Cyprus: 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 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 comprising the chairperson and four members who are appointed by the Council of Ministers based on a proposal of the minister of energy, commerce, industry and tourism. 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 and are assisted by the Service of the CPC. The staff of the Service are members of the Public Service and are appointed as per the Public Service Law and procedures.

The CPC is an administrative body, bound by administrative law, and as such 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.

The period of reference taken into account for this contribution is between June 2017 and March 2018.

Between June 2017 and March 2018, the CPC has issued 43 decisions, 29 of which concerned examination of notifications of concentrations between undertakings, issuing clearance decisions to 27 of them in Phase I and to one of them in Phase II on the basis of certain terms and conditions and one decision for infringement of Merger Law.

After the conclusion of the full investigation of the merger regarding the creation of a joint venture called VLPG PLANT LTD by the companies Hellenic Petroleum Cyprus Ltd, Petrolina (Holdings) Public Ltd, Intergaz Ltd and Synergkaz Ltd, the Commission issued a clearance decision on the basis of a number of terms and conditions. Based on the information in the notification, the named companies will transfer part of their activities relating to the storage and handling of liquified petroleum gas (LPG) to the new company. Τhe Commission decided unanimously to declare the concentration in question compatible with the functioning of competition in the market, subject to the commitments offered by the participating undertakings and the conditions imposed. The commitments submitted by the participating companies and the terms imposed are valid for the whole time period that the New Company will be active and concern:

• amendment of the Shareholders’ Agreement and the Articles of Association of VLPG PLANT LTD so that the members of the Boards of Directors and the senior executives of the Founding Companies will not hold any position in the Board of Directors of the New Company;
• a declaration by all New Company Directors that they will always keep and treat as highly confidential, and will not disclose any confidential or sensitive information to the members of the Boards of Directors and the senior management of the Founding Companies, any business information or professional secrets of any new potential competitors in the LPG import or wholesale markets operating in the same markets as the Founding Companies, that will come to their knowledge due to their involvement or participation in the Board of Directors of the New Company;
• a declaration by the general manager and the chief financial officer of the New Company that they will always keep and treat as highly confidential, and will not disclose to the members of the Boards of Directors or the senior executives of the Founding Companies, any confidential or sensitive business information or business secrets of any new potential competitors in the LPG import or wholesale markets operating in the same markets as the Founding Companies that will come to their knowledge as part of their activities as general manager or chief financial officer (as the case may be) of the New Company;
• the above declarations will be signed by the directors whenever a new member is appointed to the New Company’s Board of Directors. The same will apply in the event of a change of a general manager or a chief financial officer (if any);
• the New Company, throughout its operations, will act as an independent and autonomous entity;
• the participating undertakings will appoint an independent trustee who will be responsible for verifying that all commitments are kept and will submit an annual report to the Commission within the first quarter of each year, confirming the implementation or not of the commitments by the New Company in relation to the previous year. The identity of that person or entity will be communicated to the Commission within one month of the notification to the involved parties of the Commission’s decision that the concentration is declared compatible;
• the New Company will provide its employees with a Competition Compliance Manual. This handbook will be signed by all New Company employees;
•  the participating undertakings will amend the Shareholders’ Agreement and add to it criteria that will be taken into account when assessing the storage capacity request from third parties;
• the participating undertakings will notify to the Commission the directors’ and secretary’s certificate, as issued by the Department of Registrar of Companies, that will present the new members of the Board of Directors of the New Company, within two months from the notification to the parties of the Commissions’ decision, that the concentration is declared compatible, as well as copies of the relevant declarations and a copy of the amended Shareholders’ Agreement;
• the New Company will carry out its work on a commercial basis that will ensure its services will be offered at arm’s length, in a transparent and non-discriminatory manner and based on a cost-oriented pricing policy;
• any transaction of the New Company with its Founding Companies will take place on commercial terms and at arm’s length;
• the New Company will publish the standard terms and conditions for the services of the storage space and the relevant pricelist on its future website. This publication should be made at the start of the operations of the New Company;
• the New Company will provide any new entrant, that will proceed with the construction of LPG storage facilities in the area, access to the anchor and unloading pipes, to the extent that it will be under the control of the New Company. The New Company’s pricing policy will be cost-oriented. It is clarified that for all users of the New Company facilities, the use of anchorage and unloading pipes will be included in the services provided; and
• if the demand for gas storage services for the domestic market is increased and any third parties contact the New Company for expansion of the New Company’s facilities and storage space, the parties involved will examine and assess the viability of such an extension.

