1) Is a merger control regulation in force?

Yes. The Control of Concentrations Between Undertakings, Law 83(I) of 2014 (the Law), is the statute regulating the control of concentrations (in this guide generally referred to as “mergers”) between undertakings in Cyprus.

2) Which authorities enforce the merger control regulation?

Enforcement of the Law rests with the Commission for the Protection of Competition (CPC). The CPC has overall responsibility for implementing the Law and is the competent authority for the control of mergers. The CPC is empowered under the Law to declare a merger as compatible or incompatible with the functioning of competition in the market. The investigation and procedural aspects relating to notifications of mergers are performed by the CPC’s civil service (the Service).

3) Relevant regulations and guidelines with links:

4) Does general competition regulation apply to mergers or ancillary restrictions?

The Law is silent on ancillary restraints. 

5) May an authority order a split-up of a business irrespective of a merger?

No.

6) Other authorities that also require merger filing or may prohibit transaction
(Note that this may not be an exhaustive list and that industry-specific legislation should always be considered. Furthermore, a merger will often require change of registrations with – but not approval from – the companies register, land register and authorities that have issued permits for the activities of the merging parties.)

The Minister of Energy, Commerce and Industry may declare a merger notified to the CPC as one of major public interest, as to the effect it may have on the public security, the pluralism of the media and the principles of sound administration. The Minister can refer to the Council of Ministers a decision issued by the CPC with respect to a merger which the minister declared as one of major public interest. On such referral from the Minister, the Council of Ministers is able to approve or disapprove the merger on grounds of public interest.

Depending on the precise activities of the undertakings concerned and any authorisations they need to carry out business in Cyprus, separate approvals may be required from competent regulators, such as, inter alia, the Cyprus Securities and Exchange Commission, the Central Bank of Cyprus, the Regulator of Electronic Communications and Postal Services, the Superintendent of Insurance and/or the Cyprus Energy Regulatory Authority.

Foreign investment control

While Cyprus has yet to notify screening measures pursuant to the provisions of Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union, the said Regulation applies in Cyprus and has entered into force on 11 October 2020, affecting investments completed as of 11 April 2019.

7) Are any parts of the territory exempted or covered by particular regulation?

No. However, it should be noted that the areas of Cyprus which are outside the effective control of the Government of the Republic of Cyprus are not taken into account for certain aspects of the exercise of the CPC’s powers under the Law. 

8) Is merger filing mandatory or voluntary?

The notification to the CPC of mergers of major importance, namely those mergers which meet the jurisdictional thresholds, is mandatory.

9) Is there a general definition of transactions subject to merger control?

Yes, The Law applies to mergers between undertakings resulting in a change of control on a lasting basis. A merger of undertakings shall be deemed to arise where a change of control on a lasting basis results from:

1. the merger of two or more previously independent undertakings or parts of undertakings, or 
2. the acquisition, by one or more persons already 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.

Joint ventures performing all functions of an autonomous economic entity on a lasting basis are also caught under the Law.

10) Is "change of control" of a business required?

Yes, the Law is applicable to mergers between undertakings resulting in a change of control on a lasting basis.  

11) How is “control” defined?

‘Control’ is defined as control stemming from any rights, agreements or other means which, either severally or jointly, confer the possibility of exercising decisive influence over an undertaking through:

1. ownership or enjoyment rights over the whole or part of the assets of the undertaking; or
2. rights or contracts that confer the possibility of decisive influence on the composition, meetings or decisions of the bodies of an undertaking.

12) Acquisition of a minority interest

Minority interests are caught by Cyprus merger control where they confer, either severally or jointly with other rights, the possibility of exercising decisive influence over an undertaking. The contractual arrangements arising from the transaction documents and constitutional documents of the target undertaking or joint venture are of tantamount importance in determining whether any rights resulting in a change of control are in place.

De facto control could satisfy the control test, and the ability to veto certain types of decisions could also be deemed to fall under such rights conferring the possibility of exercising decisive influence over an undertaking.

13) Joint ventures/joint control – which transactions constitute mergers?

Fully functional joint ventures are subject to notification to the competent authority. As such, when there is a change from sole to joint control over an existing undertaking, the criterion of a merger is only fulfilled when the arising joint venture performs on a lasting basis all the functions of an autonomous economic entity.

