Legislation and jurisdiction

Relevant legislation and regulators

What is the relevant legislation and who enforces it?

The Control of Concentrations Between Undertakings, Law 83(I) of 2014 (the Law), is the statute regulating the control of concentrations between undertakings in Cyprus.

Enforcement of the legislation rests with the Commission for the Protection of Competition (CPC), initially established in 1990 and re-established pursuant to the provisions of the Protection of Competition Law No. 13(I) of 2008, as amended by Law No. 4(I) of 2014. The CPC has overall responsibility for implementing the Law and is the competent independent authority for the control of concentrations. The CPC declares that a concentration is compatible or incompatible with the functioning of competition in the market. The investigation and procedural aspects of the notification of concentrations are implemented by the CPC’s civil service (the Service).

Scope of legislation

What kinds of mergers are caught?

The Law is applicable to transactions resulting in a permanent change of control. Such transactions include mergers of two previously independent undertakings or parts thereof, and acquisitions by one or more persons already controlling at least one undertaking, or by one or more undertakings, directly or indirectly, whether by purchase of securities or assets, by agreement or otherwise, of control of one or more other undertakings. The definition of ‘control’ is addressed in question 4.

What types of joint ventures are caught?

Joint ventures performing all functions of an autonomous economic entity in a permanent manner are caught under the Law.

Is there a definition of ‘control’ and are minority and other interests less than control caught?

Pursuant to section 6(2) of the Law, ‘control’ is defined as control stemming from any rights, agreements or other means which, either severally or jointly, confer the possibility of exercising decisive influence over an undertaking through:

  • ownership or enjoyment rights over the whole or part of the assets of the undertaking; or
  • rights or contracts that confer the possibility of decisive influence on the composition, meetings or decisions of the bodies of an undertaking.
Thresholds, triggers and approvals

What are the jurisdictional thresholds for notification and are there circumstances in which transactions falling below these thresholds may be investigated?

Transactions falling under those specified in questions 2 and 3 constitute concentrations for the purposes of the Law. Nevertheless, only concentrations of major importance must be notified to the CPC.

For the purposes of the Law, a concentration of undertakings is deemed to be of major importance and therefore meets the jurisdictional thresholds if:

  • the aggregate turnover achieved by at least two of the undertakings concerned exceeds, in relation to each one of them, €3.5 million;
  • at least two of the undertakings concerned achieve a turnover in Cyprus; and
  • at least €3.5 million of the aggregate turnover of all undertakings concerned is achieved in Cyprus.

The Law vests the Minister of Energy, Commerce, Industry and Tourism with the power to declare a concentration as being of major importance even where the thresholds are not met.

Is the filing mandatory or voluntary? If mandatory, do any exceptions exist?

Filing of concentrations of major importance is mandatory.

However, notification is not required in the following cases, where, pursuant to section 6(4)(a) of the Law, a concentration between undertakings is not deemed to arise if:

  • a credit or financial institution or an insurance company, the normal activities of which include transactions and dealing in securities on its own account or for the account of third parties, holds on a temporary basis securities that it has acquired in an undertaking with a view to reselling them, provided that the institution does not exercise voting rights in respect of those securities with a view to determining the competitive behaviour of that undertaking or provided that it exercises such voting rights only with a view to facilitating the disposal of all or part of that undertaking or of its assets or the disposal of those securities, and that any such disposal takes place within one year of the date of acquisition - a period that can be extended by the CPC on request, where it can be shown that the disposal was not reasonably possible within the period set;
  • control is exercised by a person authorised under the legislation relating to liquidation, bankruptcy or any other similar procedure;
  • the concentration of undertakings between one or more persons already controlling at least one or more undertakings is carried out by investment companies;
  • property is transferred owing to death by a will or by intestate devolution; or
  • it is a concentration between two or more undertakings, each of which is a subsidiary undertaking of the same entity.

Do foreign-to-foreign mergers have to be notified and is there a local effects or nexus test?

