may have had as their object or effect the prevention, restriction or distortion of competition in violation of section 3(1)(b) of the Competition Law and article 101(1)(b) of the TFEU.

Based on all evidence before it and following the completion of the oral hearing and written submissions of all involved parties, the CPC unanimously decided that:

• in relation to the cooperation agreement protocol between SEMEEK, SEHK, ACEEME, SEE and OSEHK, as associations of undertakings, on the basis of which SEMEEK, SEHK, SEE and OSEHK would only submit tenders in relation to projects where the consultant is a member of a professional association and the corresponding members of ACEEME would call for tenders only contractors who are members of professional associations, all said parties infringed section 3(1)(b) of the Competition Law and article 101(1)(b) of the TFEU. The object of the agreement was the restriction of competition from the time it was adopted (19 November 2015 for SEMEEK, SEHK and ACEEME and 28 January 2016 for SEE and OSEHK) up until the time it was suspended for the first time on 19 April 2016; and
• in relation to the agreement between SEMEEK, SEHK, SEE and OSEHK, as associations of undertakings whose members should not submit tenders to projects unless the submission conformed to appointed subcontracting method, SEHK, SEE and OSEHK infringed 3(1)(b) of the Competition Law and article 101(1)(b) of the TFEU. The agreement had as an object the restriction of competition from the time it was adopted (19 November 2015 for SEHK and 28 January 2016 for SEE and OSEHK) up until the commencement of the ex officio investigation on 20 October 2016. This infringement was not attributed to SEMEEK as, taking into account the CPC’s Decision No. 25/2017, there was not a commencement of procedures based on section 17 of the Competition Law.

Pursuant to section 24 of the Competition Law, the CPC unanimously decided that ACEEME, SEMEEK, SEHK, SEE and OSEHK must avoid repeating the above-mentioned infringements in the future. Additionally, the CPC, in exercising its discretion, evaluated all of the evidence before it and, having considered the nature, duration and seriousness of the infringements as well as all mitigating factors, unanimously decided to impose administrative fines:

• on OSEHK, SEE and SEHK regarding the infringement of section 3(1)(b) of the Competition Law and article 101(1)(b) of the TFEU in relation to the aforementioned cooperation agreement-protocol, and also regarding the infringement of section 3(1)(b) of the Competition Law and article 101(1)(b) of the TFEU in relation to the matter of the appointed subcontracting; and
• on SEMEEK and ACEEME regarding the infringement of 3(1)(b) of the Competition Law and article 101(1)(b) of the TFEU in relation to the aforementioned cooperation agreement-protocol.

Merger decisions

Decision relating to the storage and management of liquefied petroleum gas

The CPC decided that the concentration resulting from the acquisition of the share capital of VLPG PLANT Ltd (VLPG) by Yugen Limited (now EKO Logistics Ltd) (EKO Logistics) and the merged Hellenic Petroleum SA Group activities related to the storage and management of liquefied petroleum gas (LPG) with the respective business divisions of Petrolina (Holdings) Public Ltd, Synergas Ltd and Intergaz Ltd (together, the ‘Founding Companies’ of VLPG), which have already been merged through VLPG (the Founding Companies together with EKO LOGISTICS, the ‘Companies’), is compatible with the functioning of competition in the market, subject to specific conditions undertaken by the parties involved in the transaction.

The CPC concluded that the above notified concentration was within the scope of the Control of Concentrations between Undertakings Law of 2014, Law No. 83(Ι)/2014 (the Law) and decided to proceed to a full investigation.

In the context of a full investigation, the Service provided additional information from the participating undertakings in the concentration, as well as from the relevant bodies and businesses, and submitted a findings report to the CPC on 19 November 2021, on the basis of article 27 of the Law. The CPC assessed the findings report and decided that there were still doubts as to the compatibility of the concentration with the functioning of competition in the market. The CPC, acting on the basis of section 28(2) of the Law, compiled a report with objections ascertained in relation to the incompatibility of the concentration with the functioning of competition in the market and informed the participating undertakings that they could submit any amendments to the concentration in writing, as well as any other commitments so as to remove the doubts raised by the objections. Prior to its decision, and on the basis of article 33(1) of the Law, the CPC held a hearing with the participating undertakings. The Companies then submitted a number of commitments, with the final one being submitted on 14 December 2021.

