We summarise the current law and practice for Competition control for mergers, acquisitions and joint ventures in Cyprus.
Introduction
It is important for businesses that have any business relation with Cyprus to ensure that every merger, acquisition or joint venture in which they take part has been scrutinised for the purpose of ascertaining whether there are any formalities required for clearance by the Cyprus Commission for the Protection of Competition or the European Commission if the matter has a European Community dimension. We set out below a practical overview of the current law and practice applicable for Competition control for mergers, acquisitions and joint ventures in Cyprus and the European Union.
The legislative framework and the regulator in Cyprus
The Control of Concentrations Between Undertakings, Law 83(I) of 2014, as amended (the CCBU Law) is the statute regulating the control of concentrations between undertakings in Cyprus. The the Cyprus Commission for the Protection of Competition is mandated for the enforcement of the CCBU Law and acts as the competent authority for the control of concentrations in Cyprus.
What needs to be notified?
The following concentrations are considered concentrations of major importance and need to be notified for consideration to the Cyprus Commission for the Protection of Competition, provided that they meet the thresholds set out below:
- mergers of two or more previously independent undertakings or parts thereof;
- acquisitions by one or more persons already controlling at least one undertaking, or by one or more undertakings, directly or indirectly, whether by the purchase of securities or assets, by agreement or otherwise, of control of one or more other undertakings; and
- fully functional joint ventures.
A concentration of undertakings is deemed to be of major importance and therefore meet the thresholds for notification if:
- the aggregate turnover achieved by at least two of the undertakings concerned exceeds, in relation to each one of them, €3.5 million;
- at least two of the undertakings concerned achieve a turnover in Cyprus; and
- at least €3.5 million of the aggregate turnover of all undertakings concerned is achieved in Cyprus.
The notification of concentrations of major importance to the Cyprus Commission for the Protection of Competition is mandatory.
How are turnovers calculated?
The CCBU Law contains detailed provisions on the calculation of turnover. In general, turnovers comprise the amounts derived from the sale of products and the provision of services by the undertakings concerned during the preceding financial year and corresponding to the ordinary activities of the undertakings, after deduction of sales rebates, value added tax and other taxes directly related to turnover.
How to notify?
Concentrations of major importance must be notified in writing, either jointly or separately by the undertakings concerned in a merger, the joint acquisition of control of another undertaking or the establishment of a joint venture.
The notification of a concentration should include information and documents which are set out in detail in the CCBU Law. The notification must be submitted in Greek whereas the supporting documents may also be submitted in English. In the case where the documents are written in another language, the document must be submitted in both the original language, as well as in translation into one of the official languages of the Republic of Cyprus.
When to notify?
The notification of a concentration of major importance must take place after the conclusion of the agreement giving rise to them (e.g. after the execution of a share purchase agreement or a shareholders agreement) but prior to its completion. Therefore, it is customary for clearance to be expressly mentioned as a condition precedent to the completion of the transaction. A concentration may also be notified if the participating undertakings demonstrate their good faith intention to conclude an agreement, or in the case of a public bid, where the intention or final decision for such bid to be made has been announced.
What are the fees for notification?
A notification fee of €1,000 is initially paid. If clearance is obtained without the need for a Phase II full investigation (see below), then there is no further payment. In the event of a Phase II – full investigation, there is a fee of €6,000. A notification cannot be considered complete (and the clock does not tick) unless the repsective fee is paid.
What happens after notification?
The CCBU Law provides for a one-month deadline within which the applicant must be informed whether the concentration is cleared or whether a full investigation is warranted (phase II). The one-month period commences from the date of submission of the notification or the submission of such additional information necessary for the notification to be considered complete and payment of the filing fee.
In a full investigation (phase II), the reply is required to be issued within three months as of the date of submission of the notification or such additional information necessary for the notification to be considered complete, provided that the relevant filing fee is settled.
What happens if undertakings fail to notify despite an obligation to do so?
Where a concentration is either partially or fully implemented prior to clearance by the CPC, administrative sanctions may be imposed. An administrative fine of up to ten per cent (10%) of the aggregate turnover achieved by the notifying undertaking during the immediately preceding financial year may be imposed on the notifying undertaking for the relevant violation. The Cyprus Commission for the Protection of Competition also has the power to order the partial or complete dissolution of a concentration that has been implemented prior to obtaining clearance.
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