Merger Control 2023 Comparisons

The relevant merger control legislation in Cyprus is the Control of Concentrations between Undertakings Law of 2014 (L. 83(I)/2014) (the “Law”).

The Law came into effect on 20 June 2014 and has not been amended since its introduction (other than purely corrective amendments). No subsidiary legislation or guidance has been issued pursuant to the Law, although as Cyprus is a member state of the EU, the European Commission (EC) Merger Regulation is also relevant.

In practice, the Cyprus Commission for the Protection of Competition (CPC), as well as practitioners, also refer to the Commission Consolidated Jurisdictional Notice on Merger Control.

There are several areas where specific consents may be required or particular processes must be followed in order to implement a particular transaction (in addition to merger clearance). Examples include the following.

• Acquisitions of significant interests (10% or more) in certain types of institutions regulated by the Central Bank of Cyprus (including banks, credit servicers and credit acquiring companies) require pre-approval from the Central Bank of Cyprus.
• Takeover bids are subject to a specific regulatory regime, in addition to requiring merger clearance, if they meet the applicable thresholds.
• Acquisition of significant interests (20% or more) in insurance or re-insurance undertakings require approval by the Superintendent of Insurance.
• There are restrictions on the acquisition of significant shareholdings in entities active in the press/broadcasting industry by residents of states outside the EU.
• There are also restrictions on the acquisition of immovable property by residents of countries outside the EU.

The competent authority responsible for enforcing the merger control legislation in Cyprus is the CPC. The CPC is the entity to which merger control notifications are submitted, and the entity that issues decisions (both Phase I and Phase II) with respect to these notifications. The CPC is assisted by the CPC’s Service (the “Service”). The Service investigates a notification and submits a report to the CPC.

The CPC’s decisions may be appealed (by way of administrative recourse) to the Administrative Court. Decisions of the Administrative Court may, in turn, be appealed to the Supreme Court. On 1 July 2023, Cyprus will introduce a new Court of Appeal. Although the relevant legislation and guidelines have not been fully finalised, it is expected that from that date, decisions of the Administrative Court will be appealed to the Court of Appeal, with decisions of the Court of Appeal being in turn appealed to the Supreme Court (on certain grounds and subject to leave).

Additionally, the Minister for Energy, Commerce, Industry and Tourism (the “Minister”) has the authority to declare that a particular concentration is of major importance, in which case the provisions of the Law will apply to the concentration even if the concentration in question does not meet the usual thresholds (see 2.5 Jurisdictional Thresholds). The Minister may also declare that a concentration is “of major public interest”, in which case the relevant concentration is referred to the Council of Ministers, which may approve or reject the proposed concentration (overriding whatever decision the CPC may have reached). This power has very rarely been used.

If a transaction is expected to produce a “concentration of major importance” (see 2.3 Types of Transactions), it must be notified to the Service. There is no deadline within which parties must notify the Service, but the transaction cannot be put into effect before CPC clearance is obtained. There is no exception to the obligation to notify, although the CPC has the discretion to permit implementation of parts or the entirety of a transaction prior to clearance being obtained (see 2.14 Exceptions to Suspensive Effect and 2.15 Circumstances Where Implementation Before Clearance Is Permitted).

The CPC has the power to impose severe penalties for implementation of a concentration without CPC clearance, which would take effect if a concentration is implemented without being notified to the Service. Additionally, the CPC has the power to impose daily fines. These fines and other penalties are discussed in more detail in 2.13 Penalties for the Implementation of a Transaction Before Clearance.

Transactions that constitute “concentrations of major importance” must be notified to the CPC before they are implemented. There are, therefore, two questions to consider: (i) does the transaction in question amount to a “concentration” and (ii) if it does, is it a concentration “of major importance”?

A “concentration” will occur where a change of control on a lasting basis results from:

• the merger of two or more previously independent undertakings (or parts of undertakings);
• the acquisition, by one or more persons who already control at least one undertaking or by one or more undertakings, and whether by purchase of securities or assets, by contract (eg, conclusion of a shareholders’ agreement) or by any other means (eg, by amending an entity’s articles of association), of direct or indirect control of the whole or parts of one or more other undertakings; or
• the creation of a joint venture which permanently fulfils all of the functions of an independent economic unit.

The Law provides a specific definition of control, which should be borne in mind when assessing whether a concentration has occurred. Control would also include negative control (see 2.4 Definition of “Control”).

There are certain exceptions to the definition of concentration. These are:

• temporary holdings acquired by financial or insurance companies whose usual activity includes dealing in securities, provided the holder does not exercise the voting rights attached to the security in question with the aim of determining the undertaking’s competitive conduct (or the voting rights are exercised in preparation for a sale of the securities which takes place within one year of their acquisition);
• control is vested in a liquidator or similar official;
• control is acquired by an investment company, provided that such company only exercises its voting rights to maintain the full value of its investments (and not to determine the undertaking’s competitive conduct); or
• the property that forms the subject matter of the concentration is transferred on death.

