1. Legal and enforcement framework
1.1 Which legislative and regulatory provisions regulate dominance in your jurisdiction?
Dominance is regulated by the Law on the Protection of Competition (13(I)/2008), which sets out the legal framework with regard to the protection of competition in Cyprus. The prohibition of abuse of a dominant position is set out in Section 6(1) of the law.
1.2 Do any special regimes apply in specific sectors?
No special regimes apply in specific sectors.
1.3 Is the legislation intended purely to protect economic interests or does it have other aims?
The legislation is intended purely to protect economic interests.
1.4 Which authorities are responsible for enforcing the legislation?
The authority responsible for enforcing the Law on the Protection of Competition, including the sections relating to the abuse of a dominant position, is the Commission for the Protection of Competition.
1.5 How active are the enforcement authorities in taking action against abuse of dominance in your jurisdiction? What key decisions have the enforcement authorities adopted most recently?
The Commission for the Protection of Competition is actively involved in investigating potential abuse of dominance cases, either ex officio or following a complaint. The most recent key decisions issued by the commission are as follows:
- Decision 30/2020, Primetel Plc v Cyprus Telecommunications Authority and others;
- Decision 4/2020, A Princess Airport Parking Ltd and others v Hermes Airports Ltd;
- Decision 21/2020, Golden Telemedia Limited v MTN Cyprus Limited;
- Decision 53/2019, K.A.C. Constantinides Trading Ltd v GPM – Henkel Ltd;
- Decision 32/2018, Pittas Dairies Ltd and other v Pancyprian Organization of Cattle Farmers (POCF) Public Ltd.
2. Definitions and scope of application
2.1 What parties are covered by the dominance legislation? Are any exemptions available?
The dominance legislation covers all undertakings (private and public) with a dominant position in one or more relevant markets.
Undertakings which have been assigned the operation of services of general economic interest or which have the character of a revenue-producing monopoly are exempt from the application of this legislation, insofar as its application obstructs the performance of the tasks assigned to them (Section 7). Where an undertaking invokes the exemption contained in Section 7, it bears the burden of proving that it is applicable.
2.2 How is 'dominance' defined in your jurisdiction?
According to Section 2 of the Law on the Protection of Competition, 'dominance' is defined as a position of economic strength enjoyed by an undertaking which enables it to prevent the preservation of effective competition in the market and to behave, to a substantial extent, independently of its competitors and customers, and ultimately of consumers.
This definition is essentially a transposition of the definition of 'dominant position' given by the Court of Justice of the European Union in United Brands (Case 27/76).
2.3 How important is market share in assessing dominance in your jurisdiction? Do specific thresholds apply in this regard?
The Commission for the Protection of Competition gives serious consideration to market share when assessing dominance. Although the Law on the Protection of Competition does not set specific thresholds in relation to market shares, the commission is usually guided by relevant decisions of the EU courts, such as:
- Hoffmann-La Roche (Case 85/76) and Hilti (Case T-30/89), in which it was held that a market share of over 70% proves the existence of dominance;
- AKZO (Case C-62/86), in which it was held that a market share of over 50% constitutes a rebuttable presumption of the existence of dominance; and
- United Brands (Case 27/76), in which it was held that a market share of less than 40% cannot lead to the establishment of dominance.
2.4 What other factors are considered when assessing dominance?
The Commission for the Protection of Competition follows the reasoning adopted in the case law of the EU courts regarding the examination of additional factors when assessing dominance. Among other things, the commission usually takes into account the following factors:
- barriers to entry;
- countervailing buyer power;
- the degree of vertical integration of the undertaking; and
- access and/or control of essential facilities or inputs.
2.5 How are the product and geographic markets defined in your jurisdiction?
For relevant product market definition purposes, the Commission for the Protection of Competition is guided by Commission Notice 97/C 372/03 on the definition of relevant market for the purposes of Community competition law. This provides that the relevant product market depends on the interchangeability or substitutability of the products or services, which is estimated in accordance with the characteristics, prices and intended use of the products or services. The commission further takes into consideration the relevant case law of the EU courts, such as Michelin (Case 322/81), in which it was held that the estimation of the degree of interchangeability or substitutability mainly takes into account the competitive conditions and the structure of supply and demand.