A joint venture that is genuinely fully functional must be able to operate independently of its parents on an identifiable market. In order to do so, the joint venture must have management dedicated to its day-to-day operations and access to sufficient resources including finance, staff, and assets (tangible and intangible) in order to conduct its business activities on a lasting basis. 

14) Which thresholds decide whether a merger notification must be filed?
(Unless explicitly stated otherwise, the thresholds described under one threshold category are not cumulative with those described under another category. Thus for instance if there is a market share threshold and a turnover threshold, it is sufficient to meet one of these, unless stated otherwise.)

a) Turnover thresholds

The Law only requires notifications of mergers of “major importance”, which is deemed to include any mergers that meet the following jurisdictional thresholds:

1. the aggregate global turnover achieved by at least two of the undertakings concerned exceeds, in relation to each one of them, EUR 3.5 million; 
2. at least two of the undertakings concerned achieve a turnover in Cyprus; and
3. at least EUR 3.5 million of the aggregate turnover of all undertakings concerned (taken together) is achieved in Cyprus.

In cases of acquisition of sole control, the turnovers of the acquiring undertaking and the target are respectively taken into account in determining whether the jurisdictional thresholds are met.  

In cases of acquisition of joint control, the turnover of each of the undertakings acquiring joint control as well as the turnover of target undertaking is taken into account.

One party could satisfy the threshold relating to the achievement of at least EUR 3.5 million in Cyprus.  

b) Market share thresholds

N/A

c) Value of transaction thresholds

N/A

d) Assets requirements

N/A

e) Other

N/A

15) Special thresholds for particular businesses

Other than the special turnover calculation rules for credit institutions and insurance undertakings, discussed under topic 17, there are no sector-specific rules.

16) Rules on calculation and geographical allocation of turnover

Turnovers comprise the amounts derived from the sale of products and the provision of services by the undertakings concerned during the preceding financial year and corresponding to the ordinary activities of the undertakings, after deduction of sales rebates, of value added tax and other taxes directly related to turnover.

Turnovers are calculated for groups of undertakings and are derived from the last audited financial statements of each of the undertakings concerned (or consolidated financial statements at a group level).

The value of assets also derives from the last audited financial statements of each of the undertakings concerned (or consolidated financial statements at a group level). 

17) Special rules on calculation of turnover for particular businesses

Banks and other credit institutions:

Turnover is deemed to be one tenth of the balance sheet of the last financial year;

Insurance companies:

Turnover is calculated as the value of the gross premiums during the last financial year which shall comprise all amounts received or receivable in respect of insurance contracts concluded by it or on its behalf, including outgoing reinsurance premiums and after deduction of taxes and parafiscal contributions or levies charged by reference to the amounts of individual premiums or the total volume of premiums.

18) Series of transactions that must be treated as one transaction

The Law provides that a merger carried out in stages within 4 years is effected on completion of the last stage resulting in a change in control on a lasting basis.  That is also the date by which the merger must be cleared. A merger carried out in stages is notifiable as a single merger.

19) Temporary change of control

Merger filing is only required if there is a change of control on a lasting basis.

20) Special industries, owners or types of transactions

Notification is not required in the following cases, where a merger between undertakings is not deemed to arise:

1. a credit or financial institution or an insurance company, the normal activities of which include transactions and dealing in securities hold, on its own account or for the account of third parties and on a temporary basis, securities in an undertaking with a view to reselling these; provided that the institution does not exercise voting rights in respect of those securities with a view to determining the competitive behaviour of that undertaking or provided that it exercises such voting rights only with a view to facilitating the disposal of all or part of that undertaking or of its assets or the disposal of those securities, and that any such disposal takes place within one year of the date of acquisition (which period can be extended under certain circumstances);
2. control is exercised by a person authorised under law to carry out a liquidation, bankruptcy or any similar procedure with respect to the undertaking;
3. the merger is carried out by investment companies;
4. property is transferred due to death by a will or by intestate devolution; 
5. the merger is between two or more undertakings, each of which is a subsidiary of the same entity.

The exemption relating to investment companies refers to those companies the sole objective of which is to acquire and manage holdings in other undertakings, without involving themselves (directly or indirectly) in the management of those undertakings so as to determine the competitive behaviour of those undertakings.

21) Transactions involving only foreign businesses (foreign-to-foreign)

There is no exemption for foreign-to-foreign mergers, as any mergers meeting the jurisdictional thresholds in topic 14 are caught under the Law. 

