Cyprus: CPC promotes healthy competition with fresh legislation, impactful antitrust rulings and public advocacy

In summary

This article sets out the main developments and decisions in cases dealt with by the Competition Authority of Cyprus, the main developments in national legislation regarding competition law, as well as some of the main initiatives undertaken by the Authority. The period of reference taken into account is between April 2022 and March 2023.

Discussion points

• The Cyprus Commission for the Protection of Competition competences
• Infringement and non-infringement decisions issued
• Decision relating to the production and supply of grey cement
• Decision relating to the provision of services by chemists to the Healthcare Insurance Organisation for the operation of the national healthcare system
• Decision relating to the failure of an undertaking to provide information during a notification of a concentration between undertakings
• Current investigations and other matters
• Advocacy

Referenced in this article

• The Cyprus Commission for the Protection of Competition
• The Protection of Competition Law of 2022 (Law No. 13(I)/2022)
• The Protection of Competition (Amending) Law of 2022 (Law 169(I)/2022)
• The Protection of Competition Laws of 2008 and 2014

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 (Law No.13(I)/2022), as amended by Law 169(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 the national competition authority responsible for the application of articles 101 and 102 of the Treaty for the Functioning of the European Union and Council Regulation (EC) No. 1/2003 of 16 December 2002 on the implementation of the rules on competition.

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 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. It comprises the chair 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 chair and members is five years and can be renewed. The chair and members serve on a full-time basis. The CPC 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

Following the enactment on 23 February 2022 of the Protection of Competition Law of 2022, Νo. 13(Ι)/2022, which repealed and replaced the Protection of Competition Laws of 2008 and 2014 (the 2008 and 2014 Laws), further amendments were enacted in November 2022. More specifically, on 14 November 2022, the Protection of Competition Law of 2022 was amended, following the passing into law of the Protection of Competition (Amending) Law of 2022 (Law 169(I)/2022) (the Amending Law). The Amending Law was voted on by Cyprus’s parliament following a proposal by the Parliamentary Committee on Energy, Trade, Industry and Tourism.

One of the most significant amendments brought about by the Amending Law was the increase in the maximum level of administrative fines, as well as of fines in relation to criminal offences, that the Council of Ministers of Cyprus can determine, under regulations that may be issued pursuant to article 65(1) of the Competition Law, where these regulations provide for such fines. Specifically, the maximum level of the fines that such a regulation can determine has now been increased from €85,000 to €350,000. Under section 65(1) of the Competition Law, the above regulations may be issued by the Council of Ministers for better implementation of the provisions of the Competition Law or for the regulation of any matter that, based on the provisions of the Competition Law, needs or is susceptible to determination. Indicatively, some of the matters that the regulations issued by the Council of Ministers may regulate include: the procedure followed before the Commission when examining violations in accordance with the provisions of this Law, and the determination of the method of exemption or reduction of administrative fines for violations in accordance with the provisions of the Competition Law.

Additionally, section 10(5) of the Law was amended so that the Commission’s code of ethics, which deals with the rules regarding conflicts of interest of the chair and the members of the CPC, now requires that it be approved by the Parliamentary Committee on Energy, Trade, Industry and Tourism, rather than the Minister for Energy, Trade and Industry, before it comes into force.

Publication of leniency programme

On the 18 November 2022, the CPC’s leniency programme was published, following the coming into force of the Competition Law. The leniency programme was issued in accordance with sections 29(a), 47(5) and 65 of the Competition Law and replaces the previous 2011 leniency programme.

The leniency programme is the legal framework that defines the leniency or full exemption from administrative fines of an undertaking wishing to cooperate with the CPC to uncover illegal cartels, which are prohibited by section 3 of the Competition Law or article 101 of the TFEU, or both. In particular, the leniency programme consists of the regulations (secondary legislation) that provide undertakings with immunity from or reduction of administrative fines in cases of restrictive collusions infringing section 3 of the Competition Law or article 101 of the TFEU, or both.

