A. THE PROTECTION OF COMPETITION LAW (LAW 13(I)/2008)
The enactment of this Law became necessary in order to further enhance the powers and capacity of the Commission for the Protection of Competition in proceedings against firms infringing competition rules. The Law’s main provisions are a reproduction of Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) and the provisions of the EC Regulation 1/2003.
More specifically, section 3(1) of this Law prohibits all concerted practices between undertakings which have as their object or effect the prevention, restriction or distortion of competition, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production, distribution, technical development, or
investment;
(c) share markets or sources of supply geographically or otherwise;
(d) apply dissimilar conditions to equivalent transactions, thereby placing other undertakings at a competitive disadvantage; or
(e) make the conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
The following are, according to section 3, prohibited:
(a) all agreements between undertakings or associations of undertakings;
(b) all decisions by associations of undertakings, and
(c) any concerted practice
which have as their object or effect the prevention, restriction or distortion of competition.
According to section 3(2), any such acts shall be automatically void.
Section 4(1) creates an exemption for certain concerted practices which would otherwise be prohibited and void.
In order to be exempted and as such to be declared valid and enforceable either pursuant to an Order or a Decision by the Commission, these concerted practices must comply with certain requirements:
(a) they must contribute to improving the production or distribution of goods or to promoting technical or financial progress while allowing consumers a fair share of the resulting benefit;
(b) they must not impose, on the undertakings concerned, restrictions which are not indispensable to the attainment of these objectives; and
(c) they must not afford undertakings, to which the Agreements relate, the possibility of eliminating competition in respect of a substantial part of the market of the products in question.
Abuse of a dominant position
Section 6 is concerned with an undertaking or undertakings which occupy a dominant position. Only the abuse of the dominant position and not the dominant position per se is prohibited, in so far as it may affect trade with third parties. Such abusive conduct may entail:
(a) directly or indirectly fixing unfair purchase or selling prices or other unfair trading conditions;
(b) limiting production, markets or technical development to the prejudice of consumers;
(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; or
(d) making the conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
According to section 7, some agreements do not fall within the scope of the Law, e.g. agreements relating to wages and terms of employment and working conditions, acts of state etc.
B. THE CONTROL OF CONCENTRATIONS BETWEEN ENTERPRISES LAW (LAW 22(I)/1999, as amended)
Within the framework of the efforts to further ensure conditions of healthy competition and also to harmonise our Legislation with the acquis communautaire, “The Concentration of Enterprises Control Law of 1999” was enacted by the House of Representatives and was put into effect as from 19 March 1999. This law is based on Regulation No. 4064/89 of the E.U. and on corresponding legislations of member states of the E.U.
It applies to all concentrations of major importance, i.e. acts of concentrations between at least two (2) enterprises whose aggregate worldwide turnover exceeds in relation to each of them €3,417,203; at least one of the parties to the concentration engages in commercial activities within the Republic of Cyprus; and at least €3,417,203 out of the aggregate turnover of all the participating enterprises relates to the disposal of goods or the supply of services within the Republic (section 13).
According to section 4 of this Law, a concentration of enterprises shall take place if two (2) or more enterprises merge or one or more persons already controlling at least one enterprise or one or more enterprises, acquire control of the whole or parts of one or more enterprises, or if a joint venture is established which permanently carries out all the functions of an autonomous economic entity.
However, this Law shall not apply to a concentration of two (2) or more enterprises, each of which is a subsidiary enterprise of the same enterprise (section 5).
The provisions of section 8 and 36 give the Minister of Commerce, Industry and Tourism the power to declare, subject to certain prerequisites, concentrations of enterprises as of major public interest, including them in the scope of implementation of the law even though they do not normally come under it.
According to section 10, a concentration which creates or strengthens a dominant position in the affected markets within the Republic shall be declared incompatible with the requirements of the competitive market. The Commission shall declare a concentration as compatible or incompatible, after taking into account the following criteria contained in section 12:
(a) the structure of the affected markets;
(b) the market position of the participating enterprises and the enterprises related thereto;
(c) the economic power of all the enterprises;
(d) the alternative sources of supply of the products and services which are traded in the affected markets and of their substitutes;
(e) the supply and demand trends for all the products and services referred to in paragraph (d);
(f) any barriers to entry to the affected markets;
(g) the interests of the intermediate and final consumers of the products and services referred to in paragraph (d) above.
The provisions of section 13 impose on the enterprises concerned the obligation to notify within a fixed deadline (i.e. one week) the concentrations they intend to create. The sections which follow describe the procedure followed after such notification is filed.
The provisions of sections 38 and 39 give the Council of Ministers the power to examine certain cases of concentrations and to take a final decision in connection with them.
The provisions of sections 42 to 47 allow the imposition of partial or total dissolution of a concentration incompatible with effective competition, as well as of measures which are considered necessary for the restoration of effective competition in the markets affected.
Finally, the provisions of sections 52 and 53, concerning the imposition and collection of various fines by the Commission for the Protection of Competition, are significant from the point of view of effectively ensuring the implementation of the whole system which is introduced.
C. The Commission
For both of the above-mentioned laws, the Commission for the Protection of Competition established under the previous Protection of Competition Law No. 207/1989, is responsible for examining and ruling upon a complaint by an interested party or ex proprio motu, conduct that is deemed anti-competitive and in violation of the Law.
Its decisions are subject to recourse to the Supreme Court.