An exception is also provided where a concentration takes place between an undertaking and one or more of its subsidiaries. An entity will be regarded as a subsidiary of another entity where its business activity is controlled by the second entity.

Concentrations “of Major Importance”

A concentration will be regarded as being “of major importance” where it meets certain threshold tests. These are described in 2.5 Jurisdictional Thresholds. As noted in 1.3 Enforcement Authorities, the Minister may also declare a concentration as being of major importance, notwithstanding that it does not meet the applicable thresholds.

Control may result from rights, contracts or other means, which (either on their own or when combined with other means) provide a person with the ability to decisively influence the activity of an undertaking. The Law makes specific reference to the following examples of means which may produce control (the list is not exhaustive):

• preference rights;
• other rights to use; and
• rights over the composition, meetings or decision-making of an undertaking’s board of directors or similar supervisory or executive body.

In practice, control is interpreted broadly and can result from a wide variety of arrangements. Examples of rights that may confer control include share options, rights acquired pursuant to shareholders’ agreements (eg, as to the appointment or dismissal of senior management, or approval of the budget or the business plan), amendment of an entity’s articles of association, and rights resulting from the taking and crystallisation or enforcement of security.

The Law does not distinguish between majority and minority interests. Minority interests that are capable of producing meaningful control (negative control) may also, therefore, be notifiable (eg, in cases where a minority interest provides its holder the right to veto an entity’s strategic decisions).

A concentration will be regarded as being “of major importance” (and will therefore be notifiable to the Service) where it meets the following thresholds:

• at least two of the undertakings participating in the concentration have an aggregate worldwide turnover exceeding EUR3.5 million each;
• at least two of the undertakings generate turnover within Cyprus; and
• at least EUR3.5 million of the combined turnover of all of the participating undertakings is achieved within Cyprus.

The thresholds set out above are applicable to all sectors, although turnover is calculated differently for certain types of enterprise (see 2.6 Calculations of Jurisdictional Thresholds).

Basic Position

An entity’s turnover includes proceeds from the sale of products and/or provision of services by it as part of its ordinary course of business activity during the preceding financial year. However, turnover does not include:

• sales rebates;
• VAT and other taxes that are directly connected to turnover; or
• internal transactions carried out between parties whose turnover is aggregated with that of the participant (see 2.7 Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds).

An entity’s turnover will also be aggregated with the turnover of certain other entities (see 2.7 Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds).

All figures included in a notification must be stated in euros and should be converted using the average exchange rate for the period of reference (usually the preceding financial year). In practice, parties may use exchange rates published by the European Central Bank.

Exceptions

Where the concentration concerns the acquisition of parts of an enterprise, only the turnover relating to the parts which are the subject matter of the transaction should be taken into account. This is the case regardless of whether such part(s) are legally distinct entities.

There are also separate rules governing the calculation of turnover for certain kinds of enterprise. These are (i) credit institutions (eg, banks), whose turnover is deemed to be equal to one-tenth of their balance sheet during the preceding financial year; and (ii) insurance companies, where turnover is deemed to be equal to the value of their gross premiums during the preceding financial year. This includes all amounts received and receivable on account of their insurance contracts, but excludes taxes and duties charged on individual premiums or by reference to the total volume of premiums.

When calculating an entity’s turnover for the purposes of assessing whether it meets the jurisdictional thresholds described in 2.5 Jurisdictional Thresholds, the turnover of the following entities must be aggregated with the turnover of the first entity.

(a) Undertakings participating in the concentration.

(b) Any entities in which the participants hold (directly or indirectly) more than half of the capital or voting rights, or otherwise have the power to appoint more than half of the members of the board of directors or similar supervisory or executive body, as well as any entities whose affairs are managed by the participants (or the participants have a direct or indirect right to manage such entities’ affairs).

(c) Any entities which have the rights/powers set out in (b) in relation to the participants in the concentration, eg, the participants’ holding companies.

(d) Any entities in relation to which an entity in (c) has the powers in (b) (ie, the participants’ sister companies and other group entities that may not be direct holding or subsidiary companies vis-à-vis the participants).

(e) Any entities in relation to which two or more entities listed in (a) to (d) jointly hold the rights described in (b).

As noted in 2.6 Calculations of Jurisdictional Thresholds, where the concentration concerns the acquisition of parts of an enterprise, only the turnover relating to the parts which are the subject matter of the transaction should be taken into account. This is the case regardless of whether such part(s) are legally distinct entities.

When participants in the concentration jointly hold the rights/powers listed in (b), the turnover resulting from the sale of products or the provision of services between the jointly controlled enterprise and each participant (or any other entity whose turnover is aggregated with a participant) is ignored. Turnover resulting from sales or the provision of services by the jointly controlled enterprise to third parties is apportioned (in equal parts) to the participants.

The participants’ turnover should be calculated as at the end of the relevant reference period (so in practice, the end of the previous financial year). To the extent that changes in the business of a participant, such as acquisitions, divestments or business closures, have occurred and are not reflected in the participant’s financial statements, these should be included as supporting documents to the notification.