The leniency programme basically codifies the procedure, the conditions and the criteria for granting an exemption or reduction of administrative fine imposed by the CPC on an undertaking. The leniency programme contains specific provisions regarding the rights and procedures followed for its application. Relevant information in relation to the CPC’s leniency programme may be found in the relevant ICN Anti-Cartel Template (Chapter 6).

Cases examined by the CPC^[1]

Between April 2022 and March 2023, the CPC issued 74 decisions, 61 of which concerned the examination of notifications of concentrations between undertakings, issuing clearance decisions for 59 of them in Phase I and issuing decisions accepting the withdrawal of two of them, while the Commission also issued decisions in relation to infringements of the Concentrations Law in two cases. The CPC also issued nine decisions under the Competition Law: seven concerned non-infringement findings and two concerned findings of infringements.

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

Antitrust and concentrations decisions

Decision relating to the production and supply of grey cement

Following the completion of a preliminary investigation and having evaluated the information before it, the CPC issued Decision No. 3/2023, unanimously deciding on the finding of an infringement of section 6(1) of the 2008 and 2014 Laws, as applicable at the time, and of article 102 of TFEU by Vassiliko Cement Works Public Company Ltd (Vassiliko Cement Works) in the provision of cement sector.

The company under investigation is a limited liability public company, duly registered in Cyprus, operating mainly in the production and provision of cement and the production of clinker, which is one of the raw materials out of which cement is produced. This company is the only company operating in the production and provision of cement and the production of clinker within the Republic of Cyprus and also operates in the following sectors: the production of ready-mixed concrete, the production of quarry products through its subsidiaries and affiliated companies, and in generating electrical energy via one of its subsidiary companies.

The subject matter of the ex officio investigation was the potential infringement of the provisions of sections 3(1) and 6(1) of the Competition Law, as well as of articles 101 and 102 TFEU in relation to the practices, actions and conduct of the company, in the provision of cement sector.

The CPC, on the basis of all information before it, and after the conclusion of the oral hearing and the filing of written observations by the company under investigation, unanimously decided that Vassiliko Cement Works abused its dominant position in the production and provision of grey cement within the Republic of Cyprus by imposing unfair selling prices – through the application of excessive pricing in relation to grey cement in the domestic market – thereby infringing section 6(1)(a) of the Competition Law and article 102 (a) of the TFEU. Specifically, the CPC unanimously decided that the actual production cost of grey cement and the prices Vassiliko Cement Works imposed on its customers within the domestic market was excessively disproportionate. Therefore, on the basis of the financial analysis that was carried out, and according to the available information, it was concluded that the profit margin percentages of Vassiliko Cement Works, were excessive and that the prices were not fair. By taking into account, all of the information presented to the CPC, and according to the financial analysis that was carried out, the CPC concluded that the pricing policy for domestic sales was excessively high, and consequently, there was an excessively high profit margin for the company between 2013 and 2018 for grey cement. In addition, when comparing the prices imposed by Vassiliko Cement Works on domestic customers to the prices imposed for the same product in foreign markets, there was a significant difference.

The CPC, while assessing the amount of the fine, took into account the seriousness of the established infringement, its duration and any mitigating circumstances, and therefore acted on the basis of sections 24(a)(i) and 42 of the 2008 and 2014 Laws, as applicable at the time when the infringement was committed. It issued its decision on 10 January 2023 and decided to impose the administrative fine of €5,070,950. Moreover, the CPC, on the basis of its decision of 10 January 2023, obliges the company to refrain from repeating the established infringement and to avoid any such similar practice from occurring in the future.

Decision relating to the Pancyprian Organisation of Cattle Farmers

Following the completion of a preliminary investigation and having evaluated the information before it, the Commission issued Decision No. 8/2022, unanimously deciding on the finding of an infringement of section 6(1) of the 2008 and 2014 Laws, as applicable at the time, by the Pancyprian Organisation of Cattle Farmers (POCF) in the sector of fresh cows’ milk.