Foreign-to-foreign mergers are caught under the Law. The test as to whether a foreign-to-foreign merger is caught as a concentration of major importance is satisfied where the jurisdictional thresholds are met, with the local effects dimension being the achievement of a turnover of at least two undertakings concerned in Cyprus and the combined Cyprus-achieved turnover of all undertakings concerned is at least €3.5 million.

Are there also rules on foreign investment, special sectors or other relevant approvals?

Notwithstanding the exceptions discussed in question 6 in relation to credit and financial institutions or insurance companies, there are no specific rules on foreign investments, special sectors or other approvals.

Notification and clearance timetable

Filing formalities

What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?

Concentrations of major importance must be notified to the Service prior to their implementation, following the conclusion of the relevant agreement or the publication of the relevant takeover or the acquisition of a controlling interest. Notification can also take place where the undertakings concerned prove to the Service their bona fide intention to conclude an agreement or, in the case of a takeover offer or of an offer for the acquisition of a controlling interest, following a public announcement of an intention or final decision to make such offer.

Upon becoming aware of a concentration of major importance that ought to be notified but the undertakings concerned have failed to do so, the Service immediately notifies the undertakings concerned of their obligation to proceed with notifying such a concentration in accordance with the provisions of the Law. The time limit for the assessment of the concentration would then commence at the time of the Service receiving such notification.

Although failure to notify a concentration does not by itself give rise to sanctions, where the concentration has been partially or entirely implemented in the absence of clearance by the CPC, administrative fines may be imposed. These fines are discussed in detail under question 12.

The CPC has the power to order the partial or total dissolution of a concentration of major importance to secure the restoration of the functioning of competition in the market, provided that the requirements of the Law are met.

Which parties are responsible for filing and are filing fees required?

Concentrations of major importance must be notified to the Service in writing, either jointly or separately by the undertakings participating in a merger or in the joint acquisition of control of another undertaking. In all other cases, the party responsible for notification is the undertaking acquiring control.

Filing fees are fixed by the Law at €1,000. Where a concentration becomes subject to a full investigation (Phase II), the undertakings concerned are bound to pay a fee of €6,000 to the CPC.

What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?

The Service shall, within one month of the date of receipt of the notification and the filing fees or the date on which the Service receives additional information necessary towards achieving conformity of the notification to the requirements of the Law, inform the notifying undertakings regarding the decision of the CPC of whether the concentration is cleared or whether it will proceed to a full investigation of the concentration.

If, owing to the volume of work or the complexity of the information contained in the notification, the Service is unable to comply with the aforementioned time frame, it shall, within seven days prior to the lapse of the one-month period, inform the notifying undertaking of an extension to the said period by a further period of 14 days.

The Law expressly prohibits the partial or entire implementation of the concentration prior to clearance, infringement of which prohibition entails administrative fines, as discussed under question 12.

Pre-clearance closing

What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?

Where a concentration is either partially or entirely implemented prior to the clearance of the CPC or prior to the lapse of the time frame within which the Service ought to inform the notifying undertaking of whether the concentration is cleared or shall be fully investigated but the Service has not so informed, administrative sanctions may be imposed by the CPC.

An administrative fine of up to 10 per cent of the aggregate turnover achieved by the notifying undertaking during the immediately preceding financial year may be imposed on the notifying undertaking for the discussed infringement, which may be followed by additional administrative fines of €8,000 for each day the infringement persists.

There have been no cases where the undertakings concerned implemented a concentration prior to clearance by the CPC under the new regime. Nevertheless, taking into account the approach followed under the previous framework, it can be certain that the CPC will exercise its powers in relation to the implementation of concentrations in violation of the statutory provisions in a rigorous manner.

Moreover, the CPC has the power to order the partial or total dissolution of a concentration that has been implemented prior to obtaining clearance by the CPC.

Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?

Closing before clearance could lead to administrative fines being imposed, as discussed under question 12, irrespective of whether such concentration is a foreign-to-foreign merger or not.

What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?