After studying and evaluating the final proposed commitments made by the Companies and VLPG, the amended shareholders agreement of VLPG and the results of the full investigation of the concentration, the CPC considered that the commitments undertaken by them were sufficient to remove the doubts raised.

After considering the commitments made by the participating undertakings, the CPC, acting on the basis of article 28(1)(a) of the Law, unanimously decided that the concentration was compatible with the functioning of the competition on the market. Specifically, the participating undertakings undertook the commitments that are valid based on the Decision CPC 49/2018, that had been undertaken by the Founding Companies, which are as follows:

1. Modification of the Shareholders’ Agreement, in order to ensure that there will not be different pricing policies or terms and conditions between the companies involved and customers. The New Company will enter into transactions with all its customers under the same terms (at arm’s length).
2. Modification of the Shareholders’ Agreement, in order to ensure the cost-oriented pricing policy of the New Company regarding the provision of storage space, access to anchorage and transport pipelines.
3. Ensure the possibility of renting storage space to at least two companies with a decrease in the minimum level of space necessary for accepting a company, and a commitment by VLPG that in the case where 10 per cent of the total storage space is not used by a third party, then 100MT will be provided to the next applicant, even if the total storage space to third parties exceeds 10 per cent.
4. Ensure the provision of 10 per cent of total storage space to third parties, in the case of extending the storage space.
5. The provision of a manual for protecting competition to all the members of staff of VLPG, in which all the policies of the Companies will be documented as well as the procedures that will have to be followed by all the members of staff who may have access to sensitive and/or confidential information.
6. Appoint an independent third party who will be responsible for verifying compliance with all commitments and to submit an annual report to the CPC within the first quarter of each year confirming the implementation or non-implementation of the commitments by the VLPG with respect to the previous year.
7. A commitment not to prevent VLPG customers from using and renting facilities of a potential competitor, thus limiting any activity in the upstream or downstream market.
8. During the period of construction of the necessary facilities of the storage space and the twelve (12) month period from the start of the operation, the companies are obliged to hold any Board of Directors’ meetings of VLPG in the presence of an independent third party, who will ensure that no illegal coordination exists in the affected markets and that no sensitive information regarding VLPG is exchanged.
9. The members of the Board of Directors and the chief executive officers of the Companies will not hold any position in the Board of Directors of the New Company, twelve (12) months after the start of VLPGS’ operation.
10. The commitments must be met for the entire period of VLPG’s operation.

In addition to the above, Hellenic Petroleum S.A Group undertook the following additional commitments:

1. any use of the two of the plots owned by the Hellenic Petroleum SA Group in the space designated by the Ministry of Energy, Trade and Industry for use in relation to LPG, will not concern and/or related to the storage and/or handling of LPG and in any case will not to compete with any activity of VLPG, provided that EKO Logistics Ltd and/or any other company of the Hellenic Petroleum SA Group is a shareholder of VLPG;
2. after the lapse of five (5) years from the date of the approval of the concentration by the CPC and in case the two aforementioned plots would not have been used for the declared reasons, nor the licensing process for alternative plans would have been started, or would not have been released in favour of the state by then, the plots in question would be released in favour of the state; and
3. a representative of the Hellenic Petroleum SA Group will provide full information to the CPC, within the first quarter of each year until the end of the five-year period, on all relevant developments.

Current investigations and other matters

Statement of objections relating to the market of production and supply of grey cement

The CPC issued a statement of objections to Vassiliko Cement due to the fact that the preliminary investigation revealed prima facie that the latter abused its dominant position in the market of production and supply of cement within Cyprus. The CPC found that Vassiliko Cement imposed overpriced grey cement on the domestic market, in violation of section 6(1)(a) of the Competition Law and corresponding article 102(a) of the TFEU.

There was a preliminary ex officio investigation in the field of cement from 2013 until 31 August 2018.

Decisions of the Administrative Court

The CPC, being an administrative body, is bound by administrative law and all its decisions may be reviewed through an appeal filed to the Administrative Court. Further on, Administrative Court decisions can be reviewed by the Supreme Court of Cyprus.

Between April 2021 and March 2022, the Administrative Court ratified a number of decisions issued by the CPC.

More specifically, on 14 October 2021, the Administrative Court ratified CPC decision No. 20/2015, according to which an administrative fine of €750.000 was imposed on Hermes Airports Ltd for infringements of section 6(1)(a), 6(1)(b) and 6(1)(c) of the Competition Law and the corresponding article 102 of the TFEU.

