Provided the jurisdictional thresholds are met, foreign-to-foreign mergers, acquisitions and joint ventures are caught under Cyprus merger control, even where the transaction is not expected to have any impact on the competitive market in Cyprus.
The Control of Concentrations Between Undertakings of 83(I) of 2014 (the “Law”) is the legislative instrument providing the substantive and procedural framework on the notification, assessment and clearance of concentrations between undertakings.
What transactions are caught?
The Law applies to concentrations of major importance, which are those transactions meeting the jurisdictional thresholds. Subject to certain exceptions, a concentration is defined under the Law as taking place through the permanent change of control as a result of:
- the merger of two previously independent undertakings or parts thereof; or
- the acquisition of control of (whole or parts of) an undertaking, directly or indirectly, through the purchase of securities or assets, by agreement or otherwise; or
- a joint venture being established which permanently carries out all the functions of an autonomous economic entity.
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.
What are the thresholds?
A concentration is deemed to be of major importance and meet the jurisdictional thresholds where:
- 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 the Republic of Cyprus; and
- at least €3.5 million of the aggregate turnover of all undertakings concerned is achieved in the Republic of Cyprus.
As the thresholds indicate, the local effects dimension triggering a filing obligation is met by the achievement of a turnover by at least two undertakings concerned in Cyprus, while the Cyprus turnover of all undertakings concerned need only be €3.5 million.
Are there sanctions for failure to notify or obtain clearance?
The Law expressly prohibits the partial or entire implementation of the concentration prior to clearance, infringement of which prohibition entails administrative fines.
An administrative fine of up to ten per cent (10%) of the aggregate turnover achieved by the notifying undertaking during the immediately preceding financial year may be imposed to the notifying undertaking for the discussed infringement, which fine may be followed by additional administrative fines of €8.000 for each day the infringement persists.
The CPC has the power to order the partial or whole dissolution of a concentration of major importance that has been implemented by the undertakings concerned in violation of their statutory obligation to notify the concentration or that has been implemented prior to obtaining clearance by the CPC.
The CPC has exercised its powers in numerous cases to impose administrative fines and is highly aware of transactions being concluded, both through its own monitoring and through its participation in the European Competition Network.
When should a notification of the concentration be filed?
The filing of concentrations of major importance to the CPC is mandatory and such transactions must be notified 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.
Filing can also take place where the undertakings concerned can evidence their bona fide intention to conclude an agreement or, in the case of a takeover offer, following a public announcement of an intention or final decision to make such offer.