Developments in Cyprus Competition Law


     By Anastasios Antoniou LLC

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As of 2008 Cypriot competition law is in full alignment with Community competition law and the Cyprus Commission for the Protection of Competition Law has increased competences and powers.

Cypriot competition legislation is now fully aligned with Community law, Law 13(I)/2008 on the Protection of Competition being the main legal instrument regarding infringement of competition rules as a result of anti-competitive practices. Specifically, section 3 of the Law is identical to the wording of Article 81(1) EC, as regards the prohibition of “agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition within the Republic [of Cyprus]”. This is a significant improvement from the less specific provisions of preceding legislation – repealed by Law 13(I)/2008 – which caught ‘collaborations’ of undertakings.

The 2008 legislation, particularly s. 4 thereof, fully reflects the Treaty’s provisions in respect to forms of collaboration otherwise caught by competition rules but which may be allowed on the basis of their contribution towards improving the production or distribution of goods or the technical or economic progress, as per Article 81(3) EC. Unsurprisingly, and in accordance with the changes Regulation 1/2003 has effected in the way competition rules are enforced, Law 13(I)/2008 does not provide for ‘individual exemptions’. Block exemptions may be granted pursuant to section 5(1), which provides for an Order being issued by the Council of Ministers, following a justified opinion by the CPC.

Section 6 of Law 13(I)/2008 provides for the abuse of a dominant position. Sub-section (1) of the said section contains a list of abuses identical to the list found in Article 82 EC, which has been held to be non-exhaustive . It would likewise appear that the list in section 6(1) of Law 13(I)/2008 is also non-exhaustive, given the inclusion of the phrase “in particular” in its wording.

Institutionally speaking, Law 13(I)/2008 is in full harmony with EC Regulation 1/2003, as it re-establishes the Commission for the Protection of Competition (“CPC”) as the National Competition Authority of Cyprus for the purpose of applying Articles 81 and 82 EC and Regulation 1/2003, where necessary. It should be noted that Law 13(I)/2008 now provides for the CPC’s competences and powers to be in line with Article 5 of Council Regulation 1/2003. The 2008 Law further provides that the Orders and Regulations as well as the individual administrative acts issued pursuant to the aforementioned repealed Laws shall maintain their force unless they are amended or abolished by the CPC.

With respect to concentrations, the applicable statute is Law 22(1)/1999, pursuant to the provisions of which the CPC has the competence and authority to control concentrations between undertakings. According to Law 22(1)/1999 any concentration of major importance cannot be put into effect before its written notification to the Service of the CPC. Looking at the statistics, during the period between 2004 and 2008 notified concentrations were on the increase, with 29 notifications for 2008 and another 29 for 2007, 25 for 2006, 11 for 2005 and 5 for 2004. Out of the 29 concentrations that were notified to the CPC in 2008, only one concentration was led to a full investigation by the CPC. Even though there was prima facie evidence of an alleged infringement of the provisions of the Law in four cases, the CPC decided not to impose a fine and decided to accept the explanations submitted by the concerned parties.

The EC Merger Regulation on the control of concentrations between undertakings, which inevitably is also applicable in Cyprus, does not conflict with the provisions of the Companies Law, Cap.113. Since the object of the EC Merger Regulation is the effective control of concentrations with a Community-wide dimen¬sion which is exercised by the European Commission in close and continuous cooperation with the national competition authorities, national legislation concerning undertakings is subject to the provisions of the said Regulation, which enjoys supremacy over national law.

The end of 2009 saw the most important decision of the CPC up to date, namely its findings against the four market leaders in the oil industry of Cyprus. The CPC found these four undertakings as having infringed competition law and in particular s. 3(1)(a) of the Law over both the engagement in a concerted practice between them having their object the fixing of fuel prices and the conclusion of agreements with their resellers (gas stations) on that basis and with the same object. This violation constituted a serious infringement of competition rules and as such carries monetary fines of the highest levels.

ABOUT THE AUTHOR: Georgia Parpa
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.