From a local nexus perspective, it suffices that the undertakings concerned achieve a turnover in Cyprus.  It is thus often the case that transactions that are not directly related to the competitive market in Cyprus require notification and clearance by the CPC. 

Where a ’foreign-to-foreign’ is either partially or entirely implemented prior to the clearance of the CPC, administrative sanctions may be imposed by the CPC (see topic 42).

22) No overlap of activities of the parties

There is no exemption for transactions with no overlap of activities.

23) Other exemptions from notification duty even if thresholds ARE met?

As a consequence of the EU "one-stop shop" principle, the Law does not apply if the thresholds for EU merger control are exceeded and the European Commission has not referred the merger to the CPC.

24) May a merging party file voluntarily even if the thresholds are not exceeded?

No, the CPC will only handle a merger notification if the thresholds are met or if a referral from the European Commission allows it to handle the notification.

25) May the competition authority request a merger notification or oppose a transaction even if thresholds are not met?

Only in the case of referral from the CPC or the European Commission.

26) Referral within the jurisdiction

N/A

27) Referral from another jurisdiction

The CPC cannot assess mergers based on referrals from other jurisdictions, except referrals from the European Commission.

The European Commission may refer a merger or a part of a merger to the CPC. In that case, the CPC may handle the merger even if the thresholds for merger notification in Cyprus are not exceeded. In the case of a partial referral, the European Commission will handle certain (international) aspects of the merger, whereas the CPC will handle the strictly Cypriot aspects.

A referral of a merger from the European Commission may be requested either by the CPC or by the merging parties.

28) Referral to another jurisdiction

If the thresholds for merger notification are met in at least three EU member states, the parties may request that a single merger notification is made to the European Commission in place of notifications to each of the relevant national authorities (see topic 29).

29) May the merging parties request or oppose a referral decision?

Referral to the CPC:

If a merger is subject to EU merger control, the parties may – prior to an EU merger notification – request that the merger is referred to the CPC, provided that the merger may significantly affect competition in a distinct market in Cyprus. If the CPC does not oppose such referral, the European Commission may decide to refer the merger in whole or in part.

The European Commission must decide whether to refer a merger within 25 working days of receipt of the request (reasoned submission).

The European Commission may also, on its own initiative or upon request from the CPC, decide to refer a merger that has already been notified to the European Commission to the CPC. Such a referral decision must be taken within 65 working days after the merger notification has been filed. The merging parties cannot oppose such a referral decision.

Referral from the CPC:
If a merger is not subject to EU merger control but is subject to merger control in Cyprus and at least two other EU member states, the parties may request that a single merger notification is made to the European Commission in place of notifications to each of the relevant national authorities. If none of the relevant authorities oppose the referral, the European Commission will handle the merger notification and no notifications are needed in Cyprus or any other EU member state. If any of the national authorities in question oppose the referral within 15 working days, the merger must be notified to each of the relevant national authorities.

30) Stage of transaction when notification must be filed

Although, there is no express deadline within which a merger should be filed, they must be both notified to and cleared by the CPC prior to their implementation.  

While the Law provides that notifications take place following the conclusion of the relevant agreement, the publication of public offer or acquisition of control, as the case may be, the earliest time at which a notification can take place is when the undertakings concerned are able to evidence to the CPC their bona fide intention to conclude an agreement.

31) Pre-notification consultations

The Law does not provide for any pre-notification consultations, nor are any such consultations binding on the CPC. It is not typical to engage in such consultations with the CPC.

32) Special rules on timing of notification in case of public takeover bids and acquisitions on stock exchanges

Mergers involving takeovers are notified to the CPC prior to their implementation and following the announcement of the public bid.

If a public bid would result in a merger of major importance exceeding the jurisdictional thresholds, notification may also be made where the undertakings demonstrate to the CPC where they have announced an intention or final decision to make such a bid.

33) Forms available for completing a notification

Although there is no standard form available, the notification of a merger should include the information prescribed in Appendix III to the Law. The notification must be made in Greek and must be accompanied by various supporting documents. 

There is no “short form” filing prescribed under the Law. The Service is entitled to request additional information where it deems the notification does not satisfy the statutory requirements.

34) Languages that may be applied in notifications and communication

The notification must be made in Greek and must be accompanied by various supporting documents and other information which may be in Greek or English.

