The applicable merger control rules in Cyprus are set out in the Control of Concentrations between Undertakings Law No. 83 (I) of 2014 (the “Law”), whilst the enforcement of the said law is entrusted to the Commission of the Protection of Competition (“CPC”), which is vested with wide powers to coordinate and effect the smooth regulation of mergers and acquisitions in Cyprus.
The importance of the Law is indisputable, since in practice concentrations caught under the Law cannot be implemented unless cleared by the CPC.
Transactions being caught by the Law involve the followingconcentrations between undertakings:
1. Mergers of two previously independent undertakings or parts of undertakings.
2. Acquisition of control of one or more undertakings through purchasing securities or assets (by agreement or otherwise), by one or more persons already controlling one or more undertakings or by other undertakings.
3. Existing undertakings whereby the control changes from sole to joint control, provided that the arising joint venture carries out all functions of an autonomous economic entity on a lasting basis.
Control derives from any rights, agreements or other means granting the possibility of decisive influence over an undertaking through:
i. Ownership or enjoyment rights over the whole or part of the undertaking’s assets
ii. Rights or contracts conferring decisive influence on the composition and decision-making process of an undertaking’s bodies.
A concentration of undertakings is considered of major importance if:
i. The global aggregate turnover achieved by at least two of the undertakings in question exceeds €3.5 million, in relation to each of them
ii. At least two of the undertakings concerned achieve a turnover in Cyprus
iii. At least €3.5 million of the aggregate turnover of all undertakings concerned is achieved in Cyprus.
Provided that concentration of major importance is deemed to have arisen, notification ought to be submitted in the required form – prescribed under Appendix III of the Law - and time, together with the required fee.
The Minister for Energy, Commerce, Industry and Tourism may declare a concentration as notifiable if it is of major public interest.
Concentrations must be notified before their implementation, following the conclusion of the relevant agreement or publication of the public offer or acquisition of the controlling interest.
Notification can also take place before the conclusion of the act giving rise to the concentration, so long as the undertakings concerned demonstrate a good faith intention to conclude an agreement or, in the case of public offer, where they have publicly announced their intention or final decision to make such a bid.
Framework of Investigation
CPC’s investigation and clearance is conducted in two phases:
Phase I – Preliminary Investigation: the CPC shall - within one month from the filing of the notification or from the filing of any additional information - clear the concentration or decide that additional investigation is warranted.
Phase II- Full Investigation: If the CPC decides to carry out an in depth inquiry for reasons relating to doubts as to the undertaking’s compatibility with the competitive market, it has a further two months within which to present its report to the Committee of the CPC. The Committee of the CPC must then decide within one month from the date the report of the Service was submitted.
If a notifying undertaking is undergone the phase II full investigation – whereby the Service is required within three months from the submission of the notification to provide to the CPC a report of its findings – the CPC shall then within four months from the submission of the notification –or of any additional information - announce its decision to the notifying undertaking, in order for the notification to be considered complete.
The CPC may declare a concentration compatible with the Cyprus competitive market, may block it completely at Phase II and may impose conditions - further to negotiations – either at Phase I or at Phase II.
The CPC assesses whether the undertaking will substantially obstruct competition in Cyprus or any part of it, particularly as a result of creation or strengthening of a dominant position.
Concentrations being implemented, either partially or fully, prior to clearance may be imposed with the following sanctions:
1) Up to 10% of the aggregate turnover of the notifying undertaking’s immediately preceding financial year.
2) An additional administrative fine of €8,000 for each day of the infringement.
CPC’s order of partial or complete dissolution of a concentration.
The future of the merger control regime in Cyprus
The Law, which is in force since the 1st of August of 2014,repealed and replaced the previous provisions that were in place since 1999, essentially providing for a regime that can cater for the market’s needs in an era whereby joint ventures, mergers and acquisitions play a leading role in Cyprus’ business affairs.