Cypriot merger legislation applies equally to foreign-to-foreign transactions, provided that the thresholds set out in 2.5 Jurisdictional Thresholds are met. Given that at least two of the undertakings must have some turnover in Cyprus, it would be very unusual for a filing to be required if the target does not have any turnover in Cyprus. However, there is no requirement for any entity to have a degree of local presence (eg, an office or similar premises).

The only thresholds that are relevant in determining whether a merger control filing is required in Cyprus are those set out in 2.5 Jurisdictional Thresholds.

Joint ventures may also constitute a concentration of major importance for the purposes of the Law, provided that (i) the joint venture will fulfil, on a lasting basis, the role of a previously independent economic entity and (ii) the thresholds described in 2.5 Jurisdictional Thresholds are met.

As explained in 2.7 Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds, where control is acquired jointly by participants in a concentration (as would be the case in a joint venture), transactions between the joint venture and each joint venture participant (and entities connected to the participants) are ignored for the purposes of calculating turnover and, therefore, for the purposes of determining whether the jurisdictional thresholds are met.

The CPC has wide-ranging powers to enable it to perform its duties pursuant to the Law (including where the CPC suspects that a notifiable transaction was not notified to it – for example, because the CPC disagrees that the transaction does not meet the jurisdictional thresholds). In such cases, the CPC may:

• enter any premises (apart from private residences, unless it obtains a court warrant);
• check any books or other records and take copies of them;
• seal any premises or documents pending its investigation; and
• ask questions and request clarifications and/or information from any relevant person.

The CPC does not need to provide advance warning of an exercise of its powers, although it does need to provide details of the objective and scope of the exercise, its start date and the basis upon which it is exercising its powers.

There is no statute of limitations applicable to the exercise of the CPC’s powers. Accordingly, the CPC could decide to investigate a transaction several years after its implementation.

Transactions (or at least the parts of a transaction that relate to Cyprus and have triggered the obligation to file a notification with the Service) may not be implemented until CPC clearance (including deemed clearance) has been obtained. For notifications that proceed to a Phase II investigation, parties can apply for permission from the CPC to implement the transaction pending clearance. See 2.15 Circumstances Where Implementation Before Clearance Is Permitted for further details.

If a concentration is put into effect without the prior approval of the CPC, the CPC may impose a fine of up to 10% of the total turnover of the relevant party for the preceding year. Additional fines (up to EUR8,000 per day) may be imposed for each day the breach continues. The CPC also has the power to order that a concentration put into effect without its approval be (wholly or partly) reversed or disbanded, but only to the extent that this is reasonably necessary to restore functional competition on the relevant market.

Very few instances of penalties being imposed in this regard have been reported. The undertakings involved in those instances (which were published on the CPC’s website) received fines ranging from EUR5,000 to EUR10,000.

It is worth noting in this regard that the Law (and consequently, the penalties described above) applies equally to foreign-to-foreign transactions.

There are no general exceptions to the suspensive effect unless specific clearance is obtained from the CPC to implement (parts of) a transaction pending CPC clearance (see 2.15 Circumstances Where Implementation Before Clearance Is Permitted).

Transactions subject to a Phase I investigation, or at least those parts that relate to Cyprus and have triggered the requirement to file, may not be implemented until CPC clearance (including deemed clearance) is obtained. Parties may implement the parts of the transaction that are not subject to CPC approval pending clearance. The CPC does not technically have to be notified of this; however, it is good practice to be as transparent as possible.

In cases where the CPC has decided to proceed to a Phase II investigation, the CPC may grant permission for a transaction or parts thereof to be implemented pre-clearance on the application of one or more of the parties involved. Permission is granted on a temporary basis (meaning that, if the CPC ultimately decides not to approve the concentration, any implementation steps taken by the parties must be unwound following the CPC’s decision) and may be issued subject to any conditions the CPC considers appropriate.

Applicants must demonstrate that they will suffer serious damage if implementation of the transaction is delayed further. In deciding whether to grant permission, the CPC will take into account the consequences of the delay in implementation on the participants as well as on third parties and will weigh such consequences against the perceived threat to healthy competition posed by the transaction.

The Law does not prescribe a particular deadline by which notification must be made, subject to the proviso that a concentration (or at least, those parts of a concentration that relate to Cyprus) may not be implemented without CPC clearance. See 3.2 Type of Agreement Required Prior to Notification with regard to the timing of submission of a notification.

A notification may only be made once an agreement as to the concentration has been concluded, or in the case of a takeover offer, following publication of the public takeover bid or acquisition of a controlling interest triggering a takeover bid. In practice and given that the concentration may not be implemented before CPC clearance is obtained, parties tend to submit notifications within a few days of signing the transaction documentation.

There is one exception to the above, which is where the parties are able to demonstrate to the Service that they have a good faith intent to reach agreement or (in the case of a takeover offer) where the relevant party has publicly announced its intention to make a takeover bid.

