Akey aspect that must be properly assessed prior to any merger, acquisition or joint venture, or indeed any concentration that has a Cypriot dimension as it will be presented for the reader below, is the application of provisions of the Control of Concentrations between Undertakings Laws 1999-2000, and the necessity of securing a relevant prior approval via a clearance decision.
The relevant independent national authority that applies the law is the Commission for the Protection of Competition of the Republic of Cyprus (CPC).
The CPC currently comprises the chairperson, Loukia Christodoulou, and four members: Eleni Karaoli, Leontios Vryonides, Costas Melanides and Demetris Pitsillídes.
The CPC is assisted by the Service of the CPC, which in relation to concentration control law provisions proceeds – after the filing of a notification of concentration – to its evaluation and the preparation of a written report with its position in order to be considered by the CPC, prior to the issue of the CPC decision.
The director of the Service of the CPC is Christiana Sideri.
Role of CPC
The role of the CPC includes: safeguarding the competitive market and the assessment of whether any proposed concentration is compatible with the demands of the competitive market, and hence it is cleared without the imposition of any conditions; or whether it necessitates further investigation or the imposition of conditions in order to be cleared; or that it is deemed incompatible with the demands of the competitive market.
Duty on acquirer
Sections 3 and 13 of the law, read in conjunction, impose the duty upon the acquirer the control to file a notification of concentration with the CPC in the event that:
a) at least two of the participating undertakings have a total turnover of €3,417,202.88 (US$4,443,390) each;
b) at least one of them engages in commercial activities within the Republic of Cyprus; and
c) at least €3,417,202.88 out of the aggregate turnover of all the participating undertakings relates to the disposal of goods or the supply of services within the Republic of Cyprus.
If the above criteria are met cumulatively, the notification form must be filed in Greek within seven days at the latest from the date of conclusion of the relevant agreement, or the publication of the relevant offer of purchase or exchange, or the acquisition of a controlling interest, whichever of these events occurs first, under section 13(1) of the law.
Penalties for non-compliance
In the event that a concentration is put into effect and closing occurs without the prior approval of the CPC, then the participating undertakings and the persons contravening or omitting to comply with the following provisions of the law are exposed to administrative fines including:
a) a fine up to €85,430 in case of omission to notify a concentration as required by section 13, and an additional fine up to €8,543 for each day that the contravention continues; and
b) a fine up to 10% of the total turnover of the participating undertakings, that being globally in the financial year immediately preceding the concentration, in case a concentration is partially or completely put into effect in contravention of the provisions of section 9, and in addition a fine up to €8,543 for each day on which the contravention continues. All of the above fines can be imposed conjunctively.
We also note the power of the CPC to issue an order for the partial or total dissolution of the relevant concentration under section 42 of the law.
It must be pointed out that the CPC, also a member of the Network of European Competition Authorities and the International Competition Network, has shown great effort and efficiency in delivering a remarkable number of reasoned decisions regarding concentration control.
An indicative example of a novel notification of concentration that has been cleared without the imposition of any conditions, and was handled by L Papaphilippou & Co, is the notification of concentration between Vassiliko Cement Works and Hellenic Tzilalis (Cyprus) regarding the full functionality of the pre-existing joint venture Enerco/Energy Recovery, with the relevant market being the collection and transfer of waste and the management of waste and alternative fuels.
First for the market
Further to the above information, the notification of concentration regarding the acquisition of joint control of Demco Insurance by Rodardo and Demetrios Kontominas, leading to a CPC clearance decision without the imposition of any conditions, and the notification regarding the acquisition of joint control of Interlife Insurance Company by Golvenveil and Michalis Michaelides leading to a CPC clearance decision without the imposition of any conditions were filed simultaneously as back-to-back transactions, which was in fact a first for the CPC and for the Cyprus market.
Pantelis Christofides is a partner at L Papaphilippou & Co in Cyprus
17 Ifigenias street
2007 Strovolos, P.O. Box 28541
2080 Nicosia, Cyprus
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