The POCF was found to have a dominant position in the fresh cows’ milk production market. The members of the POCF undertake to provide and sell their product to the POCF, and the POCF sells the product in bulk to the industry (milk companies, ice cream companies, cheese making companies, etc). Each member had a maximum quota in relation to its production of cows’ milk. On 1 April 2015, the EU regulation providing for the end of quotas for national milk production expired. Based on its expiration, national quotas were no longer in force.

The CPC, on the basis of all information before it, and after the conclusion of the oral hearing and the filing of written observations by the POCF, unanimously decided that the POCF’s practice, as the dominant undertaking in the market for the production of fresh cows’ milk, to impose quotas on its members in relation to the production of fresh cows’ milk had resulted in the limitation of competition in the market of production and wholesale of fresh cows’ milk, thus infringing section 6(1)(b) of the Competition Law.

The CPC, while assessing the amount of the fine, took into account the seriousness of the established infringement, its duration and any mitigating circumstances, and decided to impose an administrative fine on the POCF of €77,197.99.

Decision relating to the application by pharmacies to contract with the Healthcare Insurance System for the provision of healthcare services

The CPC decided that the refusal of the Health Insurance Organisation (HIO) to accept new applications by pharmacies to contract with the Healthcare Insurance System (HIS) for the provision of healthcare services, via the HIS, did not constitute economic activity within the meaning of the Competition Law, but rather concerned the exercise of public authority aimed at regulating the HIS.

The case concerned a complaint submitted to the CPC by PA, a pharmacist (a natural person) who planned to open a pharmacy that would, among other things, supply the beneficiaries of the HIS with drugs and other services. The complaint was filed against the HIO regarding an alleged infringement of section 6 of the 2008 and 2014 Laws.

The CPC defined the relevant market of the alleged anticompetitive behaviour of the HIO as:

• the management of healthcare services provided within the framework of the HIS; and
• the sub-market for the provision of pharmaceutical and medical products and sanitary items that are included in the products and services that are granted to General Health System beneficiaries.

The complaint concerned the August 2019 decision of the HIO whereby the HIO had stopped accepting new applications by pharmacies to contract with the HIS in order to provide healthcare services to beneficiaries. Owing to the above decision of the HIO, it was alleged that the new pharmacists could not establish and operate their own pharmacies, as the HIS plays a decisive role in the financial sustainability of pharmacies. Therefore, the HIO’s decision allegedly indirectly created barriers of entry to the profession.

PA alleged that the HIO had abused its dominant position as the ‘sole administrator of the HIS’, contrary to section 6 of the 2008 and 2014 Laws, by rejecting PA’s application ‘without any serious justification’. As a result of this, PA claimed that, as a new pharmacist who wished to open up their own pharmacy, they were subjected to discriminatory treatment when compared to older pharmacists, which was ultimately to PA’s detriment.

The CPC examined whether the management of healthcare services by the HIO, within the framework of operation of the HIS, fell under the concept of ‘undertaking’ (economic activity) as interpreted on the basis of competition law and the decisions of the courts of the European Union. In particular, the CPC examined the way in which the HIS and the HIO operate, the activities, actions and decisions of the HIO in relation to the provision of the specific healthcare services, and the aggregate set of factors that characterise the HIO’s activity, before concluding that the HIO did not act as an undertaking when entering into contracts with healthcare service providers. The CPC noted that the state had authorised the HIO to implement, manage and ensure the operation of the HIS, which was universal, mandatory and characterised by social solidarity and, thus, fulfilled a social purpose. In addition, the legislative and the state had regulated the powers and competences of the HIO in a strict manner (ie, they had predetermined the framework within which the HIO operated).

Consequently, the CPC unanimously decided that the HIO’s activities, actions and decisions under investigation regarding the terms of service provided by pharmacists did not constitute economic activity within the meaning of the Competition Law, but rather concerned the exercise of public authority aimed at regulating the HIS.