In practice, the Service will require evidence that there is a high degree of certainty that the transaction will proceed (eg, execution versions of the transaction documentation) as well as an explanation of the urgency involved (eg, that the transaction documents cannot be signed before a separate regulatory clearance is received, but there would be serious financial or other repercussions to delaying implementation for the duration of the CPC’s review period).

There is a flat filing fee of EUR1,000 for a notification. If the CPC decides to proceed to a Phase II investigation, an additional fee of EUR6,000 is payable.

The filing fee is paid when submitting the notification. The CPC’s review period does not begin until the filing fee is paid.

Where the notifiable transaction involves a merger of two previously independent undertakings, or the acquisition of joint control over one or more undertakings, notifications must be made, either jointly or separately, by each participant. In all other circumstances, the responsibility to notify rests with the person acquiring control (eg, in a share sale which does not involve the creation of a joint venture, the purchaser).

Notifications tend to be quite detailed and will typically run to between 20 and 30 pages for most transactions (and will be longer if the transaction is expected to raise meaningful competition concerns). There is no short-form version of the notification; all notifications must, at a minimum, contain the following information:

• names, addresses and contact details of all the participants in the concentration, along with a description of their business activities;
• description of the nature and extent of the concentration, including the circumstances which lead to concentration, whether the whole or only parts of an undertaking are involved in the concentration and, in the case of a public offer, whether the offer is supported by the board of directors of the offeree;
• explanation of the purposes of the concentration;
• whether the concentration has been notified to other competition authorities (and if so, whether it has been approved by them);
• description of the financial and structural aspects of the concentration, including the structure and control of the relevant undertaking(s) following implementation of the concentration, the anticipated date the concentration will be implemented, as well as a description of any support received from any (public or private) sources;
• details of the worldwide and Cypriot turnover of each participant;
• details of profits before tax for each participant;
• the number of employees of each participant, both in Cyprus and worldwide;
• details of the group structure of each participant;
• information regarding other entities active in the affected markets, in which a participant (or its group) holds at least 10% of the shares or voting rights, or where there is an overlap between the board members of the entity concerned and a participant (or member of the participant’s group);
• description and analysis of all relevant product and geographic markets, and of all reasonable alternative definitions of relevant product and geographic markets;
• description and analysis of all affected markets and other markets likely to be significantly affected by the concentration, including information regarding:
1. turnovers (of the market generally and the specific participants);
2. details of demand and supply in the market;
3. market shares of the participants and their competitors;
4. barriers to entry, including significant entries in the market in the preceding five years and expected future entries;
5. economies of scale;
6. impact of the concentration on final and intermediate consumers;
7. impact of research and development activities; and
8. distribution and supply networks;
• where a joint venture is being established, confirmation of whether the joint venture participants will continue to participate in the same market(s) or in an adjacent market as the joint venture, and if so, details of their turnover, market share and activities.

The notifying parties must also confirm that all the information and estimates contained in the notification are, to the best of their knowledge, accurate, that any expressions of opinion are genuinely held and that they are aware of the potential penalties that can be imposed.

Parties may nominate a representative to sign the notification and handle queries regarding the notification on their behalf. In this case, details of the representative and evidence of their authorisation (in a prescribed form) must also be submitted.

Supporting Documents

The notification must be accompanied by the following supporting documentation:

• copies of the final (or most recent) transaction documentation;
• copies of the most recent annual returns and audited financial statements of all the participants in the concentration;
• copies of any reports or analyses produced for the purposes of the concentration (if they relate to Cyprus), which form the basis for the information included in the notification;
• an index and summary description of all reports, analyses, etc, that have been prepared for the purposes of assessing the competitive impact of the concentration, the market conditions and potential or actual competitors; and
• in the case of a public offer, a copy of the announcement of the bid and a copy of the offer document (if one exists).

Language

The notification itself must be submitted in one of the official languages of Cyprus (ie, Greek or Turkish), but is usually submitted in Greek. The supporting documentation may be filed in English.

Two hard copies of the notification (along with its supporting documents) must be delivered to the offices of the CPC. They must also be sent to the Service electronically.

Supporting documents may be submitted in either original or copy form. If copies are submitted, the notifying party must certify that the copies are genuine and complete, but there is no formal certification requirement (eg, notarisation or apostille).

There are no penalties imposed for the submission of an incomplete notification (but see 3.7 Penalties/Consequences of Inaccurate or Misleading Information for penalties relating to the submission of inaccurate or misleading information). However, the time to the deadline for the CPC to issue a decision on the notification does not begin until the CPC considers that it has received a complete filing.

If a notifying party has submitted inaccurate or misleading information in the filing, the CPC may impose a fine of up to EUR50,000. The same fine applies where a party fails to supply information otherwise required pursuant to the Law. Fines must be accompanied by a reasoned explanation by the CPC for the imposition of the fine and parties subject to fines must be given the opportunity to be heard.

Furthermore, where the CPC discovers that it has approved a concentration on the basis of false or misleading information, it may withdraw its approval, modify the terms of its approval, or require the parties to reverse the whole or part of the implementation of the concentration.