Closing prior to clearance is not possible unless the Service fails to inform the notifying undertaking of whether the concentration is cleared or a Phase II investigation will be carried out within the one-month period discussed in question 11, in which case the concentration is deemed as cleared. Nevertheless, a temporary approval of a concentration is possible pursuant to the provisions of section 31 of the Law, in the case where a full (Phase II) investigation is decided by the CPC, where the undertakings concerned can establish, upon a relevant application to the CPC, that they shall suffer substantial damage as a result of any additional delay to the concentration. Such temporary approval may be accompanied by conditions decided at the CPC’s discretion and it does not affect the final decision of the CPC.

Public takeovers

Are there any special merger control rules applicable to public takeover bids?

In the case of public takeover bids, concentrations of major importance arising from the publication of a public takeover or the acquisition of a controlling interest must be notified to the CPC prior to their implementation and following such publication. Notification can also take place where the undertakings concerned prove to the Service of the CPC their bona fide intention of a takeover offer or of an offer for the acquisition of a controlling interest, following a public announcement of an intention or final decision to make such an offer.

Documentation

What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?

The notification of a concentration of major importance should include the information prescribed in Appendix III to the Law. The notification must be made in Greek and must be accompanied by various supporting documents and other information, which may be in Greek or English, including but not limited to the following:

  • a copy of all final or most recent documents that brought about the concentration either by agreement or following a public bid;
  • in the case of a public bid, a copy of the public bid document;
  • copies of the most recent annual reports and audited financial statements of all the undertakings participating in the concentration;
  • copies of reports or analyses prepared for the purposes of the concentration;
  • a list and short description of the contents of all analyses, reports, studies and surveys that were prepared by or for any of persons responsible for notification for the purpose of evaluating or analysing the proposed concentration in relation to the market and competition conditions;
  • details of the concentration (including the nature and scope of the concentration, the financial and structural details of the concentration, and details regarding the turnover in Cyprus and worldwide of each undertaking);
  • details of relationships of ownership and control as between each participant in the concentration and the undertakings connected with it;
  • personal and economic ties as between each group of undertakings and any other undertaking operating within the affected market in which such group holds, inter alia, at least 10 per cent of the voting rights or shares;
  • a description and analysis of the relevant markets; and
  • a description and analysis of the affected relevant markets.

A fine of up to €50,000 may be imposed for a failure to provide requested information or clarifications, or for providing misleading or inaccurate information.

Investigation phases and timetable

What are the typical steps and different phases of the investigation?

Phase I entails the preparation of a written report by the Service to the CPC and an assessment of the concentration by the CPC upon receiving the said report by the Service. The CPC’s assessment shall lead to a decision that the concentration is not one of major importance and therefore does not fall within the scope of the Law, that the concentration is of major importance but does not raise any doubts as to its compatibility with competition in the market and is therefore declared compatible and cleared, or that doubts as to such compatibility are raised and a full investigation must be initiated.

Phase II entails the preparation of a report of findings by the Service, which is submitted to the CPC within three months of the date of receipt of the notification, provided that the fees applicable in the case of a full investigation are paid. The CPC is then bound to assess the concentration under the light of the findings of the Service and accordingly declare the concentration as compatible, subject to conditions that it may decide to impose upon the undertakings concerned, or incompatible with competition in the market and thus not cleared.

What is the statutory timetable for clearance? Can it be speeded up?

Within one month of the date of receipt of the notification and the filing fees or the date of receipt of additional information necessary towards achieving conformity of the notification to the requirements of the Law, the Service is required to inform the notifying undertakings of whether the concentration is cleared or whether the notification will proceed to a full investigation of the concentration.

If, owing to the volume of work or the complexity of the information contained in the notification, the Service is unable to comply with this time frame, it shall, within seven days prior to the lapse of the one-month notice period, inform the notifying undertaking of an extension of 14 days. On the basis of the CPC’s practice during Phase I investigations, only rarely will the CPC extend the aforesaid deadline for issuance of its decision. Provided a notification is complete and the Service has no requests for clarifications, decisions are issued in a timely manner, within the statutory timetable.