35) Documents that must be supplied with notification

The notification must be accompanied by various supporting documents and other information, including but not limited to the following:

1. a copy of all final or most recent documents that brought about the merger either by agreement or following a public bid;
2. in the case of a public bid, a copy of the public bid document;
3. copies of the most recent annual reports and audited financial statements of all the undertakings participating in the merger;
4. copies of reports or analyses prepared for the purposes of the merger;
5. a description of the contents of all analyses, reports, studies and surveys that were prepared by or for any of persons responsible for notification to evaluate or analyse the proposed merger concerning the market and competition conditions;
6. details of the merger (including the nature and scope of the merger, the financial and structural details of the merger, and details regarding the turnover in Cyprus and worldwide of each undertaking);
7. details of relationships of ownership and control as between each participant in the merger and the undertakings connected with it;
8. personal and economic ties as between each group of undertakings and any other undertaking operating within the affected market in which such group holds, inter alia, at least 10 per cent of the voting rights or shares; 
9. a description and analysis of the relevant markets; and
10. a description and analysis of the affected relevant markets.

36) Filing fees

The filing fees are fixed by the Law at EUR 1,000. 

Where a merger becomes subject to a full investigation (phase II), the undertakings concerned are bound to pay a fee of EUR 6,000 to the CPC.

37) Is implementation of the merger before approval prohibited?

Yes. The Law expressly prohibits the partial or full implementation of the merger prior to a clearance by the CPC, infringement of which prohibition entails administrative fines.

38) May the parties get permission to implement before approval?

Temporary approval of a merger might be possible in the event where the CPC is carrying out a full  investigation (Phase II), should the undertakings concerned be able to establish to the CPC, that they shall suffer substantial damage as a result of any additional delay in the implementation of the merger. 

Any such temporary approval does not affect the final decision of the CPC and may be accompanied by conditions decided at the discretion of the CPC.

39) Due diligence and other preparatory steps

The undertakings concerned should limit the exchange of sensitive commercial information between them to the extent possible, restricting such exchange to the minimum required for the purposes of negotiation, carrying out due diligence and integration planning.  

Undertakings should consider using appropriate safeguards in their information exchanges throughout the period leading to completion of the transaction.

In preparing for the notification of a merger, the parties must collect the information that must be included in the notification, as prescribed under Appendix III of the Law.

40) Veto rights before closing and "Ordinary course of business" clauses

An "ordinary course of business" clause that prevents the target company from taking decisions outside the course of its ordinary business until the closing date is generally considered acceptable.

However, it must be assessed on a case-by-case basis to what extent the parties may discuss – or provide each other with veto rights concerning – any decisions in their respective businesses.

41) Implementation outside the jurisdiction before approval – "Carve out"

Carve out is not permissible, as the Law expressly prohibits the partial or full implementation of the merger prior to a clearance by the CPC.

42) Consequences of implementing without approval/permission

Where a merger is either partially or fully implemented before clearance by the CPC, administrative sanctions may be imposed by the CPC.

An administrative fine of up to ten per cent (10%) of the aggregate turnover achieved by the notifying undertaking during the immediately preceding financial year may be imposed on the notifying undertaking for the aforementioned infringement, which may be followed by additional administrative fines of EUR 8,000 for each day the infringement persists.

The CPC also has the power to order the partial or complete dissolution of a merger that has been implemented prior to obtaining clearance by the CPC.

43) Phases and deadlines

44) Tests or criteria applied when a merger is assessed

The substantive test for compatibility of a merger with competition in the market is whether such merger significantly impedes effective competition in Cyprus or a substantial part of it, in particular as a result of the creation or strengthening of a dominant position.

In assessing the compatibility of a merger, the CPC takes into consideration the following criteria:

1. the need to maintain and develop conditions of effective competition in the relevant markets, taking into account, inter alia, the structure of the affected markets, other markets upon which the merger may have significant effects and the potential competition on behalf of undertakings within or outside Cyprus;
2. the position in the market of the undertakings concerned and undertakings connected to them;
3. the financial power of such undertakings;
4. the alternative sources of supply of products or services in the affected markets and/or other markets upon which the merger may have significant effects;
5. any barriers of entry to the affected markets and/or other markets upon which the merger may have significant effects;
6. the interests of the intermediate and end consumers of the relevant products and services;
7. the contribution to technical and economic progress and the possibility of such contribution being in the interest of consumers and not obstructing competition; and
8. the supply and demand trends for the relevant markets.

While the Law is silent in this regard, the CPC’s approach and analysis of harm are substantially aligned with the respective approach of the European Commission. Besides high market shares, the assessment usually takes into account the anti-competitive effects that could potentially arise out of a merger, such as coordinated effects as well as unilateral effects.