With regard to the definition of the geographic market, the commission takes into consideration the abovementioned commission notice, combined with the relevant case law of the EU courts, such as United Brands (Case 27/76). On this basis, the relevant geographic market is defined as the area:
- in which the undertakings concerned are involved in the supply of products or services;
- in which the conditions of competition are sufficiently homogeneous; and
- which is distinguishable from other areas due to the appreciably different conditions of competition that exist between them.
2.6 Does the dominance legislation make any distinction between dominant purchasers and suppliers?
The dominance legislation does not distinguish between dominant purchasers and suppliers.
2.7 Is collective dominance recognised in your jurisdiction? If so, how is it defined?
The Law on the Protection of Competition recognises collective dominance. More specifically, Section 6(1) of the law prohibits the abuse of a dominant position by one or more undertakings that hold a dominant position. The law does not define 'collective dominance'. For the purpose of ascertaining the existence of collective dominance, the Commission for the Protection of Competition is guided by relevant decisions of the EU courts, such as Airtours (Case T-342/99) and Commune d' Almelo (Case C-393/92), in which the existence of links between the undertakings – including structural links – as well as the oligopolistic structure of the market were taken into consideration for the purpose of ascertaining the existence of collective dominance.
2.8 What is the statute of limitations to prosecute abuse of dominance cases in your jurisdiction?
The Law on the Protection of Competition provides for limitation periods in relation to the imposition of administrative fines by the Commission for the Protection of Competition, without, however, distinguishing cases of abuse of dominance. More specifically, Section 41 of the law sets out two limitation periods:
- three years in the case of infringements of provisions concerning requests for information or the conduct of inspections under Sections 30, 31 and 32A of the law; and
- five years in the case of all other infringements, thus including abuse of dominance cases.
Upon the expiry of the applicable timeframe, the commission no longer has the power to impose an administrative fine.
3. Abuse of dominance
3.1 How is 'abuse of dominance' defined in your jurisdiction?
The Law on the Protection of Competition does not define what constitutes an abuse of dominance. The Commission for the Protection of Competition is guided by the case law of the EU courts, such as Hoffmann – La Roche (Case 85/76) and BPB Industries (Case T-65/89), in which it was held that the concept of abuse is objective; and that even in the absence of intent and/or the occurrence of anti-competitive effects, the conduct of a dominant undertaking may be regarded as abusive.
The commission is also guided by the relevant case law of the EU courts, such as AKZO (Case C-62/86) and Hoffmann La-Roche (Case 85/76), in which it was held that the abuse of dominance concerns the conduct of a dominant undertaking that is in a position to affect the structure of a market in which, due to its presence, competition is already weakened, and which through recourse to methods different from those governing normal competition, has the effect of hindering the maintenance of the degree of the existing competition in the market or the development of that competition.
Section 6(1) of the law also indicatively lists the types of conduct which constitute an abuse of dominant position.
3.2 What specific types of conduct constitute an abuse of dominance in your jurisdiction?
Section 6(1) of the Law on the Protection of Competition indicatively lists practices that constitute an abuse of dominant position. More specifically, it prohibits the abuse of dominant position if the relevant practice results or may result in:
- directly or indirectly fixing unfair purchase or sale prices, or any other trading conditions that are unfair under the circumstances;
- limiting production, distribution or technical development to the detriment of consumers;
- applying dissimilar conditions to equivalent transactions, thereby placing certain undertakings at a competitive disadvantage; or
- 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.
3.3 On what grounds may the enforcement authorities commence an abuse of dominance investigation?
The Commission for the Protection of Competition may commence an abuse of dominance investigation either on its own initiative (ex officio investigation) or following a complaint (Section 23(2)(a) of the Law on the Protection of Competition).
