Legislation and authority
This commentary provides a high-level overview of the merger control rules in Cyprus, as set out in the Control of Concentrations between Undertakings Law (L. 83(I)/2014) (the "Law"). As such, it summarises the main provisions of the legal framework and the applicable thresholds, offering a basic understanding of how certain transactions — referred to as concentrations — are assessed and monitored in Cyprus.
The Control of Concentrations between Undertakings Law (L. 83(I)/2014) is the main piece of legislation regulating the control of concentrations in Cyprus. Enforcement of the said Law, rests with the Commission for the Protection of Competition (the "CPC"), which is the competent authority responsible for overseeing and applying the provisions of the Law.
Transactions caught
The Law captures the below transactions, referred to as "concentrations":
- mergers of two or more previously independent undertakings or parts of them;
- acquisitions by one or more persons (already controlling at least one undertaking) or by one or more undertakings of direct or indirect control of the whole or parts of one or more undertakings-whether by the purchase of securities or assets, by contract, or by any other means; or
- the creation of a joint venture that performs all functions of an autonomous economic entity on a lasting basis.
The Law is applicable to concentrations between undertakings resulting in a change of control on a lasting basis. Such change of control on a lasting basis takes place where a party gains the power to exercise decisive influence over another undertaking, and this influence is permanent or long-term, rather than temporary.
Thresholds
The Law requires concentrations of "major importance" to be notified to the CPC. Such concentrations are deemed to arise when the following thresholds are cumulatively met:
- the aggregate turnover achieved by each of at least two of the participating undertakings is over €3.5 million;
- at least two of the participating undertakings achieve a turnover in Cyprus; and
- at least €3.5 million of the aggregate turnover of all participating undertakings is achieved in Cyprus.
Penalties for failing to notify a merger
A concentration of major importance cannot be implemented unless previously notified to and cleared by the CPC.
The CPC may impose substantial administrative penalties on obligated persons if a concentration of major importance is partially or entirely implemented before receiving CPC's clearance.
CPC's Assessment
After assessing a notified concentration, the CPC will decide either that:
- The notified transaction does not fall within the ambit of the Control of Concentrations between Undertakings Law.
- The concentration is cleared and considered compatible with the operations of the competitive market.
- A full Phase II investigation of the concentration is required.
Phase II investigation by the CPC involves a more detailed, second-stage review of a concentration when serious competition concerns are raised, aiming to assess whether the merger would significantly harm competition and deciding whether to approve, conditionally approve, or block it.
Final Thoughts
For businesses considering mergers, acquisitions, or joint ventures it is crucial to assess from the outset whether the anticipated transaction constitutes a concentration under the Law and whether it meets the thresholds requiring notification to the CPC.
This assessment plays a key role not only in ensuring regulatory compliance but also in shaping the legal and commercial structure of the anticipated transaction. In practice, this often involves incorporating appropriate conditions precedent into the transaction documents to reflect the need for CPC clearance, while also managing timelines and mitigating execution risks.
Beyond this, legal advisors play a central role in preparing the notification, liaising with the CPC throughout the review process, and addressing any queries or competition concerns that may arise. Early engagement with professionals experienced in merger control is therefore essential — not just to avoid administrative sanctions for non-compliance, but to facilitate a smooth and timely closing and support the overall integrity of the transaction.
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.