Fines for the provision of inaccurate or misleading information are not frequently imposed by the CPC. In a recent case (which involved a failure to provide accurate information regarding a participant’s business activities as part of a notification), the CPC imposed an administrative fine of EUR25,000.

All notifications begin their life as Phase I investigations. A Phase I investigation starts when a complete notification is submitted to the Service. The CPC must issue a decision within 30 calendar days from the date the CPC considers a complete filing has been received. “Decision”, in this case, means a statement by the CPC that:

• the notified concentration does not fall within the ambit of the Law; or
• the notified concentration does fall within the ambit of the Law but does not raise competition concerns (and the concentration is therefore approved); or
• the notified concentration does fall within the ambit of the Law but does raise competition concerns., and as a result, the CPC needs to proceed to a Phase II investigation.

The CPC has the power to extend the 30-day review deadline by an additional 14 days where it considers that the review deadline might be missed as a result of the complexity or amount of information submitted as part of a notification. Any extension must be notified to the person submitting the notification at least seven days before the expiry of the original 30-day review period. The CPC rarely implements extensions in practice.

If the CPC does not issue a decision within the 30-day deadline (or extended deadline if applicable), the concentration is deemed to have been approved.

If the CPC decides to proceed to a Phase II investigation, it must issue a decision (either approving or rejecting the proposed concentration) within a further three months from the date it considers it has received all of the information it requires for its investigation. As with Phase I investigations, the CPC has the power to extend the deadline for its review by an additional 14 days (or longer if the CPC considers that the delay is due to a failure or omission by any of the participants, eg, a failure to submit requested information). Clearance is deemed given if the CPC does not issue its decision within four months of receipt of a complete filing (or within such extended timeframe as may have been notified to participants by the CPC).

In total therefore, a notification that has proceeded to a Phase II investigation may take between four and six months to resolve.

There is no official route by which parties may engage in pre-notification discussions with the CPC, and if parties attempt to do so, there is consequently no legal basis which would require the CPC to treat such discussions confidentially.

It is relatively common for the Service to issue requests for information during the review process; however, the Service does not generally go beyond requesting information that is reasonable and proportionate to its task. Parties can minimise the likelihood that the Service will request additional information by taking care to ensure that the filing contains all the details prescribed by the Law (see 3.5 Information Included in a Filing).

If the Service considers that it requires additional information after it has begun its review, the Service may “stop the clock” pending receipt of the information. In our experience, provided the parties respond to the Service’s requests in a prompt and transparent manner (particularly if it is possible to respond on the same day or the following day), the Service will not stop the clock for minor information requests.

There is no accelerated, short-form or fast-track procedure for merger clearance under Cypriot law, although the CPC rarely chooses to extend its review deadline. The CPC also generally issues a decision by the applicable deadline, although in any event, failure to issue a decision on the part of the CPC within the deadline constitutes deemed clearance of the notified concentration.

The CPC will examine whether (i) the notified transaction qualifies as a “concentration of major importance” within the meaning of the Law (see 2.3 Types of Transactions); and (ii) the concentration would significantly impede effective competition in Cyprus (or in a substantial part of Cyprus), particularly where the concentration is expected to create or strengthen a dominant position. If both questions are answered affirmatively, the concentration will not be approved.

Any notification for clearance submitted to the CPC must include:

• a description and analysis of all relevant product and geographic markets and of all reasonable alternative definitions of relevant product and geographic markets; and
• a description and analysis of all affected markets and other markets likely to be significantly affected by the concentration.

The Law contains some guidance designed to enable notifying parties to comply with this obligation, which is summarised below.

Relevant Product Markets

A relevant product market will comprise all products and/or services that a consumer may consider interchangeable (or which can be substituted for one another) on the basis of their price, characteristics (including their physical and technical characteristics) and intended use.

Relevant Geographic Markets

The relevant geographic market will include the area in which there is supply and demand of/for the relevant products and/or services by the undertakings involved in the concentration. Conditions of competition in the relevant geographic market should be sufficiently homogenous, and the relevant geographic market should be distinguishable from neighbouring geographic areas (particularly on the basis that there are different conditions of competition in such neighbouring areas).

In determining the relevant geographic market, parties should particularly take into account the following:

• the nature and characteristics of the relevant products and/or services;
• the existence of barriers to entry;
• consumer preferences;
• differences in the participants’ market shares compared to neighbouring geographic areas; and
• price differences.

Affected Markets

Relevant product and/or geographic markets (and plausible alternative product and geographic markets) will be classed as affected markets where they are within the Republic of Cyprus and either (i) two or more of the parties are engaged in business activities in the same relevant market which afford them a combined market share of at least 15%; or (ii) a party is engaged in business activities in a relevant market which is downstream or upstream to another relevant market on which a different party is engaged in business activities, provided that:

• any party has a market share of at least 25% on any relevant market; or
• the combined market share of both parties comes to at least 25%.

Other Markets Likely to Be Significantly Affected by the Concentration

Markets which may be classed as such include, but are not limited to, the following.

