Speeches

The changes and transformations on the internal structure of the C.P.C. that took place at the end of 2000 had a major impact in all aspects and levels of enforcement of the national competition policy. With the new structure, the C.P.C. became more flexible and focused on the enhancement of the foundations of the competition culture at a national level. During these five years of intensive work, the public acknowledged the efforts made by the C.P.C. and started cultivating in its every day life that, in a healthy competitive market the consumer enjoys goods at lower prices, improved quality and the fruits of technological development. This resulted in the increase of the number of complaints submitted and the investigations initiated by the C.P.C.

a) The Protection of Competition Law 207/89 and the Control of Concentration between Enterprises Law 22(I)/1999, as amended

The prohibition of agreements, decisions and concerted practices between undertakings and the prohibition of abusive conducts by undertakings holding a dominant position constitute the two founding policies of the Protection of Competition Law 207/89, as amended (henceforth «Law 207/89»). Although, both prohibition policies aim at the same result, they differ, since section 4 of Law 207/89 prohibits agreements, decision and concerted practices between undertakings, in contradiction with section 6 by which unilateral conducts of undertakings are prohibited. Both provisions contained in sections 4 and 6 are inspirited by the equivalent articles 81 and 82 of the EC Treaty.

The Control of Concentration between Enterprises Law 22(I)/1999, as amended (henceforth «Law 22(I)/99») forms the rules by which reorganisations of corporate companies in the form of concentrations are controlled in order to ensure that they do not result in the distortion of the structure of the market and thus, damage competition. The scope of application of Law 22(I)/99 covers only concentrations of major importance, in connexion with the geographical dimension of the activities of the companies involved and the quantitative thresholds. In cases where the thresholds are not met, Law 22(I)/99 provides for the possibility of concentration to be declared of major importance through a Reasoned Order of the Minister of Commerce, Industry and Tourism.

b) Key amendments of the national legislations

As you may all know, on the 1st May 2004 the Council Regulation (EC) 1/2003 on the implementation of the rules laid down in articles 81 and 82 EC Treaty (henceforth «Regulation 1/2003») and the Council Regulation (EC) 139/2004 on the control of concentrations between undertakings (henceforth «Regulation 139/2004») came into force. Although both Regulations are directly applicable, the C.P.C. proposed for the replacement of the Protection of Competition Law 207/89, in order to accommodate Regulation 1/2003 and also to modernise the provisions of the Law, by filing the gaps and drafting more flexible and transparent procedural rules.

Regulation 1/2003 establishes a new legal system for more effective enforcement of articles 81 and 82 of the EC Treaty, through direct effect and greater involvement of national bodies. In the light of Regulation 1/2003, the national legislation is under legal reform, in order to accommodate the provisions included in Regulation 1/2003 and thus, designate the C.P.C. as the competition authority responsible for the application of articles 81 and 82 of the EC Treaty.

The central features of amendments are:

· The abolition of the national notification system for companies to obtain negative certification or individual exemption and as a result, agreements that fulfil the conditions of section 5(1) of Law 207/89 are legally valid and enforceable without the intervention of an administrative decision.

· Improvement and enhancement of the current powers of the C.P.C, like the extended powers in decision making, investigations of business premises and non business premises.

· The Cartel Immunity Programme and Reduction of a Fine that came into force on the 1st of February 2003, which sets out the basis of the leniency policy in situations where an undertaking that is part of an illegal cartel in accordance with section 4 of Law 207/89 can obtain total immunity or reduction of fines, it will become part of the national law with the new legislation.

· In the light of article 15 of Regulation 1/2003 that provides for the principle of amicus curiae, the Supreme Court is planning to issue a Procedural Order to accommodate the provisions of article 15(3), enabling, thus, the C.P.C. to submit written or oral observations to the national courts on issues relating to the application of articles 81 and 82 of the EC Treaty.

Although, the C.P.C., along with the Ministry of Commerce, Industry and Tourism and the Legal Service of the Government made all efforts to complete the legal vetting of the proposed legislation that would accommodated all the provisions of the European Regulation 1/2003, the new legislation on the protection of competition did not as yet come into force. One of the main reasons for this delay was the negotiations for the adoption of the Annan Plan as a solution to the Cyprus political problem, just before accession time. As you may imagine the workload of the Legal Service to prepare the Constitution of the Federal Government and of the Greek Constituent State, as well as all legislations governing the Federal Government was so enormous that it had to stop working on the legal vetting of the rest of the harmonisation laws. With conclusion of the negations that led to a dead end for the Cyprus political problem, the Legal Service refocused on the implementation of the acquis communitaire and it is doing its best to keep up with the good work.

