Cyprus: Monopolies, Abuse Of Dominance And Economic Dependence Under Cyprus Law

Last Updated: 4 June 2015
Article by Anastasios Antoniou and Aquilina Demetriadi

Monopolies and abuses of market power are regulated exclusively under the Protection of Competition Law 13(I)/2008, as amended by Law 41(I)/2014 ('the Law'). Enforcement of the legislation remains with the Commission for the Protection of Competition ('the CPC').

Abuse of Dominance

Under the provisions of the said statute, specifically s. 6(1) thereof, any abuse of a dominant position by one or more undertakings in a market for a product or service is prohibited.

Under the Law, s. 2 thereof, an undertaking may be in a dominant position if it holds market power that enables it to obstruct the maintenance of effective competition in the relevant market and allows it to act, to a substantial degree, independently from its competitors and customers and eventual consumers.

The Law provides, under s. 6(1) thereof, that abusive conduct may, in particular, consist in:

  1. directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
  2. limiting production, markets or technical development to the prejudice of consumers;
  3. applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
  4. making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

Abuse of Economic Dependence

Moreover, pursuant to s. 6(2) of the Law, the abuse of a relationship of economic dependence, by one or more undertakings in relation to an undertakings that is a customer, supplier, producer, representative, distributor or commercial associate, even as regards a particular type of products or services, which does not have an equal alternative solution, is prohibited.

Such abuse may, in particular, consist of the imposition of unfair trading terms, discretionary treatment, interruption of trade relationships by assumption or transfer of the activities developed in these trade relationships in a way that essentially affects competition or of sudden and unjustified interruption of long-term trade relationship.

The Law does not apply over undertakings entrusted with the operation of services of general economic interest or having the character of state monopoly, in so far as the application of these provisions obstructs the performance in law or in fact, of the particular tasks assigned to them by the State.

CPC Investigate Powers

The CPC has the following powers in the course of conducting its investigations:

  • collect information it deems necessary to exercise its function.
  • conduct enquiries at the offices of the undertakings under investigation.
  • inspect books and business documents.
  • demand and receive copies or extracts from documents.
  • require on-site oral clarifications.
  • enter offices, premises and means of transportation of the undertakings under investigation and seal such offices and premises during an investigation.
  • summon witnesses and obtain statements.
  • obtain the assistance of the police authorities to enforce any aspect of the investigation.

Moreover, acting on its own or upon an application of an interested party, the CPC can issue interim orders during its investigations of a peremptory nature or prohibiting the undertakings concerned from any acts the CPC shall so decide.

Penalties and Criminal Liability

Where an abuse of a dominant position is established in violation of s. 6 of the Competition Law, the CPC can impose administrative fines of up to 10% of the combined annual revenue of the undertakings concerned, plus an administrative fine of up to 5% of the average daily turnover of the undertakings concerned during the previous financial year, for each day that the infringement persists.

The CPC can also impose fines to undertakings for:

  • failure to comply with an interim measure ordered by the CPC: up to 5% of the average daily turnover of the offending enterprise during the previous financial year for each day of non-compliance.
  • acting in any way contrary to the terms of an interim measure ordered by the CPC: up to 5% of the average daily turnover of the offending enterprise during the previous financial year for each.
  • failure to submit information that the CPC has requested, or wilfully or negligently providing inaccurate or misleading information: up to 1% of the average turnover of the offender during the previous financial year (plus up to 5% of the average daily turnover of the offender during the previous financial year for each day of non-compliance).
  • wilful or negligent failure to present a full account of books or documents during a CPC investigation, or failing to comply with a search request: 1% of the turnover of the offender during the previous financial year (plus up to 5% of the average daily turnover of the offender enterprise during the previous financial year for each day of non-compliance).
  • failure to comply with commitments that have been imposed by the CPC: up to 10% of the turnover achieved during the previous financial year.

Before imposing an administrative fine, the CPC allows any interested party to submit representations. Administrative fines are imposed upon a reasoned judgment, following due investigative process and taking into account the severity and the duration of the infringement. Administrative fines are recovered as a civil debt owed to the Republic of Cyprus. The CPC can initiate legal proceedings to secure a court order for payment.

In addition, a legal or natural person can be criminally liable, and penalties can be imposed for:

  • Failing to comply with a decision of the Commission: up to €340,000 or imprisonment of up to two years, or both.
  • Failing to comply with an interim measure ordered by the Commission: up to €340,000 or imprisonment of up to two years, or both.
  • Failing to observe the duty of confidentiality: up to €3,500 or imprisonment of up to one year, or both.
  • Refusing or neglecting to comply with an obligation to provide assistance, information, documents and statements during the course of an investigation: up to €85,000 or imprisonment of up to one year, or both.
  • Destroying or defacing information or documents during the course of an investigation: up to €85,000 or imprisonment of up to one year, or both.
  • Providing inaccurate, false or misleading information or documents during the course of an investigation: up to €85,000 or imprisonment of up to one year, or both.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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