3.4 What powers do the enforcement authorities have in conducting their investigation?
The Commission for the Protection of Competition has a wide range of powers in conducting its investigations, either following a complaint or ex officio, in the context of enforcing the Law on the Protection of Competition. More specifically, the commission has the following powers:
- the power to collect information through sending a written request to undertakings, associations of undertakings or other natural or legal persons or public or private entities (Section 30);
- the power to conduct interviews with natural or legal persons, following their consent, in order to receive statements in relation to the subject of the investigation conducted by the commission (Section 30A);
- the power:
- to conduct inspections at the premises of undertakings or associations of undertakings (with the exception of households);
- to examine records, books, accounts and other documents related to the business, regardless of how they are stored, and to take copies/extracts thereof;
- to seal any business premises and records, books, accounts and other documents for inspection purposes; and
- to ask any representatives or staff members of the undertakings questions and record their answers (Section 31).
- the power to conduct inquiries in particular sectors of the economy and into specific types of agreements when the trade trends, the rigidity of prices or other circumstances create suspicions of the restriction or distortion of competition in Cyprus. To this end, the commission may request information and conduct inspections. It may also publish a report containing the results of its inquiry, and use the evidence acquired from its inquiry in cases of investigations of potential infringements (Section 32A).
3.5 Is there an opportunity for third parties to participate in the investigation?
Third parties may participate in the investigation by replying to questionnaires sent by the Commission for the Protection of Competition and by attending the proceedings of the commission.
3.6 What are the general rights and obligations of the enforcement authorities during the investigation?
The investigatory powers of the Commission for the Protection of Competition are set out in question 3.4.
When conducting unannounced inspections of the offices, premises or means of transport of an undertaking, the commission and its officials must:
- accurately state the subject matter and purpose of the inspection (Section 31(3));
- protect business secrets and information of a confidential nature (Section 33); and
- communicate to the undertaking being investigated all documents on which it intends to base its decision, excluding those that constitute business secrets or those already available to the undertaking (Section 17(9)(a)).
3.7 What are the general rights and obligations of the target company during the investigation? What are the general rights and obligations of individuals targeted during the investigation?
Target undertakings have the general right to protect their rights of defence.
In the case of unannounced inspections, undertakings have the right to be informed of their subject matter and purpose (Section 31(3)).
Moreover, target undertakings have the right to:
- request access to the case file in order to prepare their written observations regarding the prima facie conclusions of the Commission for the Protection of Competition (statement of objections);
- submit their written observations (Section 17(6));
- request an oral proceeding to present their arguments (Section 17(8));
- indicate information that they consider to be confidential by justifying their opinion (Section 30(10)); and
- be informed of the evidence on which the commission intends to base its decision (Section 17(9)(a)).
During the investigation process, undertakings are obliged to cooperate with the commission by providing complete and accurate information (Section 30(3)) and/or clarifications (Section 30(4)).
If the commission carries out an unannounced inspection, the target undertakings must cooperate throughout (Section 31(10)). The following constitute criminal offences:
- refusal or failure to cooperate;
- the concealment, destruction or falsification of information or records which are the subject of the inspection; and
- the provision of false, incomplete, inaccurate or misleading information, declarations or records, or refusal or failure to provide the same.
Anyone who commits one of the above criminal offences will be subject to a sentence of imprisonment for up to one year or a fine of up to €85,000, or both (Section 31(11)).
3.8 What factors will the enforcement authorities consider in assessing whether an abuse of dominance has taken place?
When assessing whether an abuse of dominance has occurred, the Commission for the Protection of Competition will first define the relevant market in which the undertaking concerned operates. Thereafter, the commission will evaluate whether the undertaking concerned possesses a dominant position in the relevant market by considering a variety of factors (see questions 2.3 and 2.4). If it determines that the undertaking has a dominant position in the relevant market, it will proceed to examine the relevant facts and the dominant undertaking's conduct in order to ascertain whether it has been involved in any practices of either an abusive or exclusionary nature which are affecting or may affect competition in the relevant market or in a downstream/upstream or neighbouring market. Subsequently, the commission will assess potential objective justifications put forward by the dominant undertaking.