The CPC also issued a decision relating to infringements of the Merger Law. It found that a notification of a concentration was not notified within the time frame of the law as it applied at the time of the obligation to notify had arisen. The CPC decided that the undertaking responsible for notifying the concentration had delayed 36 days to notify the concentration and imposed on the said undertaking a fine of €2,000. For the same merger case, the CPC also found that the undertaking had provided false and inaccurate information in three separate instances during the examination of the concentration by the Service of the Commission, which were detected by the Service itself, and decided to impose on said undertaking a fine of €35,000.

In addition to the above, the CPC has also issued a decision finding a violation of article 3(1)(b) of the Competition Law by the Association of Contractors of Mechanical and Electrical Works of Cyprus (SEMEEK). In particular, the CPC concluded that SEMEEK, as an association of undertakings, had the intent, through a press release and circular issued on the basis of a General Assembly decision, to prevent its members from participating in an open tender of Pafos Municipality for the restoration of the municipal market of Pafos, announced through the subcontracting method, thus restricting competition by object and effect, in violation of article 3(1)(b) of the Competition Law. The Commission imposed a fine of €2,100 on SEMEEK – whose turnover was based on its members’ subscription fees – issued a cease-and-desist order, and ordered that similar actions are not repeated in the future and that SEMEEK issue an announcement on its website about the Commission’s decision and about the relevant actions that will be followed in order for the violation of the law to desist. The Commission also ordered SEMEEK to notify all its members in writing about the Commission’s decision and that they were free to submit tenders when the projects concern internal subcontracting and appointed subcontracting, and to notify said actions to the Commission.

The Commission has also issued a decision finding that ExxonMobil Cyprus Ltd, Hellenic Petroleum Cyprus Ltd, Petrolina (Holding) Public Ltd and Lukoil Cyprus Ltd violated the provisions of article 3(1)(a) of the Competition Law in the period 1 October 2004 to 22 December 2006 due to the vertical agreements of each petroleum company (separately) with its petrol station dealers, which directly or indirectly determined a retail sale price of unleaded 95 octane gasoline, unleaded 98 octane gasoline and LS petroleum, which had as their object or effect the prevention, restriction or distortion of competition within the Republic. The infringement of the companies extends until 3 December 2015, as it did not appear from the data before the Commission that it had ceased before that date. The Commission imposed administrative fines on ExxonMobil Cyprus Ltd, Hellenic Petroleum Cyprus Ltd, Petrolina (Holding) Public Ltd and Lukoil Cyprus Ltd of €8.7 million, €5 million, €5.7 million and €1.4 million, respectively.

Further to the above, the Commission also issued 10 decisions finding no violation of the law. Also, during 2017, after the conclusion of the preliminary investigation, the Commission decided to serve 12 statements of objections in relation to prima facie infringements of the Competition Law. These statements of objections concerned the airport management services sector, the pay-TV sector, the ready-mix concrete sector and the fresh cow milk sector.

Additionally, the Commission has introduced a Programme of Unpaid Training with the purpose of giving graduates practical experience in the legal or economic fields of free competition, within the broader objective of raising awareness of the benefits of competition, developing a culture of competition in Cypriot society and economy and the role that competition policy can play in promoting and protecting it.

In July 2017, the Actions for Damages for Infringements of Competition Law of 2017 was passed by the House of Representatives and published in the Official Gazzette of the Republic of Cyprus.

Furthermore, the CPC is also involved in the national preparations and groundwork in relation to the Proposal for a Directive of the European Parliament and of the Council 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 its limited resources available and also has the power to initiate ex officio investigations as well as conduct sector inquiries.