Similarly, it ratified CPC decision No. 42/2014, according to which an administrative fine of €2.1 million was imposed on the Pancyprian Organization of Cattle farmers for infringement of sections 3(1)(a), 3(1)(b) and 6(1)(a) of the Competition Law, and also the CPC’s decision No 7/2015, whereby the Cyprus Telecommunications Authority received an administrative fine of €1,016,425 for infringements of sections 6(1)(a) and 6(1)(b) of the Competition Law.

Furthermore, a decision first issued in 2001 by the CPC in relation to infringement of section 6(2) of the Competition Law in a case concerning the cosmetics sector MTV, and Wella was finalised and ratified in 2021. The second CPC’s decision in relation to the case was challenged before the Court in 2012, and the respective court decision, which was issued in favour of the CPC in 2015, was subject to appeal and reviewed by the Supreme Court of Cyprus. It is significant to note that, following 12 years of procedures, the Supreme Court issued the final decision on 25 October 2021, rejecting the aforementioned appeal and ratifying the decision issued by the CPC. The Supreme Court acknowledged that the facts could not lead to fulfilment of the necessary conditions for infringement of section 6(2) of the Competition Law, despite the long-term (commercial) relationship of financial dependence between MTV and Wella.

CPC and European Competition Network

The CPC, along with all other EU national competition authorities at the European Competition Network (ECN) Directors General’s meeting of 22 June 2021, have endorsed a joint paper regarding the contribution of all national competition authorities to the enforcement of the proposition for the Digital Markets Act (DMA) published by the ECN.

The paper declares the need for better coordination on the implementation of the DMA with the national competition procedures, and in this regard makes some efficiency proposals to make it a more powerful tool for dealing with some of the most harmful behaviours applied by enormous gatekeepers.

Furthermore, the CPC participated in the issuance of the Joint ECN statement on the application of competition law in the context of the war in Ukraine. The CPC, along with the other national competition authorities, is fully aware of the social and economic consequences for Ukraine as well as for the EU/EEA. As stated in the ECN joint statement on the application of competition law during the covid-19 crisis, the different EU/EEA competition instruments have mechanisms that consider, where appropriate and necessary, market and economic developments. Competition rules ensure a level playing field between companies. This objective remains relevant in a period when companies and the economy as a whole suffer from crisis conditions. In these circumstances, the ECN will not actively intervene against strictly necessary and temporary measures specifically targeted at avoiding severe disruptions caused by the impact of the war or of sanctions in the internal market. If companies, on the basis of their self-assessment, have doubts about the compatibility of such cooperation initiatives with EU/EEA competition law, they can reach out to the CPC, the EFTA Surveillance Authority or the national competition authority concerned any time for informal guidance. At the same time, it is of utmost importance to ensure that essential products (eg, energy, food, raw materials) remain available at competitive prices and that the current crisis is not used to undermine a competitive level playing field between companies.

The CPC in the digital era

Following the introduction of the e-OASIS system, a software that digitalises the authority’s files, the CPC has been active in implementing changes to render its procedures more efficient and effective, and has participated in relevant programmes.

Pursuant to the provisions of the Control of Concentrations of Undertakings Law of 2014 (83(Ι)/2014), any person who is responsible for notifying a concentration of undertakings should proceed with the submission of all relevant documentation in printed and electronic form. For this purpose, the CPC set up a new email address ([email protected]), where all such documentation may be sent, thus, creating a more efficient line of communication between the Commission and enterprises, avoiding unreasonable delays and simultaneously ensuring better data security.

Moreover, the CPC participates in the Computational Antitrust project, hosted by the CodeX Center of Stanford University and run by Professor Thibault Schrepel. The programme aims to introduce new tools and methods that will succeed in pairing the protection of competition with digital techniques, and involves national competition authorities and academics with different backgrounds.

The CPC welcomes this programme and considers that it will offer new possibilities for competition law that will make it more effective in modern digital markets and technologies.

Human resourcing

In light of the CPC’s reinforcement and empowerment, and following its painstaking efforts, a recruitment procedure was concluded in 2021 by which nine additional officers of legal or economic background were appointed to its Service.

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 provides reasoned opinions to public bodies and the House of Representatives on matters of its competence and on new or older legislation or other activities.

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.

Notes