Where a Phase II investigation is initiated by virtue of section 25 of the Law, the Service is bound to prepare a report of findings to the CPC within three months as of the date of receipt the notification, provided that the fees payable towards a full investigation are settled. In the case of full investigation, the notifying party or parties must be informed of the CPC’s decision no later than four months from the date of receipt by the Service of the original notification application. Where additional information is requested by the Service, the period is extended to four months from receipt of the additional information.

The Law does not provide for a fast-track procedure of clearance of concentrations.

Substantive assessment

Substantive test

What is the substantive test for clearance?

A concentration that would significantly impede effective competition in Cyprus, or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, shall be declared incompatible with the functioning of competition in the market.

In assessing the compatibility of a concentration, there are no special circumstances that would be taken into account. The CPC takes into consideration the following criteria:

  • the need to maintain and develop conditions of effective competition in the relevant markets, taking into account, inter alia, the structure of the affected markets, other markets upon which the concentration may have significant effects and the potential competition on behalf of undertakings within or outside Cyprus;
  • the position in the market of the undertakings concerned and undertakings connected to it in a manner prescribed under Annex II to the Law;
  • the financial power of such undertakings;
  • the alternative sources of supply of products or services in the affected markets or other markets upon which the concentration may have significant effects;
  • any barriers of entry to the affected markets or other markets upon which the concentration may have significant effects;
  • the interests of the intermediate and end consumers of the relevant products and services;
  • the contribution to technical and economic progress and the possibility of such contribution being in the interest of consumers and not obstructing competition;
  • the supply and demand trends for the relevant markets; and
  • the contribution on the development of technical and economic progress provided that it is to consumers’ advantage and does not form an obstacle to competition.

Is there a special substantive test for joint ventures?

To the extent a full-function joint venture that constitutes a concentration has as its object or effect the coordination of competitive conduct of undertakings that remain independent, this coordination is examined in accordance with the provisions of sections 3 and 4 of the Protection of Competition Law No. 13(I) of 2008, as amended by Law No. 4(I) of 2014. In assessing a joint venture, the Service shall particularly take into account:

  • whether two or more parent companies retain, to a significant extent, activities in the same market as the joint venture or in a market that is downstream or upstream from that of the joint venture or in a neighbouring market closely related to this market; and
  • whether the coordination that directly emanates from the creation of the joint venture provides the undertakings concerned with the ability to eliminate competition for a substantial part of the relevant products or services.
Theories of harm

What are the ‘theories of harm’ that the authorities will investigate?

While the Law is silent in this regard, the CPC’s approach and analysis of harm is substantially aligned with the respective approach of the European Commission. Besides high market shares, the assessment usually takes into account the anticompetitive effects that could potentially arise out of a concentration, such as coordinated effects as well as unilateral effects.

Non-competition issues

To what extent are non-competition issues relevant in the review process?

The CPC only takes competition issues into account when considering the Service’s report and issuing its decision. However, the Minister of Energy, Commerce, Industry and Tourism can, by issuing a justified order, declare a concentration as being of major public interest with regard to the effects it might have on public security, pluralism of the mass media and the principles of sound administration.

Economic efficiencies

To what extent does the authority take into account economic efficiencies in the review process?

In reviewing the compatibility of a concentration with the competitive market, the CPC takes into account the following:

  • the structure of the affected markets, the structure of other markets where the notified concentration might have significant implications and the actual or potential competition from undertakings located either within or outside the Republic;
  • the market position of the participants;
  • the economic power of all the undertakings in the market;
  • any barriers of entry to the affected market;
  • the interests of the intermediate and end consumers of the products and services;
  • the alternative sources of supply of the products and services that are traded in the affected markets and of their substitutes;
  • the supply and demand trends for the relevant markets; and
  • the contribution on the development of technical and economic progress provided that it is to the consumer’s advantage and does not form an obstacle to competition.

Remedies and ancillary restraints

Regulatory powers

What powers do the authorities have to prohibit or otherwise interfere with a transaction?

Before reaching its final decision and subject to the time limits provided by the Law, the CPC may, if it considers it expedient to do so, carry out negotiations, hearings or discussions with any of the interested parties or other persons. Furthermore, the CPC has wide investigative powers when assessing a concentration, including access to any premises, property, means of transport, books or records in the possession of the undertakings concerned or third parties.