However, the CPC noted that the decisions taken by the state and by organs of the state reaching decisions under the public authority assigned to them by the state must be in line with the acquis communitaire and ensure the functioning of the internal market.

The same issue was examined by the CPC in two other cases, where one concerned an ex officio investigation and the other concerned a complaint filed by pharmacies.

Decision relating to the failure of an undertaking to provide information during a notification of a concentration

The CPC imposed an administrative fine on Altamira Asset Management SA (Altamira) for an infringement of section 40(1)(c) of the Control of Concentrations between Undertakings Law of 2014, Law No. 83(Ι)/2014, for the amount of €25,000 for failure to state, in the notification of the concentration between Altamira and Altamira Asset Management (Cyprus) Ltd, the nature of the commercial activity in which Altamira is engaged.

The concentration had concerned the acquisition of equity capital of Altamira Asset Management (Cyprus) Ltd by Altamira. Following the approval by the CPC of the notification of the above concentration, it came to the CPC’s attention that particular data and information had not been provided during the notification of the above concentration. The above knowledge came to the CPC’s attention following certain publications, on the basis of which specific questions had been sent out and from the answers of which came the knowledge that the required data and information had not been provided by the undertaking.

The required data and information that had not been provided had been in relation to an intra-group agreement between Altamira and doValue for the provision of management services in relation to non-performing loans. The CPC held that undertakings were required in any notification of a concentration to provide information that is specific and clear in relation to the nature of the commercial activity in which the undertakings are engaged. The CPC decided that, with Altamira’s failure to provide the abovementioned information, Altamira had failed to meet its obligations in this respect and, as a result, imposed a fine for the amount of €25,000.

Current investigations and other matters

Statement of objections relating to the market of provision of medical services by doctors

On 9 November 2022, the CPC issued a statement of objections to the Cyprus Medical Association (CMA) owing to the fact that the preliminary investigation revealed prima facie that it had, as an association of undertakings, issued decisions whereby it had called upon, urged, advised and instructed its members not to offer their services on the newly established HIS. In particular, on several occasions, the CMA had called upon its members to ‘band together’ and ‘abstain’ from enrolling on the HIS.

The CPC decided to initiate an ex officio investigation regarding a possible infringement of section 3 of the 2008 and 2014 Laws, as well as of article 101 of the TFEU, by the CMA and its members regarding the above decisions and practices.

The CPC, assessing all the data related to the case, decided, on a prima facie basis, that the CMA had infringed section 3(1)(b) of the Law, as well as article 101(1)(b) of the TFEU, following the decision of the General Assembly of the CMA dated 27 October 2018, as well as the CMA’s prior and subsequent decisions, and the general practices of the CMA as an association of undertakings.

Decisions of the Supreme Court

The Supreme Court of Cyprus, in its decision of 2 November 2022, rejected the appeal of the Cyprus Telecommunication Authority (Appeal No. 129/2015). The Administrative Court issued Decision No. 2004/2012 of 29 September 2015 rejecting the administrative recourse filed by the Cyprus Telecommunication Authority (Cyta) against the CPC Decision No. 48/2012.

CPC Decision No. 48/2012 concerned the re-examination of the complaint of Thunderworx Ltd against Cyta for which prior Decision No. 43/2010 had been issued and was annulled due to the decisions of the Supreme Court in case Nos. 1544/09, 1545/09, 1596/09 and 1601/09 (ExxonMobil Cyprus Ltd et al v CPC), which concerned the CPC’s composition. CPC Decision No. 48/2012 concerned infringements from 31 August 2005 to 2010, and the fine imposed amounted to €960,000.

The Supreme Court, in its decision of 2 November 2022 in appeal case No. 129/2015, examined Cyta’s allegations in relation to the administration’s obligation to re-examine a case and agreed with the Administrative Court that the CPC was obliged to proceed with the re-examination of the case to safeguard the rights of all involved parties. In relation to the imposition of a fine, the Supreme Court decided that the deadline for imposing a fine is counted from the date the infringement ended and, therefore, it had not been surpassed.

