The Commission for Protection of Competition (the CPC) was established 30 years ago and maintains the exclusive competence for the harmonious operation of the Cyprus market within the rules of fair competition. Among its powers under the relevant law for the Protection of Competition (Law 13(I)/2008), as amended (the Law), are to investigate and take decisions on the infringement of competition rules, such as abuse of dominance and agreements having as their object or effect the distortion of competition.
We set out below the most important decisions adopted in 2019 by the CPC. The decisions are listed in chronological order.
- Decision CPC 13/2019: Complaint of Mr. K.M. and A.M. against the Community Council of Kouklia
On March 12, 2019, the CPC made a finding that the Community Council of Kouklia abused its dominant position by imposing excessive prices for water supply services in the tourist areas within the Kouklia community boundaries. The procedure before the CPC was initiated after two owners of properties situated within the boundaries of the community of Kouklia complained that the prices charged for the supply of water were excessive. The CPC defined the relevant market as the market for the provision of water supply services for household purposes and concluded that the Community Council of Kouklia had a dominant position in the relevant market in the community of Kouklia. To reach its conclusion, the CPC took into account the existence of legal barriers to enter the market which reinforced the monopolistic position of the Community Council of Kouklia. Further, the CPC analysed financial data and found that the Community Council had overcharged the supply of water in the tourist areas between 2013-2015 compared to other areas in Kouklia. The profit margin was very high and was not justified by any increase in cost and/or the circumstances. Considering the duration and the severity of the infringement, the CPC imposed on the Community Council a fine of €78.889,28 for violation of article 6(1)(a) of th Law and ordered the Council not to repeat the infringement in the future.
The full text of the decision can be found here.
- Decision 19/2019: Complaint of Golden Telemedia Limited against MTN Cyprus Limited
On March 29, 2019, CPC fined the telecommunications company MTN Cyprus Limited (now called EPIC Ltd) for violation of article 6(1)(b) of the Law which prohibits the abuse of a dominant position when it leads to the restriction of production, distribution or technical development to the prejudice of consumers. MTN, as a mobile telephony services provider, was found to be dominant in its mobile telephone network in relation to its subscribers and the premium rated services providers which offer premium rated services, including, inter alia, premium voice services and premium messaging services, to the subscribers of MTN mobile telephone services. From 2005 until the beginning of July 2015, MTN blocked or imposed restrictions on calls carried out by its mobile post-paid subscribers to premium voice services. Consequently, the services of the complainant premium rated services provider, Golden Telemedia Ltd, could not be offered to MTN post-paid subscribers. The provision of premium voice services was thus restricted to the detriment of consumers. In light of the above, the CPC imposed a fine of €237.181,76 and obliged MTN to avoid any repetition of the infringement in the future.
The full text of the decision can be found here.
- Decision 42/2019: Complaint of Theatre One against the Cyprus Theatre Organisation
On August 27, 2019, the CPC fined the Cyprus Theatre Organisation (the CTO) for violation of Section 6(1) of the Law. A competitor of CTO, Theatre One, complained to the CPC that CTO was in violation of Section 6(1) of the Law by controlling the finances of all other theatres. The CTO was responsible to decide the apportionment of subsidies to theatres irrespective of market-determined criteria but instead with criteria which it set unilaterally and without control. The CPC defined the relevant market as the market for producing and presenting theatrical performances in Cyprus. After examining various factors, the CPC concluded that the CTO had a dominant position in the relevant market. It was mainly financed by state funding, it had the power to decide the apportionment of state funding to private theatres, it had a higher budget in comparison to its rival private theatres and it could, thus, present the most important performances. In addition, CTO was present in Cyprus for many years, thus was very well renowned and much wealthier than its rivals. The CPC emphasised that the CTO had a dual role in the market, as it was responsible for the distribution of subsidies to theatres while at the same time it was itself present in the relevant market for producing and presenting theatrical performances in Cyprus. Due to its dual role, it abused its dominant position as it was itself receiving subsidies corresponding neither to the number of performances it presented nor to criteria similar to its rival theatres. While the CTO distributed subsidies to other theatres, as per the number of performances on the basis of certain criteria set out by the “Thymeli” Scheme, it itself received funding without any corresponding control but rather for its entire operation. In addition, in the process of examining the funding requests of its rival theatres, the CTO was receiving confidential information about its competitors which it would not otherwise have had and which was further strengthening its dominant position in the relevant market. Taking into account the severity of the infringement and its duration, the CPC imposed on CTO a fine in the amount of €342.221,35 for breach of Section 6(1) of the Law and ordered CTO to immediately cease the infringement.