The test and factors considered by the competent authority in the course of assessing whether a merger should be cleared are consistent for all sectors.

45) May any non-competition issues be considered?

The CPC only takes competition issues into account when considering the Service’s report and issuing its decision. 

However, the Minister of Energy, Commerce and Industry can declare a merger as being of major public interest with regard to the effects it might have on public security, media pluralism or the principles of sound administration (see topic 6).

46) Special tests or criteria applicable for joint ventures

To the extent a joint venture that constitutes a merger has as its object or effect the coordination of competitive conduct of undertakings that remain independent, the Service shall particularly take into account:

1. whether two or more parent companies retain, to a significant extent, activities in the same market as the joint venture or in a market which is downstream or upstream from that of the joint venture or in a neighbouring market closely related to this market; and
2. whether the coordination that directly emanates from the creation of the joint venture provides the undertakings concerned the ability to eliminate competition for a substantial part of the relevant products or services.

47) Decisions and remedies/commitments available

Before reaching its final decision and subject to the time limits provided by the Law, the CPC may, if it considers it expedient to do so, carry out negotiations, hearings or discussions with any of the interested parties or other persons. 

In declaring a merger compatible with the operation of competition in the market, the CPC may impose conditions or remedies concerning the implementation of the transaction, thus having the ability to interfere with the essence of the transaction.

A decision of the CPC following a phase II investigation may be subject to remedies and post-closing filings may be required by the parties to demonstrate adherence to their commitments, in a manner and at the time specified in the CPC’s decision. In the same context, post-closing filings may relate to requests to the CPC to grant an extension of deadlines or, in exceptional circumstances, to waive, modify or substitute the commitments.

The CPC is required to provide written notification to the undertakings concerned of any remedies as part of its decision. Should the merger be cross-border the CPC may liaise with the relevant foreign authority concerning applicable remedies. Furthermore, any remedies have to be limited to those that are reasonably necessary for the protection of the competitive market.

Appendix IV of the Law prescribes the form that undertakings concerned should submit in relation to remedies.  The CPC accepts both structural and behavioural remedies. Where the CPC’s doubts as to compatibility are not lifted by the remedies offered, the Service will commence negotiations with the notifying undertakings in respect of any modifications which may result in the elimination of such doubts.

48) How and when will details about the merger be published?

The CPC publishes a description of the notification in the Official Gazette of the Republic and on its website, indicating the names of the participants, the nature of the merger and the economic sectors involved. The CPC takes into account, as far as possible, the legitimate interest of the affected undertakings in the protection of their business secrets.

The notifying party should identify documents, statements and any material it considers contain confidential information or business secrets, justifying such view.

The CPC publishes non-confidential versions of its decisions in the Official Gazette of the Republic and on its website.  The undertakings concerned may request that any part of the decision remains confidential and be redacted from the final version published by the CPC.

The CPC and the Service are under a statutory duty of confidentiality, infringement of which is a criminal offence punishable with imprisonment up to six months or a fine of up to EUR 1,500 or both.

49) Access to the file for the merging parties and third parties

The merging parties:

The merging undertakings are entitled to access all documents with the exception of those documents containing confidential information or business secrets of other parties.

Where the CPC addresses a statement of objections to any party alleging infringements of the Law, the CPC shall be bound to communicate to such party all documents that will be used by the CPC as evidence for the compilation of the statement of objections and then for the taking of its decision, with the exception of those documents constituting business secrets.

The undertakings concerned may also request to be heard before the CPC in the context of a hearing during which they will develop their arguments.

Third parties:

Third parties are entitled to access non-confidential documents.

The CPC may request information from any third parties in the context of a full investigation (phase II).

Third parties that may be directly affected by the decision of the CPC in the context of a full investigation (phase II) may apply to the CPC to submit their views or appear before the CPC at a hearing to present and develop their arguments in that respect.

50) Who can appeal and what may be appealed?

The decisions of the CPC are administrative executive acts issued by a public authority. An aggrieved party having legitimate interest and seeking to annul a CPC decision has the right to pursue an administrative recourse.

Such recourses can be filed with the competent administrative courts of Cyprus for judicial review. A party must file a recourse within 75 days of having been notified of the CPC's decision. 

Third parties that have a legitimate interest in a CPC's decision also have rights of recourse under the foregoing procedure.