In declaring a concentration compatible with the operation of competition in the market, the CPC may impose conditions or remedies in relation to the implementation of the transaction, thus having the ability to interfere with the essence of the transaction. The CPC has at any given time the power to revoke decisions related to the compatibility of any concentration and to amend any of the terms of its decision if it determines that:

  • its initial decision was based on false or misleading information or that necessary information relating to the concentration at hand was withheld by the notifying party or by any other undertaking concerned or by any interested person; or
  • any condition attached to the decision and imposed on the participants to the concentration has not been satisfied or has ceased to be satisfied.

Where the CPC exercises its power of revocation, it may, following a study of the Service’s report, order either a partial or complete dissolution of the concentration to secure the restoration of the competitive market. It may do this, either in the course of exercising its powers of revocation of a previous decision of clearing a concentration or upon establishing that a concentration has been implemented in violation of an obligation to notify such concentration to the CPC or is duly notified but implemented prior to clearance by the CPC. The CPC also has the power to prohibit a concentration by declaring it incompatible with the operation of competition in the market.

Remedies and conditions

Is it possible to remedy competition issues, for example by giving divestment undertakings or behavioural remedies?

Competition issues can be remedied through the CPC exercising its discretionary power. In the course of remedying competition issues, the CPC may order the dissolution or partial dissolution of the concentration concerned to secure the restoration of the functioning of competition in the market, through the deprivation of any participation, shares, assets or rights acquired by any person participating in the concentration, or by the cancellation of any contracts that created the concentration or that arose from it, or by a combination of the two, or any other way the CPC deems necessary.

If the CPC ascertains that the notified concentration falls within the scope of the Law and raises doubts as to its compatibility with the competitive market, it will inform the Service of the need to conduct a full investigation. In such an event, the Service will request further information from the participants as well as other entities involved in the specific sector for the purpose of completing its investigation. Also, the Service notifies the participants that they may make suggestions to undertake remedies that will remove the CPC doubts as to the compatibility of the transaction within the time-limit defined by the Service. Appendix IV of the Law is a form that the participants will be asked to submit when they are willing to undertake any remedies. The CPC accepts both divestiture and behaviour remedies. If, following its review of the additional information provided to it, the CPC’s doubts as to compatibility have not been removed, the Service if it finds any differentiations or modifications in the circumstances under which the concentration has been established that may result in the removal of the doubts, will commence negotiations with the participating undertakings.

What are the basic conditions and timing issues applicable to a divestment or other remedy?

The CPC is required to provide written notification to the undertakings concerned of any remedies as part of its decision, which it is bound to issue within four months as of the date of receiving the notification of the concentration and payment of the filing fees. Should the merger be cross-border, the CPC may liaise with the relevant foreign authority in relation to applicable remedies. Furthermore, any remedies have to be limited to those that are reasonably necessary for the protection of the competitive market.

What is the track record of the authority in requiring remedies in foreign-to-foreign mergers?

Although there is an increasing number of local transactions in which remedies have been required, there is no case at present where the CPC has requested remedies of a material nature in foreign-to-foreign mergers.

Ancillary restrictions

In what circumstances will the clearance decision cover related arrangements (ancillary restrictions)?

The clearance decision issued by the CPC covers related agreements if such agreements are related to, and are necessary for, the implementation of the merger.

Involvement of other parties or authorities

Third-party involvement and rights

Are customers and competitors involved in the review process and what rights do complainants have?

Yes, parties having a legitimate interest may be invited to comment, but only in the event of a full investigation. Parties having a legitimate interest may on a voluntary basis submit views at any phase of the evaluation of a concentration or they may be asked to supply information by the Service of the CPC. In the case of a full investigation, the Service is required to provide any person having a legitimate interest, but who is not a participant in the concentration, with an appropriate opportunity to submit their views at the second phase of the investigation.

Publicity and confidentiality

What publicity is given to the process and how do you protect commercial information, including business secrets, from disclosure?

