The Protection of Competition Act, in combination with the Control of Company Concentrations Act, lay down a framework of rules and principles that aim to ensure effective competition.
The main provisions of the Protection of Competition Act prohibit trusts that aim to limit, adulterate or obstruct competition. In addition, they prohibit trusts and abusive exploitation of corporate market dominance.
The Act prohibits all agreements between enterprises or enterprise associations, all decisions by enterprise associations and any concerted practices with the purpose of, or resulting in, the obstruction, restriction or adulteration of competition, particularly those consisting of:
- the direct or indirect fixing of prices for the purchase or sale or other transaction terms.
- the restriction or control of production, marketing or technological development or investments.
- the geographical or other distribution of markets or sources of supply.
- the application of dissimilar terms for similar transactions and
- the dependence of entering into contracts on the acceptance of additional obligations on the part of the counterparties, which are not connected to the scope of these contracts.
Eleven (11) block exemptions have been adopted in combination with the Competition Act, which are based on relevant EU regulations and by which certain categories of agreements are exempt from the law and are acceptable so long as they fulfil certain specific terms. Exemptions concern the following categories of agreements between enterprises:
- Certain categories of agreements on the transfer of technology
- Certain categories of vertical agreements and concerted practices in the automobile industry sector
- Agreements, decisions and concerted practices in the insurance sector
- Agreements, decisions and concerted practices between shipping carriers of regular lines - joint ventures
- Research and development agreements
- Specialisation agreements
- Vertical agreements and concerted practices
- Agreements, decisions and concerted practices related to the production or marketing of agricultural products
- Technical cooperation in the sector of air transports
- Agreements, decisions and concerted practices in the sector land transports
- Shipping conferences in marine transports
Abuse of dominant position
The Act prohibits the abusive exploitation of the dominant position of a single or more enterprises that has or have a dominant position in the overall or part of the internal market with regard to a single product, particularly if this action has as a result or may possibly result in the following:
- direct or indirect fixing of unfair prices for the purchase or sale or other unfair transaction terms under the circumstances.
- restriction of production or marketing or technological development, to the detriment of consumers.
- imposing dissimilar terms for similar transactions, resulting in certain enterprises being at a disadvantage in relation to the competition.
- dependence of entering into agreements on the acceptance of additional obligations on the part of the counterparties, which are not connected by nature or as per commercial common practices, with the scope of these agreements.
Other types of unfair competition
The abusive exploitation of the dominant position of a single or more enterprises, of a relationship of financial dependence in which an enterprise finds itself against this single or more enterprises, where the former is a client, supplier, producer, representative, distributor or commercial associate and does not have an equivalent alternative, is prohibited.
The Control of Company Concentrations Act seeks to ensure effective control of significant reformations of enterprises in the form of concentrations, in relation to their effect on the demands of a competitive market. In other words, concentration control focuses on concentrations that obstruct the maintenance of effective competition and ensures the imposition of corrective measures when necessary in order to ensure competition.
National competition authorities
The Ministry of Commerce, Industry and Tourism is the competent authority for the development of the policy on competition as well as the establishment of the proper legislative framework.
The Commission for the Protection of Competition (CPC) is an independent instituted body assigned with the sole responsibility of imposing the relevant legislation. The CPC, either after having received complaints, or following ex officio investigations, decides on issues that extend to the full spectrum of the economy. It is noted that CPC is also the competent authority on competition in the Republic of Cyprus, responsible for the application of articles 101 and 102 of the TFEU in cases where inter-community commerce is affected.
Strict provisions govern company mergers
The Act specifies an exclusive deadline within which a concentration need be notified and also provides for a fine penalty in case of omission of such notification. The concentration is notified by way of sending a relevant notification document to the CPC, which must contain all the information required by law.
The relevant legislation requires the existence of a legitimate interest in order for a natural person or legal entity to be legalised in proceeding to a complaint. It is specified that legitimate interest is constituted when a person can prove that he/she has suffered or there is great or possible risk that he/she will suffer substantial financial damage or come into a disadvantageous position in relation to the competition as a direct result of the violation. The complaint is filed in writing and is addressed to the Commission and signed by the complainant or his legal advisor or authorised representative. The complaint must contain all the information set forth in the Appendix of the Act, to enable the Commission to decide whether to proceed to an investigation of the complaint submitted.