3.9 In case of a finding of abuse of dominance, can the company seek to negotiate a settlement or similar resolution? If so, what is the process for doing so?
The Law on the Protection of Competition contains no provisions on settlement or similar resolutions in relation to cases of abuse of dominance.
4.1 What defences are available to companies in response to enforcement?
Undertakings that have been found to have abused their dominant position can provide objective justifications for their conduct in the context of exercising their rights of defence.
4.2 Can companies avail of leniency in abuse of dominance cases?
Undertakings involved in abuse of dominance cases cannot avail of the Commission for the Protection of Competition's Leniency Programme (Immunity from and Reduction of Administrative Fines in cases of Restrictive Collusions Infringing Section 3 of the Law and/or Article 101 of the Treaty on the Functioning of the European Union (Leniency Programme) Regulations of 2011 (Regulatory Administrative Act 463/2011)). The programme applies only to undertakings involved in anti-competitive agreements that wish to cooperate with the commission to help it prosecute illegal cartels and receive an exemption or reduction in the administrative fine in return.
5. Remedies and sanctions
5.1 What remedies and sanctions may be imposed for abuse of dominance? Can sanctions be imposed on individuals?
Where the Commission for the Protection of Competition finds an ongoing abuse of dominance, it can order the relevant undertaking to cease the infringement within a set timeframe and refrain from repeating the infringement in the future. If the infringement ceases prior to the issue of the commission's decision, the commission can issue a declaratory decision condemning the infringement without imposing an administrative fine (Section 24(b) of the Law on the Protection of Competition).
The commission also has the power to impose administrative fines which, depending on the gravity and duration of the infringement, can be up to 10% of the turnover earned by the infringing undertaking in the preceding financial year (Section 24(a)).
Depending on the nature of the infringement, the commission also has the power to impose terms and measures of a behavioural and/or structural nature which are necessary to terminate the infringement (Section 24(c)).
If the relevant undertaking fails to comply with the above, the commission has the power to impose an administrative fine of up to 5% of the average daily turnover achieved during the preceding financial year for each day that the infringement continues (Section 24(d)).
The Law on the Protection of Competition does not provide for the imposition of sanctions on natural persons for abuse of a dominant position.
5.2 How are the remedies and sanctions in abuse of dominance cases determined?
Depending on the facts, the decisions of the Commission for the Protection of Competition on remedies and sanctions may vary.
If the case concerns an ongoing infringement, the commission may issue a decision ordering its termination within a fixed timeframe. If the case concerns an infringement which has already been terminated, the commission may issue a declaratory decision condemning the infringement.
The commission may also impose terms and measures (commitments) of a behavioural and/or structural nature on undertakings involved in abuse of dominance cases. Following the notification of a statement of objections to the relevant undertakings, the latter may propose a series of terms and measures which they are willing to implement in order to alleviate the commission's concerns. If the commission deems the proposed terms and conditions to be appropriate and proportionate, it may render them binding on the undertakings involved.
Finally, if the commission deems it necessary, given the gravity and duration of the infringement, it may impose an administrative fine of up to 10% of the undertaking's turnover in the preceding financial year.
5.3 Can the enforcement authorities impose remedies and sanctions directly or is court action required?
Remedies and sanctions may be imposed directly by the commission.
6.1 Can the defendant company appeal the enforcement authorities' decision? If so, in what forum and what is the process for appeal?
On the basis of Article 146 of the Constitution of the Republic of Cyprus, a defendant undertaking against which the Commission for the Protection of Competition has issued a finding of abuse of dominance can file recourse to the Administrative Court for judicial review of the decision. Recourse must be filed within 75 days of the date of publication of the decision or the date on which the undertaking is notified of the decision.