• Markets where any party has a market share exceeding 25% and another party is a potential competitor in the same market. The term “potential competitor” is construed relatively narrowly and will only extend to parties that plan to enter the relevant market or have developed or pursued plans to do so within the last three years.
• Markets where any party has a market share exceeding 25% and another party holds significant intellectual property rights in the same market.
• Any of the parties are engaged in business activities on closely related neighbouring markets, and their individual or combined market share in any of those markets is at least 25%. Product markets will be classed as closely related neighbouring markets where the products concerned are complementary to each other, or where they belong to a range of products that are generally purchased by the same consumer group(s) for the same final use(s).

In examining definitions of relevant product and/or geographic markets, as well as in reaching its decision more generally, the CPC will have regard to (and will, in most cases, attempt to be consistent with) its own past practice. It will also have regard to decisions of the EC and the European Court of Justice, as well as decisions of other member-state competition authorities (notably, Greece).

The CPC examines a variety of competition concerns in reaching a decision. These include:

• the structure of the affected markets and other markets that may be significantly impacted by the concentration;
• potential competition posed by other enterprises;
• the market share of the participants and their connected parties;
• alternative sources of supply for the relevant products and/or services;
• supply and demand trends;
• barriers to entry;
• the interests of final and intermediate consumers; and
• the contribution to technical and economic progress.

Additional concerns are examined with respect to joint ventures in 4.7 Special Consideration for Joint Ventures.

As noted in 4.4 Competition Concerns, the CPC will take into account certain types of economic efficiencies, insofar as they relate to the interests of consumers or contribute to technical and/or economic progress.

The CPC does not generally tend to take any non-competition considerations into account when reaching a decision, and the CPC is not expressly empowered to do so by the Law. However, as noted in 1.3 Enforcement Authorities, the Minister may declare that a concentration is “of major importance” (and therefore notifiable to the CPC) despite the fact that the transaction may not meet the jurisdictional thresholds described in 2.5 Jurisdictional Thresholds. The Minister may do so where they consider that a concentration should be regarded as being of major importance on the basis of its expected impact on public safety, on pluralism of the media and/or on the principles of sound administration.

There are currently no general rules restricting foreign direct investment into Cyprus, although draft legislation introducing a foreign direct investment regime is currently before the Cypriot parliament (see 9. Foreign Direct Investment/Subsidies Review). There are specific rules governing investment into (i) certain specific sectors (eg, banks, insurance companies) and/or (ii) by specific methods (eg, public offers; see 1.2 Legislation Relating to Particular Sectors). These rules operate entirely independently of the merger control rules and, consequently, both sets of applicable rules should be considered when assessing the steps to implementation of a transaction.

Where a concentration involves the creation of a joint venture, the CPC will also examine whether the joint venture will result in coordination between the joint venture parents (or whether such coordination is in fact the objective of the creation of the joint venture). If such coordination exists or will exist, the CPC will consider whether the coordination is compatible with, or will interfere with, the ordinary functioning of competition on the market.

The CPC will in particular consider whether the joint venture parents will continue to undertake significant activities in the same or adjacent markets as the joint venture enterprise, and whether any coordination resulting from the creation of the joint venture will provide the parents with the ability to eliminate competition for a large part of the relevant products or services.

As noted in 2.12 Requirement for Clearance Before Implementation and 2.13 Penalties for the Implementation of a Transaction Before Clearance, notifiable transactions may not be implemented prior to CPC clearance (or in circumstances where the CPC issues a decision denying clearance). If a transaction is implemented without CPC clearance, the CPC may issue fines and/or order that the transaction be unwound.

Where the CPC decides to proceed to a Phase II investigation, it will inform the parties that they are entitled to modify the transaction or suggest remedies to resolve identified competition concerns. As part of the Phase II investigation, the CPC will examine whether any additional information it has obtained from the participants (or from third parties), combined with any remedies and/or amendments to the transaction that may have been proposed by the participants, are sufficient to allay the competition concerns identified by the CPC during the Phase I investigation.

If competition concerns persist, the CPC may (if it has identified any remedies and/or amendments to the transaction which it believes will resolve the competition concerns it has identified) enter into negotiations regarding remedies and/or amendments with the parties.

In practice, both behavioural and structural remedies (eg, divestitures) may be accepted and/or proposed by the CPC.

Any remedies or amendments to the transaction proposed by the parties must follow a form prescribed by the Law and must be submitted to the CPC within the timeframe that may be prescribed by the CPC. The Law does not specify a particular legal standard which must be met by proposed remedies, but in practice, the remedies will need to be sufficient in order to fully eliminate the competition concerns that have been identified.

In particular, a party suggesting one or more remedies should do the following:

• describe in detail the objective of the suggested remedies and the proposed conditions to their implementation;
• explain how the proposed remedies are intended to address the competition concerns identified by the CPC; and
• provide a non-confidential description of the remedies and their expected impact, to enable the CPC to market-test the proposed remedies if it so wishes (see 7.2 Contacting Third Parties).

