The Commission for the Protection of Competition of Cyprus announced that it has issued new regulations governing the leniency rules applicable in cartels and restrictive collusion arrangements in Cyprus.
Why is the law changing
In a press release issued by the Commission for the Protection of Competition of Cyprus, it is noted that secret cartels are particularly harmful to the sound functioning of the market, since they restrict or even exclude the existence of competition. Policies which provide for equity relief through Leniency Programmes are based on the premise that some undertakings, which participate in secret cartels, wish to end their participation in it and give evidence of the existence and operation of the secret cartel, but hesitate because of the administrative fines that will be imposed on them. The Commission for the Protection of Competition of Cyprus considers that it is in the public interest to 'reward' those undertakings which are willing to terminate their participation in such illegal practices and to cooperate with the Commission, thereby decisively contributing to the initiation of an investigation procedure or to the detection and proof of anti-competitive behaviour, by granting exemption from the payment of any fine.
What is changing
The Regulations on the Immunity from and Reduction of Administrative Fines in cases of Restrictive Collusions (the Regulations) set out the criteria and conditions under which the Cyprus Commission for the Protection of Competition, on the basis of Article 47(5) of the relevant Law on Competition of 2022 (the Law), may exempt or reduce the amount of the administrative fine that would otherwise be imposed on a undertaking for infringements of section 3 of the Law and/or Article 101 TFEU. Specifically, the Commission grants exemption from the imposition of an administrative fine to an undertaking which submits relevant application and reveals its participation in a secret cartel and provided it is the first to provide evidence to the Commission that:
- at the time of receipt of the application, enables the Commission to carry out a targeted inspection, pursuant to Articles 38 and/or 39 of the Law relating to infringements of Section 3 of the Law and/or Article 101 TFEU, provided that it did not yet have sufficient evidence to carry out an inspection or had not carried out such an inspection, or
- is sufficient evidence to establish an infringement of the provisions of section 3 of the Law and/or Article 101 TFEU, or provided that the Commission does not have sufficient evidence to establish the infringement and no other undertaking has previously fulfilled the conditions for exemption.
Respectively, the Commission shall grant a reduction of the administrative fine that would otherwise be imposed, in cases where an undertaking reveals its participation in a secret cartel in accordance with Regulation 5 and does not fulfil the conditions of Regulation 4 and provided that it provides the Commission with evidence which provides significant additional evidential value in terms of proof of the infringement concerned, in relation to the evidence already in the Commission's possession at the time the application for a reduction of the administrative fine is submitted.
In either case, namely exemption and/or reduction of the administrative fine, the undertaking concerned should, in accordance with Regulation 6, cooperate fully, honestly, continuously and expeditiously with the Commission from the date of submission of the application until the conclusion of the administrative procedure for investigating the case, remain at the disposal of the Commission, terminate its participation in the alleged secret cartel, at the latest immediately after the submission of its application, unless it is reasonably necessary for the Commission to continue to participate in the unlawful cartel and should not destroy, falsify or conceal information or evidence or disclose the submission of the application or any of its contents, except to the European Commission or to Competition Authorities of other Member States or to competition authorities of third countries.
It is underlined that the Commission grants an exemption only if the undertaking concerned has not taken any action to force other undertakings to join or remain in a secret cartel.
It is noted that the Commission provides protection as to the identity of the undertaking that submitted the leniency statement, the content of the leniency statement and the fact of the undertaking's cooperation with the Commission until the establishment of the statement of objections.
What is the take out of the new change
Leniency programs play a crucial role in competition law enforcement by encouraging companies to come forward and cooperate in the detection and prosecution of anti-competitive practices. These programs incentivise businesses to self-report their involvement in cartels or other anti-competitive behaviour, offering them the opportunity to receive reduced or waived penalties in exchange for their cooperation. Leniency programs are important because they enhance the effectiveness of competition law enforcement, leading to the dismantling of cartels, protection of consumer welfare, and preservation of fair market competition.
However, there are risks associated with leniency programs. One major risk is the potential for abuse, where companies may misuse the program to gain strategic advantages over competitors or to obtain confidential information about rivals. Additionally, leniency programs may also face challenges in maintaining confidentiality, as disclosure of a company's cooperation could have negative repercussions such as reputation damage or civil lawsuits.
The new Regulations seem to strike the right balance between encouraging participation in leniency programs while mitigating risks for companies. It remains to be seen how companies and stakeholders shall utilise these Regulations in the forthcoming years.
For more information please visit our website microsite on Competition & State Aid or contact us on This email address is being protected from spambots. You need JavaScript enabled to view it..
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