"In the field of competition steady progress has been made in adopting antitrust ... legislation. A substantial improvement ... in antitrust enforcement is evident after years of standstill. ... the fully independent authority for the protection of competition function[s] well, but should be developed further." (“Towards the Enlarged Union”,
Strategy Paper [9.10.2002], page 40)
Honorable Ministers, honorable judges, distinguished guests, ladies and gentlemen; on behalf of the Commission for the Protection of Competition, I wholeheartedly welcome you to this seminar.
The passage I have just read is the antitrust regime as synopsized by the European Union in its strategy paper early last October.
I have to admit; it is rather flattering. However, for all of us at the CPC we take it to mean support and encouragement in the furtherance of our activities in an area that impacts the island’s economy, with consequential effects in the society at large.
The responsibility bestowed upon the CPC is great. Our efforts may only be analogous.
“In the field of competition, steady progress has been made in adopting antitrust ... legislation"
Without regard to MY statement above, I firstly have to set the record straight and point out that Cyprus has already harmonized its antitrust laws and policies with those of the EU. All necessary legislation, including all Community Block Exemptions, is now part of our national law. The CPC is, without more, evidently adapt with all relevant and related legislation.
Expanding the Number of the Members of the Committee
On our own initiative, we are now active on a different front- the Executive branch of the Government in order to push through amendments that will simply better equip and enable us to use our powers more vigorously and effectively.
As known, the Committee of the CPC consists of the Chairman, who also heads the Service of the CPC on a full time basis, and four part-time Members. As the Committee must be composed of at least three members at any given case, and as the four Members are engaged in their own professions, our efforts are limited greatly.
An amendment to the Law for the Protection of Competition increasing the total number of the Members from five to seven has been prepared by the CPC and is being lobbied with various State actors.
Consistently, as the Law essentially provides for a vice-chairman (as substitute of the Chairman upon long absence), we are pushing for a provision placing a vice-chairman as a full-time part of the seven-Member Committee.
Such reforms will enable the CPC to form up to two adjudicative Committees able to operate concurrently and, consequently, more effectively.
Cartel Immunity and Reduction of a Fine Programme
Moreover, as part of our effort to further enhance our enforcement abilities, we have recently adopted, and expect to put into force before the end of the year, an Immunity Programme.
The rationale behind the effort?
Because of the small size of the island, and because of our borderless status [in contrast with most of the EU Member States and eight of the Candidate Countries (Malta is the other island)], a natural 'special' relationship between businessmen, particularly of those within the same sector, has evolved. We may not, thus, rely on the conventional methods to fight secret cartels.
In order to combat what is considered amongst the most serious restrictions of competition, we adopted the Cartel Immunity and a Reduction of a Fine Programme.
The Programme was drafted after extensive review of the EU's Leniency Notice, the four Member States' that had, at the time, already adopted their own programmes (Germany, France, UK and Ireland), as well as the similar programmes and practices of the US and Canadian authorities.
To give you just a glimpse of what to expect, some of the main features of the Programme are:
· Encourages self-reporting of unlawful cartels by undertakings.
· Provides for non-imposition or reductions of as much as 70% from fines.
· If undertakings withdraw evidence disclosed, normal powers of investigation may be used.
· Failure to comply with the conditions set out in the Programme includes failure to disclose any and all infringements and failure to provide full, frank and truthful disclosure of all information known. Result is disqualification from Programme.
· Undertakings must significantly contribute as to a finding of an infringement in order to qualify for a reduction of a fine.
“... after years of standstill.”
And now for a short journey back in time-
The Commission for the Protection of Competition was established in 1990 with enforcement of the Law for the Protection of Competition 207/89 (the Law), which contains, inter alia, provisions identical to those of Articles 81 and 82 of the EC Treaty. The merger control legislation, the Control Between Undertakings Law 22(I)/99, entered into force in 1999. The Commission was assisted in enforcing the Law by the Competition and Consumer Protection Service of the Ministry of Commerce, Industry and Tourism.
However, it was not until changes realised more than a decade later, that we were able to function in accordance with EU harmonization guidelines and standards.
“A substantial improvement ... in antitrust enforcement is evident after years of standstill. ... the fully independent authority for the protection of competition function[s] well, but should be developed further.”
Harmonization of Our System
With implementation of Amendment 155(I)/00 to the Law towards the end of 2000, the Service of the CPC was established as an independent body and the Chairman was appointed as a full time head of the Service. Notwithstanding this major change, the Service was only staffed with a crew of four officers, all seconded from governmental departments and no real experience in the field of competition (in other words, the staff did not even form a skeleton crew).
