Competition Law in Cyprus: Safeguarding ‘the survival of the fittest’ and coronavirus concerns

Posted on 09 Apr 2020, by Eleana Poulladou

We all deal with giants in our everyday lives. We depend on big companies for our most basic needs. On big drug companies to keep us healthy, big banks to lend us money, big online businesses to connect us with the world. EU Competition rules have helped consumers to live amongst those giants, with confidence that they'll get a fair deal. What is applicable in Cyprus?

The Framework

In Cyprus, the protection against unfair competition is regulated by two main laws relating to antitrust enforcement and mergers and acquisitions control:

  • the Protection of Competition Laws of 2008 No. 13(I)/2008, as amended by Law No. 41(I)/2014 (‘the Competition Law’); and
  • the Control of Concentrations between Undertakings Law of 2014, No. 83(I)/2014 (‘the Concentrations Law’).

The Cyprus Commission for the Protection of Competition (‘CPC’) is the administrative body responsible for enforcing and applying these statutory provisions pursuant to the relevant laws. The CPC is also responsible for applying the corresponding provisions in the Treaty on the Functioning of the EU (‘TFEU’). It is noted that Law 113(I)/2017 has effectively transposed EU Directive 2014/104/EU.

The CPC, being an administrative body, is bound by administrative law and as a result, a recourse can be filed against all its decisions before the Administrative Court under section 146 of the Constitution of Cyprus (as of 1st January 2016; previously recourses were filed before the Supreme Court of Cyprus) and were reviewed by the said Court.

Sanctions

In recent years, competition disputes have increased significantly and in Europe especially, record breaking fines have been imposed by the European Commission.

Between April 2018 and March 2019, the CPC issued 72 decisions, 40 of which concerned examination of notifications of concentrations between undertakings.  The CPC also issued 32 decisions under the Competition Law; 11 of them concerned a non-infringement conclusion and two of them concerned the rejection of the issuance of interim orders and 6 of them concerned findings of infringements.

In one decision the CPC imposed on the undertakings a total administrative fine amounting to €1,155,593 for the infringement of sections 3 (1) (a) and (c) of the Competition Law. The subject matter of the case concerned the possible infringement of section 3 of the Competition Law relating to possible collusions by the specific undertakings for the bid rigging of public tenders conducted by the Ministry for Transport, Communications and Works.

What types of conduct and causes of action can be relied upon as the basis of a competition damages claim?

A claimant (legal or physical person) can recover by way of a private civil action any loss or damage suffered as a direct result of a breach by an undertaking or associations of undertakings of Articles 4 and/or 6 of the Competition Law and/or Articles 101 and 102 of TFEU. This is provided by the national law establishing rules for actions for damages as a result of a breach of Cyprus protection of competition law and/or Articles 101 and 102 of the TFEU.

For example, section 4 of the Competition Law prohibits any agreement having as its object or effect the elimination, restriction or distortion of competition. In particular,  contracts concluded by Cypriot companies must exclude the effect of elimination or restriction of competition with respect to  fixed prices, restrictions on production, market distribution,  consumer discrimination, and inclusion of deceitful clauses on contracting parties. An agreement contravening section 4 of the Competition Law, may nevertheless be allowed either by a Ministerial Order or by a decision of the CPC if it is in the overall public interest (for example by promoting technical or financial development).

The flexibility of Competition Law – Application during the Coronavirus crisis

Competition rules ensure a level playing field between companies. This objective remains relevant also in a period when companies and the economy as a whole suffer from a crisis. The extraordinary circumstances created by the coronavirus crisis may trigger the need for companies to cooperate in order to ensure the supply and fair distribution of scarce products to all consumers. In response to this need, the European Commission, the EFTA Surveillance Authority and the National Competition Authorities that together form the European Competition Network (‘ECN’) issued a joint statement on the application of the antitrust rules during the current coronavirus crisis.

The ECN explained that considering the current circumstances, such measures are unlikely to be problematic, since they would either not amount to a restriction of competition under Article 101 TFEU/53 EEA or generate efficiencies that would most likely outweigh any such restriction. If companies have doubts about the compatibility of such cooperation initiatives with EU/EEA competition law, they can reach out to the European Commission, the EFTA Surveillance Authority or the relevant national competition authority any time for informal guidance.

At the same time, it is of utmost importance to ensure that products considered essential to protect the health of consumers in the current situation (e.g. face masks and sanitising gel) remain available at competitive prices. The ECN will therefore not hesitate to take action against companies taking advantage of the current situation by cartelising or abusing their dominant position.

The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Eleana Poulladou, Legal Consultant at eleana.poulladou@kyprianou.com