6.2 Can third parties appeal the enforcement authorities' decision, and if so, in what circumstances?
Third parties may appeal a decision of the Commission for the Protection of Competition if they can demonstrate the existence of a legitimate interest, which must be present, direct and personal. In essence, it must be demonstrated that:
- the commission's decision has caused direct harm to the third party; and
- the party has suffered such harm in a capacity recognised by the rules of law (ie, there is a special legal relationship between that third party and the contested decision).
7. Private enforcement
7.1 Are private enforcement actions against abuse of dominance available in your jurisdiction? If so, where can they be brought?
A party that has suffered damage due to an infringement of the Law on the Protection of Competition due to abuse of dominance may seek full compensation at the district court based on the Actions for Damages for Infringements of Competition Law (113(I)/2017). Where a person brings a compensation claim before a district court for damages caused by abuse of dominance in the absence of a relevant decision by the commission, it bears the burden of proving the infringement. Consequently, the court is called on to enforce the law. If, on the other hand, the commission has already issued a decision, which is not yet final, this constitutes a rebuttable presumption of infringement; whereas a final decision constitutes an irrebuttable presumption of infringement.
7.2 Are class actions or other forms of collective action available in your jurisdiction?
The Actions for Damages for Infringements of Competition Law, under which a party that has suffered damage due to infringement of the Law on the Protection of Competition may seek full compensation, does not provide for class actions or other forms of collective action.
7.3 What process do private enforcement actions follow?
No specific process is followed in private enforcement actions – that is, actions for damages for competition law infringements, including dominance. Actions for damages based on the Actions for Damages for Infringements of Competition Law are brought before the competent district court under the Civil Procedure Rules.
There are two types of actions for damages for infringements of competition law:
- standalone actions; and
- follow-on actions.
Where a party brings a standalone action before the court – that is, in the absence of a prior final decision of the Commission for the Protection of Competition finding an infringement of the Law on the Protection of Competition – it bears the burden of proving that the law has been infringed.
On the other hand, where a party brings a follow-on action before the court – that is, following a final decision of the commission finding an infringement of the law – that decision constitutes an irrebuttable presumption in the follow-on action.
7.4 What types of relief may be sought and what types of relief are most commonly awarded? How is the relief awarded determined?
Under the Actions for Damages for Infringements of Competition Law, a natural or legal person or public authority which has suffered damage due to an infringement of the Law on the Protection of Competition is entitled to full compensation. 'Full compensation' means the restoration of the party that suffered the damage to the situation it would have been in had the infringement not occurred. 'Restoration' includes actual loss and/or loss of profit, as well as interest from the time the damage occurred until the time the compensation is paid.
7.5 Can the decision in a private enforcement action be appealed? If so, to which reviewing authority?
As private enforcement is available through an action for damages before the district court, a decision of the latter may be reviewed by the Supreme Court through an appeal proceeding.
8. Trends and predictions
8.1 How would you describe the current dominance enforcement landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
The current dominance enforcement regime is almost equivalent to the rules applicable at the EU level.
Within the next 12 months, it is expected that the Law on the Protection of Competition will be reformed so as to effectively transpose the ECN+ Directive (EU) 2019/1. To this end, the Commission for the Protection of Competition has already held a public consultation to invite stakeholder comments, observations and suggestions in relation to the draft Protection of Competition Law 2021 and to the draft regulations regarding the leniency programme.
9. Tips and traps
9.1 What would be your recommendations to companies to avoid an abuse of dominance charge and what potential pitfalls would you highlight?
Undertakings must ensure that they regularly monitor the market in which they operate in order to effectively identify changes in market structure and/or market dynamics that may place them in a dominant position. They should also have a thorough understanding of the relevant markets in which they operate; a false perception of market definition may prevent them from acknowledging their dominant position.
Dominant undertakings should also be cautious of their conduct in the market, especially when deciding on pricing policies.
Dominant undertakings should further ensure that they have a valid objective justification when refusing to deal or supply.
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.