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Legislation, triggers and thresholds
Legislation and authority
What legislation applies to the control of mergers?
The Control of Concentrations between Undertakings Law (L 83(I)/2014) regulates the control of concentrations in Cyprus.
What is the relevant authority?
Enforcement of the applicable legislation rests with the Commission for the Protection of Competition (CPC).
The CPC is responsible for implementing the Control of Concentrations between Undertakings Law and is the competent independent authority for the control of concentrations.
Transactions caught and thresholds
Under what circumstances is a transaction caught by the legislation?
The Control of Concentrations between Undertakings Law applies to transactions that result in a permanent change of control and meet the applicable thresholds, including:
- mergers of two previously independent undertakings or parts thereof; and
- direct or indirect acquisitions by one or more persons already controlling at least one undertaking (or by one or more undertakings) over one or more other undertakings, whether by purchasing securities or assets, agreements or otherwise.
Joint ventures performing all functions of an autonomous economic entity in a permanent manner also fall under the law.
Do thresholds apply to determine when a transaction is caught by the legislation?
Only concentrations of major importance must be notified to the Commission for the Protection of Competition. For the purposes of the law, a concentration of undertakings is deemed to be of major importance and thus meet the jurisdictional thresholds if:
- the aggregate worldwide turnover achieved by at least two of the undertakings concerned (in relation to each undertaking and taking the groups to which they belong into account) exceeds €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.
Is it possible to seek informal guidance from the authority on a possible merger from either a jurisdictional or a substantive perspective?
No procedure for seeking informal guidance is provided under the applicable legislation.
Are foreign-to-foreign mergers caught by the regime? Is a ‘local impact’ test applicable under the legislation?
Foreign-to-foreign mergers are not treated differently to local concentrations. Mergers, acquisitions and fully functional joint ventures will be caught as long as the jurisdictional thresholds are met, without additional local nexus requirements.
In relation to ‘local impact’, the thresholds require at least two of the undertakings concerned must achieve a turnover in Cyprus and the Cyprus-achieved turnover of all undertakings concerned must be at least €3.5 million.
What types of joint venture are caught by the legislation?
Joint ventures that perform all functions of an autonomous economic entity in a permanent manner are caught by the applicable legislation.
In alignment with the European Court of Justice judgment (Case C-248/16, 7 September 2017) Austria Asphalt GmbH & Co OG v Bundeskartellanwalt, Cyprus law requires that a joint venture perform on a lasting basis all the functions of an autonomous economic entity for it to be considered a concentration.
A joint venture that is genuinely fully functional must be able to operate independently of its parents in an identifiable market. In order to do so, the joint venture must have a management dedicated to its day-to-day operations and access to sufficient resources including finance, staff and assets (tangible and intangible) to be able to conduct its business activities on a lasting basis.
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