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Competition Clearance in Cyprus – a quick summary

Posted on | by techlink

Under Cyprus law, transactions such as mergers and acquisitions resulting in concentrations of major importance which meet the threshold prescribed under the Control of Concentrations Between Undertaking Law 83(I)/2014 (the “Law”) may have to be notified to the Cyprus Commission for the Protection of Competition (“CPC”).

Which acts of concentration must be notified?

Acts of concentration of major importance within the scope of the Law, shall be notified to the service of the CPC (the “Service”) before their implementation and following the conclusion of the agreement or before its conclusion upon proving to the CPC the existence of a bona fide intention to enter into an agreement. A concentration is considered to be of major importance where:

(i) the aggregate turnover achieved by each of at least two of the participating undertakings exceeds EUR 3.500.000 (EUR 3.5 million);

(ii) at least two of the participating undertakings achieve turnover in Cyprus; and

(iii) at least EUR 3.500.000 (EUR 3.5 million) out of the aggregate turnover of all participating undertakings is achieved in Cyprus.

Notifications and timeframes

With the submission of the notification, a fee is paid to the Service of the CPC (currently set at EUR 1.000) which marks the commencement of the initial stage of the review. The Service will then proceed with a preliminary evaluation of the notification and prepare a written report to the CPC with its reasoned opinion. The CPC will in turn examine the notification taking into account the written report produced by the Service and take a decision as follows:

(a) the notified concentration does not fall within the scope of the Law and/or within the meaning of concentration; or

(b) the concentration does not raise serious doubts as to its compatibility with the functioning of competition in the market and the concentration is declared compatible with the functioning of competition in the market; or

(c) the concentration raises serious doubts as to its compatibility with the functioning of competition in the market and commences full investigation proceedings.

If the CPC decides to initiate a full investigation it invites the parties to pay an additional fee (currently set at EUR 6.000).

The Service has a statutory deadline of 1 month to notify the parties of the decision taken by the CPC on whether the concentration may be implemented (Phase I review) or whether the concentration is going to be fully investigated as per point (c) above (Phase II investigation). Depending on the complexity or volume of information, the Service may extend the deadline by 14 days in which case it shall inform the notifying undertaking at least 7 days before the expiry of the initial statutory deadline. If additional information is required for the purposes of securing the completeness of the notification, the statutory deadline is reset to 1 month.

If the notifying undertaking does not receive CPC’s decision within the expiration of the aforementioned timeframe, the transaction is deemed to have been declared compatible with the market.

Publication of CPC decision and confidentiality

The nature of the notified concentration, names of the participating undertakings and the economic sectors involved are published in the Official Gazette of the Republic of Cyprus (“Official Gazette of Cyprus”). A non-confidential version of CPC’s decision on the notified concertation with the redaction of selected parts of the decision is published on the Official Gazette of Cyprus and the website of the CPC upon a confidentiality request by the parties involved in the concentration.

The CPC and the Service are bound by a duty of confidentiality and their members and officers are prohibited from communicating and/or publicising confidential information and business secrets which become available to them in the process of the notification. The notifying undertaking may also specify to the CPC which documents, statements and material it considers as confidential information and/or business secrets.

Basic notions and definitions

“Undertaking”In Competition Law, an undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed. Any activity consisting in offering goods or services on a given market is an economic activity.
“Concentration”A concentration arises where a change of control on a lasting basis results from:  

(a) the merger of two or more previously independent undertakings or parts of undertakings;  

(b) the acquisition, by one or more persons controlling at least one undertaking, or by one or more undertakings, whether by purchase of securities or assets, by contract or by any other means, of direct or indirect control of the whole or parts of one or more other undertakings;  

The creation of a joint venture performing on a lasting basis all the functions of an autonomous economic entity also constitutes a concentration within the meaning of point (b) above.

Failure to comply with the law & administrative sanctions

The implementation of a transaction giving rise to an act of concentration of major importance is prohibited under Cyprus Law unless such transaction is cleared by the CPC. Failure to obtain clearance may result in fines, including an administrative fine of up to 10% of the total turnover of the undertaking with an obligation to notify. The CPC also has the power to order the dissolution or partial dissolution of a concentration, in order to secure the restoration of the functioning of competition in the market.

Our services include

  • Preliminary assessment to determine whether the transaction constitutes a concentration of major importance which must be notified to the CPC;
  • Comprehensive advice on cross-border and national transactions;
  • Merger control filings (notification) and approvals (clearance);
  • Request for confidentiality by redacting selected parts of the published clearance decision.

Get in touch for an initial consultation

The information provided in this article does not and is not intended to constitute legal advice; instead, all information contained in this article is for general informational purposes only. If you require assistance with any legal matter, including a matter referred to in this article, you should contact one of our attorneys to obtain advice tailored to your specific circumstances.

