The Commission for the Protection of Competition (hereinafter the “CPC”), following the completion of a preliminary investigation and having evaluated the evidence before it, issued on the 24th July 2018 a decision (No: 32/2018), concerning two infringements of Section 6(1)(a) of the Protection of Competition Laws of 2008 and 2014 (hereinafter the “Law”) by the Pancyprian Organisation of Cattle Farmers (POCF) Public Ltd (hereinafter the “POCF”).
The subject matter of the investigation is a result of a complaint lodged by Pittas Dairies Ltd and Pittas Dairy Industries Ltd (hereinafter “PD” and “PDI”) against POCF for infringements of Sections 6(1)(a), (b) and (c) and 6(2) of the Law. It is noted that in addition to the complaint, a request for interim measures was also filed.
PD and PDI are companies active in the production and distribution of dairy products based on raw cows’ milk.
POCF is a public limited company registered on the 14/1/2004, for the purpose of promoting farm products, as per the relevant law and the Common Agricultural Policy of the EU. The purpose of POCF is the collective trade of raw cow milk on behalf of its producers-members and the management of the collection and distribution of milk.
Moreover, in 2012, POCF had acquired Papouis Dairies Limited, a company that owns a milk processing factory in the Industrial Area of Athienou and produces dairy products such as halloumi, kefalotyri, feta type and anari.
Regarding the request for interim measures, the Commission, in its decision taken on the 20/6/2012, unanimously decided (Decision no: 19/2012) to issue an Interim Order, on the basis of Sections 23(2) and 28 of the Law, by which POCF was ordered to supply raw cows’ milk to PD and PDI under certain conditions. It is noted that the Supreme Court of Cyprus ratified (upheld) the CPC’s decision, rejecting the appeal of POCF.
The CPC, unanimously concluded that there is an infringement of Section 6(1)(a) of the Law by POCF in relation to the imposition of unfair trading conditions, as a result of unfair and unilateral increases in the basic price of raw cows’ milk and the unfair and unilateral variations in the quantities of raw cows’ milk delivered to the complainants during the period 01/04/2004 up until the date of filing a complaint, which was on the 9/5/2012; the above practices continued throughout the period POCF was dealing with the complainant companies and these practices were considered to continue up until 2014.
In addition, the CPC, unanimously concluded that there is an infringement of Section 6(1)(a) of the Law by POCF, for fixing of unfair prices as a result of the margin squeeze between the price of raw cows’ milk and the price charged by POCF through its subsidiary company Papouis, in the market of production and supply of halloumi, for the year 2012.
The CPC upon examining the fine to be imposed, exercising discretionary judgment, proceeded with the evaluation of all data and evidence before it, and taking into consideration, the nature and severity of the infringement, and its duration, as set out in Section 42(1) and 24(a)(i) of the Law:
(A) Unanimously decided to obligate POCF, to refrain from repeating any of the said infringements of Section 6(1)(a) of the Law in the future.
(B) Decided by majority to impose an administrative fine of €1.038.120 (One million, thirty eight thousand, one hundred and twenty euros) on POCF regarding the said infringement of Section 6(1)(a) of the Law in relation to unfair trading conditions.
(C) Unanimously decided to impose an administrative fine of €519.060,12 (Fine hundred nineteen thousand, sixty euros and 12 cents) on POCF regarding the said infringement of Section 6(1)(a) of the Law in relation to unfair pricing.
The CPC in its decision has informed POCF, that within thirty (30) days from the date of notification of the decision, it must pay the above administrative fines that have been imposed.
Finally it is noted, that with respect to the alleged infringements of articles 6(1) (b), 6(1) (c) and 6(2) mentioned in the complaint, the CPC, after analysing the evidence before it, unanimously decided that, no such infringements have been demonstrated to have been place.
The CPC’s decision dated 24/07/2018 will be published in the Official Gazette of the Republic and will be posted on the website of the CPC in due time.
THE COMMISSION FOR THE PROTECTION OF COMPETITION
28/09/2018
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