The CPC publishes a description of the notification in the Official Gazette of the Republic and on its website, indicating the names of the participants, the nature of the concentration and the economic sectors involved. In so doing, the CPC takes into account, as far as possible, the legitimate interest of the affected undertakings in the protection of their business secrets. The CPC also publishes in the Official Gazette of the Republic and on its website a non-confidential version of its decision. The undertakings concerned may request that any part of the decision remains confidential and the CPC will decide whether such information should be treated as confidential. The party to which the CPC addresses a written request for information should identify documents, statements and any material it considers to contain confidential information or business secrets, justifying its opinion, and provide a separate, non-confidential version within the time limit set by the CPC for the notification of its opinion.

The CPC and the Service are under a statutory duty of confidentiality, infringement of which is a criminal offence punishable with imprisonment of up to six months or a fine of up to €1,500 or both.

Cross-border regulatory cooperation

Do the authorities cooperate with antitrust authorities in other jurisdictions?

Pursuant to section 54 of the Law and the relevant provisions of the EU Merger Control Regulation No. 139/2004, the CPC cooperates with other national competition authorities in the European Union and the European Commission on the basis of the system of parallel competences and the exchange of views and information between them via the European Competition Network.

Judicial review

Available avenues

What are the opportunities for appeal or judicial review?

The decisions of the CPC are administrative executive acts issued by a public authority. As such, an aggrieved party having legitimate interest and seeking to annul a CPC decision has the right to file for administrative recourse to the Supreme Court under article 146 of the Constitution of the Republic of Cyprus. Appendix 5 of the Law is relevant to this purpose.

Time frame

What is the usual time frame for appeal or judicial review?

The time limit for commencing an administrative appeal is 75 days from receipt of notification of the CPC’s final decision or its publication in the Official Gazette.

Enforcement practice and future developments

Enforcement record

What is the recent enforcement record and what are the current enforcement concerns of the authorities?

Concentrations notified to the CPC are assessed under the legislative and policy rules in place and described above. The CPC is particularly keen to ensure, in the course of exercising its powers under the Law, that effective competition in the Republic or in a substantial part of it, is not significantly impeded, in particular as a result of the creation or strengthening of a dominant position. As had been the case under the previous merger control framework, a considerable number of the notified concentrations concern foreign-to-foreign transactions.

Reform proposals

Are there current proposals to change the legislation?

The Law came into effect in June 2014 and replaced the previous merger control regime in place since 1999. There are no current proposals to change the legislation.

Update and trends

Key developments of the past year

What were the key cases, decisions, judgments and policy and legislative developments of the past year?

Key developments of the past year36 What were the key cases, decisions, judgments and policy and legislative developments of the past year?

A number of important issues have been considered by the CPC recently, which have shed more light on its decision-making practice.

Specifically, the CPC dealt with the first non-performing loans servicing transaction in Cyprus, which essentially created the relevant market. In the APS/Hellenic Bank case, the CPC defined the relevant product market as being (i) the management of immovable property acquired by credit institutions through enforcement proceedings or payment of credit rights derived from mortgages and (ii) the management of non-performing loans granted by credit institutions or other persons.

In the VLPG case, in which the CPC carried out a full investigation, clearance was granted subject to commitments by the participating undertakings. The case concerned the creation of a joint venture by Hellenic Petroleum Cyprus Ltd, Petrolina (Holdings) Public Ltd, Intergaz Ltd and Synergkaz Ltd, in which the said undertakings shifted part of their activities relating to the storage and handling of liquefied petroleum gas to the joint venture. The joint venture was held to potentially have the ability and motivation to exploit its dominant position and to hinder the expansion of other companies and potential competitors. The CPC also highlighted the potential for significant obstruction of competition as a result of the creation of the joint venture’s dominant position.

The transaction was cleared subject to a number of remedies, including the exclusion of members of the boards of the parent undertakings from sitting on the board of the joint venture, confidentiality undertakings by the joint venture in relation to the parent undertakings, the appointment of a trustee and the introduction of criteria for the assessment of storage capacity requests from third parties, together with providing any new entrant that constructs 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 joint venture.