Advocacy

The CPC considers advocacy as vital for the development of a culture of healthy competition. The broad range of enforcement activities that competition agencies undertake to promote competition help to raise public awareness for matters that fall within the ambit of competition law and also help in the better enforcement of competition law. Furthermore, advocacy promotes the provision of expert competition advice in the legislative field for the better protection and promotion of competition.

Advocacy also includes the use of various means of communication with the public to strengthen and promote an agency’s work in relation to competition, including, but not limited to, via the use of social media tools.

The CPC has carried out numerous actions for the promotion of competition on a national level through the utilisation of various resources at its disposal. Significantly, it proceeded with the creation of social media accounts, including on LinkedIn, Twitter and Facebook, via which the CPC promotes the work carried out by it and keeps the public updated on significant developments in the field of competition law. The CPC’s active participation on social media is in conjunction with the CPC’s press releases for the purpose of more broadly and effectively reaching the public. Additionally, icons and hyperlinks to the social media sites used by the CPC are available on the CPC’s official website, alongside relevant links to the CPC’s social media profiles to promote these accounts.

As part of its promotion of advocacy, the CPC also issued an information guide to inform undertakings, associations of undertakings and lawyers, as well as any other interested person, of the main changes that occurred in the relevant legislation following the coming into force of the Competition Law of 2022. The information guide is available to the public on both the CPC’s official website and the CPC’s social media accounts.

The CPC has also been active in advocating for the promotion of competition to other government agencies through the provision of opinions in relation to legislative measures, secondary law and other issues arising from government measures established throughout the year.

Signing of a memorandum of cooperation with the University of Cyprus

On the 1 July 2022, a memorandum of cooperation (MOC) was signed between the University of Cyprus (UCY) and the CPC. Following the signing of the MOC, the UCY and CPC will be able to exchange experiences and knowledge and share with each other their expertise in matters related to competition law. The signing of the MoC constitutes a commitment of the two bodies to work closely together for the benefit of society and the consumer. Furthermore, both the CPC and the UCY aspire to cultivate a culture of competition with the signing of the MoC and actions brought within its framework.

Notice regarding the submission of applications for the treatment of information as confidential or business secrets

On the 25 May 2022, the CPC issued a notice providing guidelines as to the way in which applications for the treatment of certain information as confidential or business secrets should be filed by parties in the context of antitrust law, in light of the Competition Law. The notice was issued in accordance with the power conferred by sections 26(2) and 41(8) of the Competition Law.

The notice also provided guidance and information on the meaning of business secrets and information of a confidential nature and the treatment (protection) thereof by the CPC in the context of the implementation of the Competition Law.

Notice providing guidelines as to the procedure of accessing a case file

On the 25 May 2022, the CPC issued a notice providing guidelines as to the procedure of accessing a case file, in light of the Competition Law. The notice was issued in accordance with the power conferred by section 26(2) and 42(9) of the Competition Law.

Access to the CPC’s files is provided to undertakings and associations of undertakings against which the CPC has issued a statement of objections or against which the CPC addressed reasons of possible infringement of the law in accordance with section 42 of the Competition Law of 2022. Accordingly, the right to access is limited only to non-business secrets and non-confidential and non-personal information, and does not include internal documents. Nevertheless, the CPC is entitled to grant access to business secrets and confidential information in a limited manner if this is deemed necessary under the specific circumstances for the exercise of the defence rights of the undertakings or association of undertakings. The right to access the CPC’s files is also extended to natural and legal persons who have filed a complaint to the CPC, subject to the provisions of sections 40 and 41 of the Competition Law (duty of secrecy).

Promoting cooperative culture

The CPC continues to cooperate closely with regulators, in particular with the Regulator for Electronic Communications 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 and old legislation and 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