“An Evolving Profession” by Andrew Demetriou, Co-Founder, Managing Director, Ioannides Demetriou LLC

Posted on | by Paschalis Paschali

“The days of the lawyer as ‘Jack of all trades’ – and, dare I say it, ‘master of none’ in many cases – are long gone” Andrew Demetriou, Co-Founder, Managing Director, Ioannides Demetriou LLC

Read more about the evolving legal landscape, the developments in technology and the skillset that lawyers need to master in Mr. Demetriou’s recent interview in Gold Magazine.

An_Evolving_Profession_ADemetriou_GoldMagazine_TheLrgalEdition_Issue137-August2022

Download the article here

Major overhaul of the Cypriot legal system

Posted on | by Paschalis Paschali

There are a number of monumental (as far as the Cypriot legal system is concerned) changes afoot in relation to the modus operandi of the courts in Cyprus, with most of them coming into effect in the coming year. These sorely needed changes, some of which are remedies for longstanding ills, are meant to usher the Cypriot legal system into a new age of speedy, effective justice and ultimately enhance Cyprus’ reputation as a regional business centre. 

Below I will provide a brief overview of three major changes, which in my opinion are the ones that will have a profoundly positive effect on litigants, lawyers and the country’s economy.   

Re-introduction of English as a litigation language

Last month the Cypriot House of Representatives amended the constitution to allow for English to be used as a legal language in the Cypriot Courts. This is actually quite a development. English was used in the Cypriot Courts, due to Cyprus’ colonial heritage, up to the late 80s. Then, based on some misplaced sense of nationalism we ushered it out. Some thirty years later the House of Representatives has, to my mind, seen sense, and has brought back English as a language to litigate in. The benefit of litigating in one of the “world” languages in a common law jurisdiction is plainly evident. It makes Cyprus much more “litigation friendly” for both foreign parties and foreign lawyers.

The newly formed Commercial Court

The re-introduction of English is only part of the plan. The second part of the plan is the formation of a dedicated Commercial Court and a dedicated Admiralty (Maritime) Court. Previously there was no Commercial Court and admiralty actions were dealt with by Supreme Court judges sitting alone. This of course ate in to the time of the Supreme Court and elongated appeal times in both the Criminal and Civil divisions. It was a situation that was in dire need of remedial action.

The newly formed Commercial Court will be a court of first instance and will:

a) hear cases of the highest scale (€2.000.000 and above), which is the highest Court scale in the Cypriot Court system. In short it will try the most important civil cases.

b) hear “Commercial disputes”, which are deemed to be disputes in relation to:
(i) a business document or contract,
(ii) purchase, sale, import and export of goods,
(iii) transport of goods by land, sea and air,
(iv) natural resources,
(v) insurance and reinsurance,
(vi) financial markets, stocks, shares and other financial instruments and investment instruments,
(vii) contracts of service, excluding contracts for the provision of medical services and any contract in which service is rendered through an employment contract,
(viii) automotive production,
(ix) contracts of agency,
(x) Competition law,
(xi) entities regulated by the Republic of Cyprus,
(xii) intellectual property and patents,
(xiii) arbitration.

c) be staffed by the most senior District Court Judges, namely Presidents of the District Courts. Presidents usually have about 20 or so years of experience since it takes about that long to get promoted to the level of President (which is the level before becoming a Supreme Court Judge),

d) try cases in English if a party to an action requests it. This means that the pleadings, testimony and judgment will be in English,

e) allow the parties in an action now before the District Courts to apply to have their case heard by the Commercial Court if the value of the claim is €2.000.000 and above,

f) shorten trial times drastically. Some early statistical speculations suggest that the Commercial Court will have the ability to issue judgments within a year to a year and a half.

New Civil procedure rules

Third on this list is the adoption of a totally new set of civil procedure rules which will come into force on the 1.9.2023. When Cyprus achieved independence in 1960 the newly formed Republic of Cyprus adopted the English civil procedure rules as they had been formulated in the White Book of 1958. Almost 70 years later this antiquated set of rules had remained largely unchanged. They were a cumbersome product of a bygone age with serious deficiencies, primarily because they were drafted at a time when technology was absent from the courts and then subsequently, they were not amended to cater to resolving disputes in the modern age.

About four years ago the Republic of Cyprus set about the task of essentially rewriting the civil procedure rules. Lord Dyson, Cypriot judges and advocates, academics and other experts all contributed to the endeavor through their involvement in the relevant committees and the cumulative result of their efforts is a new set of civil procedure rules which will drastically reduce trial times once they come into force.

The new rules are heavily modelled on the English civil procedure rules and in fact share the same pillar, the so called “overriding objective”. In short, the overriding objective, means that the purpose of the rules and what the Court seeks to achieve in applying them is the fair resolution of a dispute in a timely and cost-efficient manner.