Where a proposed remedy involves the sale of a business, the following additional information should be provided:

• general information regarding the business to be sold, including a description of the legal entities that make up the business, their place(s) of operations and other areas where they undertake activities or provide services, as well as the organisational structure of the business;
• a description of any legal barriers to sale (eg, third-party rights or requirements to obtain regulatory consents);
• a description of the products and/or services offered by the business, including their technical characteristics, turnover relating to each product/service, business or trade names, etc;
• a description of any supporting business functions, to the extent these are not performed at the level of the business itself (eg, research and development, sales and marketing, suppliers);
• a detailed description of the relationships between the business to be sold and other enterprises controlled by the participants (eg, common staff or assets, contracts for services concluded between such enterprises, common customers);
• a description of all tangible and intangible assets (including intellectual property rights) of the business to be sold;
• a structure diagram setting out the number of employees of each business function and a list of employees who are necessary for the continuation of each function;
• a description of the customers of the business and apportionment of the turnover of the business to each customer;
• financials of the business, including turnover and EBITDA for the preceding two years, as well as projections for the next two years;
• a description of every change in its organisational structure and the relationships with its group entities during the preceding two years and a summary of upcoming changes planned during the next two years; and
• an analysis of the rationale of the sale, to an appropriate purchaser, within the suggested timeframe.

Few notifications to the CPC proceed to a Phase II investigation, and as such, there are only a small number of examples where competition clearance has been granted subject to remedies. Examples of remedies which have been used include:

• a condition that the directors of a participant of a joint venture cannot also act as directors of the joint venture itself, and that information will be treated confidentially and not shared between the two boards of directors;
• a requirement that the joint venture entity maintain a competition compliance manual;
• a commitment that any transactions between the target and its shareholders will be carried out on arm’s-length terms; and
• a commitment that access be provided to new market entrants to infrastructure controlled by the concentration, at cost.

Parties may propose remedies once invited to do so by the CPC (in practice when the CPC decides to proceed to a Phase II investigation). The CPC will enter into negotiations of remedies with the parties if it considers that the remedies proposed by the parties are insufficient to allay the competition concerns identified by the CPC. The CPC can also suggest its own remedies during the negotiation phase and may impose any conditions it considers appropriate in its clearance decisions.

Where the CPC decides to approve a concentration subject to conditions and/or remedies, it will include details of such conditions and/or remedies in its approval decision.

If a transaction is implemented without full compliance with any remedies or conditions set out in the CPC’s approval, the CPC may impose a fine of up to 10% of the total turnover of the relevant party for the preceding year. Additional fines (up to EUR8,000 per day) may be imposed for each day the breach continues. The CPC may also withdraw its approval or modify the terms upon which the approval was issued.

Finally, the CPC also has the power to order that a concentration put into effect without full compliance with applicable remedies or conditions be (wholly or partly) reversed or disbanded, but only to the extent that this is reasonably necessary to restore functional competition on the relevant market.

The CPC will typically issue a formal decision permitting or prohibiting a transaction within the applicable deadlines. If the CPC fails to issue a decision within the stated deadline, clearance is deemed given.

Non-confidential versions of decisions are published in the Official Gazette of Cyprus, as well as on the CPC’s website.

Recent remedies imposed by the CPC are outlined in 5.4 Typical Remedies, although none of the cases concerned foreign-to-foreign transactions.

No specific legislative provision is made for related arrangements (ancillary restraints) to be captured in clearance decisions and, in practice, they are not commonly captured.

Where the CPC decides to proceed with a Phase II investigation, a person who is not a party to the concentration but may nevertheless be directly affected by the CPC’s decision in relation to the concentration, may petition the CPC to submit their views in relation to the concentration. This may be done in writing or as part of an oral hearing. Relevant third parties might include:

• competitors of the undertakings participating in the concentration;
• customers of such undertakings;
• consumer protection organisations; and
• employee representative bodies.

The CPC also has the right, where it decides to proceed to a Phase II investigation, to enter into negotiations or discussions or conduct hearings with any person, where this would (in the CPC’s view) assist it in its investigation.

No third-party views are usually invited in the context of a Phase I investigation.

The CPC will often invite the views of interested third parties where it has decided to proceed with a Phase II investigation. Typically, the CPC will (i) request that the third parties concerned provide the CPC with a list of their competitors and other relevant parties and (ii) do its own research to determine which third parties might be relevant. While the CPC usually involves third parties via the circulation of written questionnaires or conducting oral hearings, it has on occasion also used more informal means (eg, telephone calls).

Part of the information that must be submitted to the CPC when proposing a remedy is a non-confidential description of the nature and scope of the proposed remedy, including the reasons why it is expected to resolve applicable competition concerns. The CPC has the power to use this non-confidential description to market-test the remedy offered.

The CPC publishes both its decisions as well as the fact that it has received a notification in the Official Gazette of Cyprus and on its website. The publications always include the names of the parties involved and a description of the concentration. When decisions are published, the relevant economic sectors are also identified. However, commercial information that has been notified to the CPC as confidential is generally not included.

The CPC co-operates with competition authorities in other EU member states, both on general policy matters and with respect to specific transactions.