During the same period, the law was again amended to include a provision mirroring Article 86(2) of the EC Treaty (the infamous section 7 that does not confer immunity on public undertakings from sections 4 and 6, except to a limited extent), and several other reforms which increased the CPC’s investigative powers and imposed stiffer fines and penalties.
The principle competition statutes remain the Protection of Competition Law 207/89 and the Control of Concentrations Between Undertakings Law 22(I)/99. Along with the amendments mentioned above, several others have taken place during 2000 and 2001, amendments designed to fully align our competition policies with those of the EU. Most notably, all Community Block Exemptions are now part of our national legislation.
Obviously, the above helped to boost the CPC’s overall efforts.
Administrative Capacity
It was not, however, until 2002, mainly because of the recruitment of additional staff, that we were able to use our powers vigorously and effectively.
During the first half of 2002, the CPC contracted four legal consultants and one economic consultant, and set up a consultative committee comprised of Dr. Phedon Nicolaides, professor at the European Institute of Public Administration, and Dr. Heliopoulos, amongst others a part-time lecturer of EU Competition Law at the University of Hamburg. In addition, as from the 1st of November, a senior officer has been appointed as Secretary of the CPC.
The CPC currently consists of fourteen people- one senior officer, eight officers, one archive clerk, three secretaries and one assistant (not including the consultative committee), whilst it is expected that by the end of the year more officers’ vacancies will be filled, thereby raising the total number of staff significantly.
Furthermore, the budget providing for experts on a contractual basis has been increased by up to 25% for 2003. The budget has already been approved by the Council of Ministers and is awaiting final approval by the House of Representatives.
Implementation and Enforcement
Evidently, the progress achieved is great. Obviously, the changes and transformations that took place since the middle of 2000 had a major impact in all aspects and levels of implementation and enforcement of the national competition policies. This reflects the fact of the matter which is none other than that the CPC now possesses the experience, expertise, knowledge and know-how for effective implementation and active enforcement of the national competition policies, as these have been harmonized as part of the acquis.
Caseload of the CPC
There are currently about twenty cases concerning restrictive agreements and/or abuse of dominant position prohibitions, almost half of which are ‘own initiative’ investigations.
The investigations cover, inter alia, the airlines sector, the banking sector, the aluminum sector, the shipping sector, the movie theaters sector, the Internet services sector, etc., whereas this year alone the CPC issued impacting decisions in areas such as the dairy industry, the health insurance sector, the telecommunications sector, the sport of football, a ‘communication style’ decision affecting almost all professional associations that follow fee-scales etc.
In addition, twelve concentrations were notified to the CPC during this year, with only one still pending.
Clearly, the CPC has entered into a phase where upon implementation and enforcement of our competition policies, as well as the CPC’s procedural and organizational practices have become mainstream.
Post-Accession Role of the CPC and Challenges Lying Ahead
We realise that the CPC will eventually become an integral part of the more decentralised, more active Community antitrust enforcement network. To this respect, we have committed ourselves to withstand the competitive pressures of the internal market resulting from the full and direct application of the acquis upon accession. It is in this sense that we can’t allow ourselves to be anything more than content with the statement of the European Union.
From this perspective, we may now only insist on adaptation well before accession.
This flows not only from our pre-accession preparation, but also from our willingness to foster the internal market discipline after enlargement, as we acknowledge that the liberalisation of network industries, along with the opening of our economic and financial borders and the challenge of globalisation faced by the EU and all potential EU Member States will certainly boost the Cyprus economy and will foster innovation and increase economic efficiency.
Advocacy Policy
In addition to the public enforcement practice of the CPC, we try to encourage the development of competition culture among enterprises and private individuals, so as to avoid any undesired repercussions likely to result from liberalisation, globalisation and accession effects.
To this end, we have defined our competition advocacy to refer to those activities related to the promotion of a competitive environment by means of non-enforcement mechanisms, mainly through our relationship with other governmental entities and by increasing public awareness of the benefits of competition.
The CPC's advocacy policy may be encapsulated in the following:
· Raise public awareness and understanding of the benefits of competition.
· Ensure the fullest possible enforcement and compliance with competition policies by means of non-enforcement methods.
· Provide an effective and timely service to EU and international best practice standards.
Accordingly, I sincerely hope that this unprecedented seminar on competition policy will develop into a forum to discuss a common interest topic. It is my firm belief that it will inevitably increase the society’s awareness of the benefits of competition.
Last, but not least, I would like to take the opportunity and thank the British High Commission and the other collaborators for their hard and outstanding work and commitment in making this seminar possible.
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