Factors such as ensuring that the parties are on an equal footing, saving costs, trying a case with regard to the value of the claim, the seriousness of the case, the complexity of the issues to be decided and the financial ability of the parties are all factors the Court must now take into account when applying the “overriding objective” to the new rules.

Furthermore, a number of pre-trial protocols will be put in place, whereby a prospective claimant, before lodging an action for a debt will be required to demand payment in writing and at the same time furnish the prospective defendant with proof in relation to the debt itself.    

The new rules are also much more detailed. As far as rulemaking in concerned, more detail translates to fewer disputes over how the rules should be applied. This in turn creates a streamlined process, with less interim applications and therefore a case is helped along to trial much faster.  Finally, there is a sense of reserved optimism about these “modifications” in the circles of the legal practitioners on the island but I am confident that once this changes take effect the domestic legal landscape will change for the better.

The Legal 500 (Leagalease) Country Comparative Guide: Insurance & Reinsurance

Posted on | by Paschalis Paschali
Country Comparative Guide: Cyprus Insurance & Reinsurance

This country-specific Q&A provides an overview of insurance & reinsurance laws and regulations applicable in Cyprus. Ioannides Demetriou LLC is a contributing firm, where Christina Ioannidou, Partner, and Katerina Hadjichristofi, Partner, provide information about the current issues affecting insurance and reinsurance in Cyprus and address topics such as contract regulation, licensing, penalties, policyholder protection, alternative dispute resolution as well as personal insight and opinion as to the future of the insurance market over the next five years.

Read the full Q&A here

Or download the Q&A PDF here

Cyprus on its way to welcoming a new digital era

Posted on | by Paschalis Paschali

The Covid-19 pandemic has, undoubtedly, increased the need for adopting different digital technologies in all economic, industrial and business sectors.

Cyprus has taken considerable steps towards the adoption of digital technologies by incorporating the provisions of Regulation 910/2014/EU (hereinafter the “Regulation”), in its national legislation with the enactment of Law 55(I)/18 (hereinafter the” Law”). Both the Law and Regulation establish a legal framework for e-signatures, e-seals, e-documents and in general all forms of electronic identification.

Additionally, on the 1st of March 2020, the Deputy Ministry of Research, Innovation and Digital Policy was established, one of the most important goals of which, is the adoption of a national digital policy and the creation of a powerful digital economy.

As the Deputy Minister of Research, Innovation and Digital Policy says, more digital services will be made available for the public in a few months.  Such services seem to include the issuance of a certified copy of birth certificate, the transfer of immovable property to an individual or even the registration of a company with the Registrar of Companies.

What the Deputy Minister has initiated to do is to take small steps to automate services in all ministries and departments for the benefit of individuals and businesses. These actions were part of a long-term, two or three year plan, but as it seems, efforts are being made for the necessary procedures to be concluded within the following months.

An example of the goals set by the Government concerns the Citizens Service Centres which up to now used to accept around 1,000 visitors per day. The goal is to offer services electronically so that the above number will be reduced to 100 to 200 visitors per day.

Other government departments that seem to be in imminent need for digital upgrade is the Registrar of Companies, the Town Planning and Housing Department and the Land Registry, while large projects such as the digitalization of hospitals and courts are estimated to continue according to plan.

Additionally, the Government seems to be in consultation with the Association of Cyprus Banks so as to permit to individuals and businesses to conclude their transactions electronically without being necessary for them to be physically present in order to sign the appropriate documents.

What is in fact stressed by the Deputy Minister of Research, Innovation and Digital Policy, is that the acquisition of an e-signature, in compliance with the provisions of the Law and Regulation, is a necessary precondition for the said services to be carried out electronically.

According to the Regulation, an e-signature can be obtained by a qualified trust service provider. Currently, in Cyprus, there is only one provider listed in the Trusted List Browser that is authorized to provide certificates for qualified e-signatures and that is, JCC Payment Systems Ltd.  The Cyprus Stock Exchange, has assumed the role of a local registration authority mediating between the applicant and the trusted provider for the issuance of a qualified certificate for e-signatures. It is noted that according to the Regulation the acquisition of a qualified signature shall have the equivalent legal effect of a handwritten signature (Article 25).

Of course, the legal effect of e-signatures remains to be seen, as, there is no relevant case law indicating how documents bearing an e-signature will be treated by Cyprus Courts. However, it seems that the Cyprus Government is placing the project of introducing digital technologies in everyday transactions at its top priorities while it is commonly admitted that the coronavirus crisis has made the Government to review and reshape its way of thinking and take considerable steps towards the creation of a new era which will respond more effectively to the needs this new state of affairs.