The Law does, however, provide that the CPC and its members are subject to an obligation to maintain the confidentiality of sensitive information received by them in the conduct of their duties. More particularly, they must keep information confidential and not publish or circulate the information except to the extent required to evidence a breach of the Law or to otherwise ensure application of the provisions of the Law.

CPC decisions may be appealed (by way of administrative recourse) to the Administrative Court. Decisions of the Administrative Court may, in turn, be appealed to the Supreme Court. On 1 July 2023, Cyprus will introduce a new Court of Appeal. Although the relevant legislation and guidelines have not been fully finalised, it is expected that from that date, decisions of the Administrative Court will be appealed to the Court of Appeal, with decisions of the Court of Appeal being in turn appealed to the Supreme Court (on certain grounds and subject to leave).

Appeals to the Administrative Court must be filed within 75 days of issuance of the CPC’s decision (or within 75 days of the date the decision was notified to the appellant). A party wishing to appeal a decision of the Administrative Court to the Supreme Court must file its appeal within 42 days of issuance of the Administrative Court decision.

In practice, appeals can take several years to resolve and are very rarely successful. This may change following the introduction of the additional appellate tier described in 8.1 Access to Appeal and Judicial Review. Final guidelines regarding the applicable timeframes for appeals under the new system are not yet available.

In addition to the parties involved in the concentration that is the subject of a clearance decision, third parties who are affected by the decision may also appeal the decision to the Administrative Court (however, there are no reported cases of third parties ever having done so successfully).

There is draft legislation currently being considered by the Cypriot parliament regarding the implementation of a foreign direct investment regime in Cyprus. A summary of the provisions included in the current draft is set out below; however, the legislation may change substantially before it is implemented (if, indeed, it is implemented at all). At the date of writing, there has been no indication of when the legislation might be implemented.

In its current form, the legislation provides that a foreign investor that intends to make a foreign direct investment which has as its purpose (or which will result in) the acquisition of a “special participation” in an “undertaking of strategic importance” must notify the Ministry of Finance in Cyprus.

“Special participation” is defined to mean the direct or indirect acquisition, alone or jointly with other persons, of an interest corresponding to at least 10% of the share capital and/or voting rights or equivalent power to exercise decisive influence over the activities of the relevant undertaking. It captures both new investments as well as changes to existing investment structures which result in the acquisition of control by a foreign investor.

“Undertaking of strategic importance” is defined as an undertaking that is headquartered in, and carries out activities in, the Republic of Cyprus, whose activities fall within one of the sectors set out in schedule 1 to the draft law. The current draft of schedule 1 refers to activities in “particularly sensitive sectors which concern vital infrastructure”, and specifically includes the following sectors:

• data processing or storage;
• defence;
• electoral services;
• financial services (including systemic credit institutions);

• energy;
• transport;
• water supply;
• health;
• communications;
• media; and
• investments in “sensitive facilities” as well as land and immovable property which are of key importance in the use of the infrastructure mentioned above.

Upon receiving a notification, the Ministry of Finance must decide (within ten working days of receiving a complete notification) whether it needs to examine the investment further. If the Ministry decides it does not need to examine the investment, it must notify the foreign investor within five working days from the date of its decision. If the Ministry decides to further examine the investment, it must (a) notify the foreign investor within five working days of its decision and (b) determine, within a further 60 working days, whether the investment may be prejudicial to the safety or public order of the Republic of Cyprus. In making its decision, the Ministry must take into account a variety of factors, including whether:

• the foreign investor is controlled by a third-country government;
• there is a serious risk that the foreign investor will be involved in illegal or criminal activities; and
• following implementation of the investment, the ability of other shareholders to participate in the undertaking (and its decision-making) will be satisfactorily preserved.

If the Ministry concludes that the investment may be prejudicial, it may impose conditions on implementation of the investment or may forbid it entirely (or, to the extent the investment has already been implemented, unwind it).

The Ministry has discretion to “stop the clock” and request further information from the notifying party, such that in practice, the timeframes listed above may be elongated.

If a notifiable investment is not notified to the Ministry in accordance with the law, then the investment is automatically deemed to be in breach of the provisions of the law and the Ministry may take any and all measures at its disposal to forbid and/or terminate and/or unwind the investment in question. The Ministry also has the power to impose administrative fines and obtain injunctions or other interim measures.

As at the date of writing, the Law has not been amended since its introduction (other than purely corrective amendments), and no subsidiary legislation has been issued pursuant to the Law. No concrete proposals exist for amendment of the Law.

The CPC very rarely issues fines, and although its powers to issue fines are draconian, the limited fines that have been issued have been low. In addition, remedies recently imposed by the CPC have tended to be fairly limited; for instance, the CPC has not yet required the sale of a business or parts thereof as a remedy.

There has been a notable shift in approach to merger control notification by the EC, which is now encouraging referrals from national competition authorities in certain cases (including cases where the jurisdictional thresholds are not met). As a result, we may see more transactions referred to the EC than was previously the case.