III. FIRST REFLECTIONS

a) Experiences

The C.P.C., even before the 1st of May 2005 was an active member of the European Competition Network (ECN), which constitutes the forum for discussion, cooperation and constant liaison for the application and enforcement of EC competition policy. The officers of the C.P.C. participate in all the ECN Plenary meetings and working groups the topics of which are focused in the implementation and enforcement of articles 81 and 82 of the EC Treaty. The officers of the C.P.C. through the ECN and the ad hoc meetings that deal with various sectors of the economy, have the opportunity to build on their abilities and academic knowledge of competition law, by learning from the experiences of the staff of other Competition Authorities and the D.G. Competition and gain from the fruitful discussions on the implementation of Regulation 1/2003 and the enforcement of competition rules in specified sectors.

Through the ECN, there is constant information of the pending investigations and decision of all the competition authorities in the member states. Although the proposed legislation has not as yet come into force, the Service is always up-to-date on the pending investigations all over the European Union and does not hesitate to pose questions to all member states on the application of the competition rules at national level. Up to now the C.P.C. did not come across with a pending investigation dealt by another competition authority that might in any way result in the distortion of the Cyprus market.

Nevertheless, the significant increase of service in the Cyprus economy, along with the strategic location of the island, the high standards of networks and infrastructures and high quality of services will attract more business to establish regional headquarters to manage their activities in the Eastern Europe and Middle East. Subsequently, the C.P.C. is positive that in the future it will have a more active role in the ECN.

An example of the above and of the good cooperation within ECN is the surprise inspection that the C.P.C. had to assist the D.G. Competition with just a couple of months ago. Based on article 22(2) of Regulation 1/2003, “at the request of the Commission, the competition authorities of the member states shall undertake the inspections which the Commission considers necessary […]”. In early March, officials of the European Commission along with a number of officers of the Service visited the offices of ACNielsen Cyprus Ltd, where the whole operation was completed with success. The inspection underwent simultaneously in five of the subsidiaries of ACNielsen in different member states. This inspection was not only a great importance for the officers that got involved in the operation but for the whole staff, since on the completion of the inspection they reported back to their colleagues on their experiences and discussed proposals on the way inspections should be conducted in future. It can easily be said that it was a landmark in the launch of down raids by the C.P.C. and we have gained a lot that would help for the smooth and quick operation of such inspection.

In another area, that of merger control, Regulation 139/2004, as you may know, contains provisions for the control of concentrations with community dimension and provisions on the liaison of the Commission with the authorities of the member states. The preamble of Regulation 139/2004 refers to the close cooperation of the Commission with the national competition authorities with the formation of a network of public authorities, by which they will share information and consultation. On the basis of the above, the Service receives daily notifications of concentration of undertakings with multi-jurisdictional effects and evaluates each of them on whether they affect in any way the Cyprus market. Although, the amount of paper and workload imposed on the staff of the Service is great, this is compensated by the feeling of having an active contribution and be informed of all the notified concentration within the European Union.

b) Weaknesses

Although, we are doing our best to keep up with our obligations as a member state the administrative capacity remains our main weakness. Since the last wave of recruitments in February 2004, no more permanent positions for officers have been opened for 2005. Even though, complaints and ex officio investigations have increased dramatically in the past few months, as well as the obligations of the C.P.C. due to Cyprus entry to the European Union and the liberalisation of the various sectors of the economy, the number of officers working at the Service remains the same, which makes it difficult to deal to increase and improve the standard quality of work and at the same time continue promoting the education of the staff.

To support the above I state the following example: The C.P.C. has placed two out of its ten officers as contact persons for the communication with the ECN and another three of its officers as contacts for the ECA. Not only do they have to deal with all the paperwork concerning both antitrust and notification of concentrations send by the European Commission and the member states they have to deal with the investigation of complaints and specifically with two or three investigations at the same time.

Should we had more staff, we would be in a position to promote better allocation of work and be in a position to have a proper International Department, the staff of which would solely deal with ECN, ECA, ICN and similar issues and subsequently, be in a position to contribute more effectively and comply with our obligations which have increased considerably.

IV. CONCLUSION

The C.P.C. is the custodian of undistorted competition in the market and enforcement of competition rules. It ensures that the legal principles and policies of free competition are properly enforced and duly protected. 2004 was a year of great experiences for the C.P.C. and I optimistic, even though my term of office finishes in December 2005 that in the forthcoming year the C.P.C. will continue working towards full harmonisation with the acquis communitaire and the enhancement of the foundations of the competition culture at a national level.

I finish this paper by calling for the State to acknowledge for all the work accomplished up to this day by our competition authority, as well as the importance of this institution and through the proper evaluation of the changes and developments in the Cyprus economy enhance the administrative capacity of the Service in order for the latter to perform its duties at the maximum level of quality.