The full text of the decision can be found here.
- Decision 53/2019: Complaint of the company K.A.C. Constantinides Trading Ltd against the company GPM-Henkel Ltd
On October 4, 2019, the CPC concluded that GPM-Henkel and its parent company Henkel AG & Co KGaA had infringed Section 6(1)(b) of the Law and the corresponding article 102(b) of the TFEU by restricting the wholesale supply of heavy-duty detergents in the Republic of Cyprus to the detriment of consumers. The decision was issued following a complaint lodged by K.A.C. Constantinides Trading Ltd against GPM-Henkel Ltd. The complainant was active in the parallel import of Henkel products in Cyprus. The CPC reached the conclusion that GPM-Henkel had a dominant position in the market for wholesale distribution of heavy-duty laundry detergents in Cyprus. It infringed Section 6(1)(b) of the Law by obstructing the sale of parallel imports of Henkel products in Cyprus by, inter alia, sending letters to wholesalers demanding that they stop importing Henkel products and by reserving GPM-Henkel’s and Henkel’s AG & Co KGaA rights to take any and all legal actions necessary against them, as well as to specific retail stores demanding from them to terminate the sale of these products. In addition, GPM-Henkel urged owners of retail stores during meetings to terminate the sale of Henkel products from parallel imports. In order to achieve the goal of preventing the parallel imports, GPM-Henkel threatened to terminate its cooperation with the retail stores if they continued to sell products from parallel imports and in the case of one store, it did so temporarily. There was supporting evidence that Henkel AG & Co KGaA was aware of the actions of GPM-Henkel in the Cyprus market. By taking into consideration the nature, the severity, the duration of the infringement, which extended from 2011 until at least July 2013, the mitigating factors and the consolidated turnover of the group, the CPC decided to impose a fine amounting to €3.302.000 for the infringement of Section 6(1)(b) of the Law and the corresponding article 102(b) of the TFEU on GPM-Henkel, jointly and severally with its parent company Henkel AG & Co KGaA.
The full text of the decision can be found here.
- Decision 56/2019: Complaint of Mr. K.K. against the Community Council of Kokkinotrimithia
On October 14, 2019, the CPC found that the Community Council of Kokkinotrimithia abused its dominant position in the market for the provision of water supply services for livestock production in 2011, 2012 and 2014. The procedure was initiated after the complaint of an owner of a livestock production farm, located within the farming area of Kokkinotrimithia in the district of Nicosia. The complaint concerned the charges for water supply to the livestock farms within the community. The complainant alleged, inter alia, that the Community Council was imposing excessive prices for water supply services for livestock production thus increasing the cost of production of the livestock products of the complainant and consequently the price of its products. The CPC defined the relevant market as the market for the provision of water supply services for livestock production within the Community of Kokkinotrimithia in the district of Nicosia. The Community Council was found to be dominant in the relevant market since: (a) the supply of water from private drilling on the part of the farmers was not a feasible alternative for many due to financial, technical and/or practical reasons; and (b) the entry into the market was difficult because the provision of water services to the Community of Kokkinotrimithia was subject to prior licensing from the Community Council of Kokkinotrimithia. The CPC came to the conclusion that the Community Council of Kokkinotrimithia abused its dominant position through excessive pricing of its water supply services for livestock production and was in breach of Section 6(1)(a) of the Law. The CPC found that there was a disproportion between the real cost of the water supply to the farming area and the sale proceeds of the Community Council from the said activity. The CPC also compared the prices charged by another local authority, namely the Community Council of Idalion, with similar characteristics with the services offered by the Community Council of Kokkinotrimithia and found that the prices charged by the Community Council of Idalion were much lower. In light of the above, the CPC imposed a fine of €33,843.81 on the Community Council of Kokkinotrimithia for abuse of its dominant position in the relevant market in 2011, 2012 and 2014.
You can see the full text of the decision here.
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