Merger Control in Cyprus: Legal Framework
The law regulating mergers in Cyprus is the Control of Concentrations between Undertakings, Law 83(I) of 2014 (the Merger Control Law).
The Commission for the Protection of Competition (the CPC) is the regulatory authority which is responsible for implementing the provisions of the Law.
CPC is empowered to declare a concentration as compatible or incompatible with the functioning of competition in the market.
Merger Control: Concentration of Undertakings
A concentration of undertakings shall be deemed to arise where a change of control on a lasting basis results from:
- the merger of two or more previously independent undertakings or parts of undertakings, or
- the acquisition, by one or more persons already controlling at least one undertaking, or by one or more undertakings, whether by purchase of securities or assets, by contract or by any other means, of direct or indirect control of the whole or parts of one or more other undertakings.
In addition, joint ventures performing on a lasting basis all the functions of an autonomous economic entity shall also constitute a concentration.
Evidently, the Merger Control Law does not apply to a concentration of two or more undertakings, each of which is a subsidiary of the same undertaking.
Merger Control in Cyprus: Concentrations of Major Importance
The Merger Control Law applies to all concentrations of major importance. A concentration shall be deemed to be of major importance if:
- The aggregate turnover achieved of each of at least two of the participating undertakings is more than EUR 3.500.000
- At least two of the participating undertakings achieve turnover within the Republic
- At least EUR 3.500.000 out of the aggregate turnover of all the participating undertakings is achieved within the Republic
Turnover includes the amounts arising from the sale of goods and the provision of services during the last financial year, subtracting discounts, VAT, and other taxes directly applicable to the turnover and excluding internal transactions. Special turnover calculation rules apply in relation to credit institutions and insurance undertakings.
The Merger Control Law does not apply where a concentration falls within the scope of application of Regulation (EC) No. 139/2004 on the control of concentrations between undertakings.
Merger Control in Cyprus: Necessity of Notification
Importantly, acts of concentration of major importance must be notified to the CPC prior to their implementation.
The notification to the CPC shall contain the information referred to in the Merger Control Law and should be submitted in one of the official languages of Cyprus.
Further information about the contents of the notification may be provided upon request.
Merger Control in Cyprus: Examining the Notification
The notification will be examined by the CPC to ascertain whether it fully complies with the conditions of Schedule III of the Merger Control Law.
If the notification is incompatible, the CPC will request additional information.
If, on the other hand, the notification complies with the conditions of Schedule III, CPC will prepare a preliminary evaluation which shall include a reasoned opinion, as follows:
- The concentration does not fall within the scope of application of the Merger Control Law, or
- The concentration can be declared as being compatible with the functioning of competition in the market, or
- The concentration raises serious doubts as to its compatibility with the functioning of competition in the market
The CPC will consider the evaluation of its service before reaching any decisions. Thereinafter, the CPC can reach any of the following decisions:
- The concentration does not fall within the scope of the law, or
- The concentration does not raise serious doubts as to its compatibility with the functioning of competition in the market and thus it is compatible, or
- The concentration raises serious doubts as to its compatibility with the functioning of competition in the market and thus full investigation proceedings shall be initiated
If full investigation proceedings are initiated, upon their completion the CPC shall:
- Declare the concentration compatible with the functioning of competition in the market subject to any specific terms and relevant commitments, or
- Declare on the basis of a reasoned report that the concentration as incompatible with the functioning of competition in the market
Before taking any final decision, the representatives of the participating undertakings and/or any interested parties shall appear before the CPC upon written request and orally present their arguments and reasoning.
Merger Control in Cyprus: Powers of the Minister of Energy, Commerce and Industry
Prior to the CPC's decision, the Minister of Energy,
Commerce and Industry may declare that a notified concentration
shall be deemed to be of major public interest as regards the
effect it may have on the public security, the pluralism of the
media and the principles of sound administration.
If there is a disagreement between the CPC's and the Minister, the Minister shall refer the decision to the Council of Ministers for examination.
The Council of Ministers shall then decide weighing the reasons of public interest and the need for the protection of competition in the market whether to approve or not the concentration.
Merger Control in Cyprus: Administrative Sanctions
In case of infringement of the provisions of the Merger Control Law, the CPC may impose several administrative sanctions, such as:
- An administrative fine not exceeding ten per cent (10%) of the total turnover of the undertaking which has the obligation for notification in the financial year immediately preceding the concentration, in case the concentration is partially or completely implemented by infringement of the provisions of section 11 and in addition an administrative fine not exceeding EUR 8.000 for every day during which the infringement continues
- An administrative fine not exceeding EUR 50.000 for the supply of false or misleading information in the course of compliance with an obligation imposed by the Merger Control Law
Merger Control in Cyprus: Challenging the CPC's decision
The CPC, being an administrative body, is bound by administrative law.
Accordingly, its decisions can be contested before the Administrative Court under section 146 of the Constitution of Cyprus within 75 days of having been notified of the decision.
Merger Control in Cyprus: Our Services
Loizides & Economou LLC has extensive experience in various aspects of competition law with a particular focus on the notification process before the CPC. Our services include:
- Advice on both Cyprus and EU competition related issues and advice on all aspects concerning anti-competitive behaviour and competition law in general, such as merger control, abuse of dominance, cartel investigations.
- Tailored guidance with regards to the prospects of a particular transaction falling within the provisions of the Merger Control Law
- Representation before the CPC through the entire notification process
- Advice and support in respect to the drafting and filing of notifications on proposed concentrations with CPC.
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.