Cyprus Courts issue their first judgment awarding civil law damages for breach of competition laws.
In the first decision issued by the Cyprus Courts on damages to a corporation as a result of infringement of competition laws, the Larnaca District Court awarded on 9 February 2022 the total amount of €257,000 (plus interest and costs) in favour of a private company and against the Cyprus Grain Commission as a result of infringements of competition laws by the Cyprus Grain Commission arising from its abuse of its dominant position in the cereals market during the years 2007 and 2008.
The claim was filed by AGS Agrotrading Ltd, which was engaged in the business of imports, distribution and marketing, both in retail and wholesale, of raw cereals such as wheat and barley, that was used for the manufacture of animal feed. According to the claim presented before the Court, the claimant suffered losses due to practices of the Cyprus Grain Commission which constituted an abuse of its dominant position in the market. The Cyprus Grain Commission maintained a monopoly on the import and marketing of all types of cereals until 2004. When the Republic of Cyprus joined the European Union, the monopoly was abolished and the cereals market was liberalised. However, the Cyprus Grain Commission continued to maintain a dominant position in the relevant market and, to the detriment of its competitors, chose to sell barley in 2007 and 2008 at prices below the average variable cost.
In 2007 a complaint was lodged with the Cyprus Commission for the Protection of Competition (CPC) for infringement of competition law. The CPC examined the complaint and concluded that the actions of the Cyprus Grain Commission with regard to barley sales below the average variable costs during the periods October - December 2007, January - June 2008 and October - December 2008, constituted an abuse of its dominant position in the market. Specifically, the Cyprus Grain Commission abused its dominant position by pursuing an aggressive pricing practice in the market for barley sold for use in animal feed. The evidence of the infringement was based on the imposition of prices lower than the average variable cost. The CPC imposed a fine to the Cyprus Grain Commission regarding the infringement.
The issue raised before the Cyprus District Court was whether the claimant suffered losses as a result of the actions of the Cyprus Grain Commission. The Cyprus Grain Commission denied the claim in its entirety, alleging that there was no damage. Applying European case law on the relevant issues, such as Manfredi v Lloyd Adriatica Assicurazioni SpA (C - 295/04) , as well as case law from the English Competition Appeal Tribunal, such as Albion Water Limited v Dwr Cymru Cyfyngedirg, 1166/5/7/10, 28.03.2013, the Court held that the quantification of damages in competition infringement cases is subject to significant restrictions on the degree of certainty. The market is affected by various factors that are not easy to estimate with absolute accuracy and, therefore, the loss is estimated in approximate terms. In such cases, the Court is called upon to assess economic activities that are largely hypothetical. However, the fact that the damages in such cases cannot be calculated with absolute accuracy does not relieve the defendant from the obligation to pay damages. In such cases, where the damage cannot be calculated with absolute accuracy, the Court must be satisfied that the damage has been proved with reasonable accuracy depending on the circumstances.
Applying the above principles and assessing the evidence before the Court, the Court accepted that the claimant suffered loss as a result of the sales made by the Cyprus Grain Commission below its variable cost and assessed the damages in total amount of €257,000. The Court was satisfied that the said financial loss was the result of the aggressive pricing applied by the Cyprus Grain Commission during the material period, abusing its dominant position in the cereals market.
This decision creates an important judicial precedent in the Cyprus justice, recognising the right of individuals or entities to receive compensation for damages suffered as a result of infringement of competition laws.
By Michael Kyriakides
For more information, please visit our microsite on Competition.
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