The Association Agreement between Cyprus and the European Economic Community entered into force in the late 1980’s. As a result, Cyprus was obliged to establish legislation for the protection of competition and regulate unfair competition practices.
Specifically, the protection against unfair competition is regulated by the following two legislations:
- the Protection of Competition Law (207 (I)/ 1989);
- the Control of Concentration Between Enterprises Law (22(I)/ 1999);
On the one hand, the Competition Law regulates restrictions in agreements and abuse of dominant position. On the other hand, the Control of Concentration Between Enterprises Law regulates mergers and acquisitions in the Republic of Cyprus. In this article, we will focused on the Competition Law.
The Protection of Competition Law was amended in 2014 in order to enforce the effectiveness of the existing legislation in Cyprus. The amendments to the competition law enhance the powers of the Commission for the Protection of Competition and facilitates the convergence with EU Law and Recommendations endorsed by the European Competition Network.
Control and Suppression of Practices that Restrict Fair Competition:
Following the provisions of section 3(1) of the Competition Law, all practices between undertakings that intend to prevent, restrict or distort competition are prohibited, and specifically those that:
- fix purchase or selling prices or influence any other trading conditions;
- restrict or affect production, supply, technical development, or investment;
- share markets or sources of supply geographically or otherwise;
- apply different conditions to equivalent transactions, in this manner placing other undertakings at a competitive disadvantage;
- make the conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial use, have no connection with the subject of such contracts;
Section 4 of the Competition Law provides an exemption for certain concerted acts which would otherwise be prohibited and invalid under the following conditions:
- these actions contribute to improving the production or distribution of goods or to promoting technical or economic development while allowing consumers a fair share of the resulting benefit;
- these actions do not enforce, on the undertakings concerned, restrictions that are not indispensable to the attainment of these objectives;
- they do not afford undertakings the possibility of eliminating competition in respect of a significant part of the product in question;
Abuse of Dominant Position:
Section 6(1) of the Competition Law stresses that any abuse by one or more undertakings that have a dominant position in the internal market or have a considerable part of it regarding a product is prohibited.
Such abusive action may involve:
- fixing purchase or selling prices or influence other unfair trading conditions;
- limiting production, markets or technical development to the prejudice of consumers;
- applying dissimilar conditions to equivalent transactions with other trading parties, in that way placing them at a competitive disadvantage;
- making the conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial use, have no connection with the subject of such contracts.
However, the provisions of section 6 do not apply in the following cases:
- Contracts related to terms of employment, working conditions and wages;
- Undertakings authorised to launch services of general economic interest or have the character of revenue-producing monopoly, in so far as the application of these provisions impedes the performance in law or in fact, of the particular tasks assigned to them by the State;
In Cyprus, the competent authority that promotes the effective and efficient operation of the market within the legal framework of fair competition away from any anticompetitive practices is the Commission for the Protection of Competition (CPC). Among the goals of the CPC is to endorse economic growth and boost social welfare.
The lawyers of Michael Chambers & Co. LLC are able to advise you and provide you with the proper legal guidance on competition law matters. If you wish to speak to one of our lawyers, then please contact us: [email protected]