On 28/3/2014, the Commission for the Protection of Competition, examined the concentration notified on 21 October 2013 by Proteas Press Limited (hereinafter the «Proteas»), I.G. Cassoulides & Son Ltd (hereinafter the «Cassoulides»), and Litho Web Limited (hereinafter the «LithoWeb»), on the basis of Section 13 of the Control of Concentrations between Undertakings Law, 1999-2000 (hereinafter the "Law").
This notification concerned the creation of a joint venture, P.C.L. United Printers Ltd (hereinafter the "New Company"), in which the parent companies would transfer their activities related to their magazine printing, as well as the printing of brochures, catalogs, business cards and other documents.
The Commission, having unanimously decided that the concentration fell within the scope of the Law and it decided that the concentration raised serious doubts as to its compatibility with the competitive market and thus decided to initiate a full investigation in regards to the market of printing services of magazines and newspapers.
In the context of a full investigation of the concentration, questionnaires were sent for the purpose of receiving additional information from the stakeholders (competitors, customers, suppliers of the participating companies), i.e. 28 printing offices, 29 publishing companies, 5 suppliers of raw materials and a distribution company of magazines and newspapers. Additionally, negotiations were carried out in relation with any variations in the circumstances that created the concentration and that could result in the removal of doubts which had been identified at a first stage.
In the context of a full investigation of this concentration, an informative press release was posted on the official website of the Commission, in which the doubts identified in the first stage were briefly presented and at the same time calling the stakeholders and any natural or legal person having a legitimate interest to submit its opinions on this concentration.
The Commission, having considered the information and evidence set before it, undertook all the appropriate negotiations, hearings and meetings with the parties of the concentration.
The Commission noted that no third party submitted voluntarily comments as a result of the press release for the launch of a full investigation.
The Commission when assessing all the evidence before it, it took into account the compatibility criteria specified in the Law, giving emphasis on the high market share that the New Company would hold in the market of weekly and monthly magazine printing, the fact that only two companies print weekly and monthly magazines would stay in the market and the need to safeguard new competition in the market that the concentration affects. In assessing this concentration the Commission also weighed the fact that the market turnover of printing services for weekly and monthly magazines is shrinking in recent years and that there is no future market growth. Also, the Commission evaluated the impact of the concentration in the neighboring market of daily and weekly newspapers printing, in which two of the founding companies operate. In addition, the Commission estimated the unprecedented economic conditions of Cyprus economy.
Accordingly, the Commission came to the unanimous decision to declare the concentration compatible with the competitive market subject to a number of conditions and commitments that the parties have brought forward.
The commitments undertaken by the undertakings in the concentration include:
1. Commitment that the New Company will not enter into long-term exclusive contracts for the supply of raw materials over 12 months with any of its suppliers. This commitment aimed at avoiding the limitation of competition at the level of raw materials.
2. Commitment that the New Company will not enter into long-term exclusive contracts of printing services over 12 months with its customers. The commitment aimed at avoiding the limitation of competition at the level of printing services.
3. Commitment that the New Company will proceed with the sale of printing equipment within the territory of the Republic:
i. The For Sale Equipment, according to the statements of the undertakings participating in the concentration, will be able to create a viable printing office with all the necessary equipment for printing and binding that can satisfy the needs and/or to meet the printing requirements of any existing magazine in Cyprus and it will have all the capabilities to respond to service weekly magazines and any other publications, for which the printing time and increased tiraz are important.
ii. This equipment will be set for sale in Cyprus, within the Commission specified deadline of twelve (12) months.
iii. Actions for sale of the For Sale Equipment would start one (1) month after the notification of the Commission decision to the undertakings participating in the concentration.
iv. The assessment and the process of divestment of the For Sale Equipment will be undertaken by an independent trustee whose name has been notified to the Commission and will be overseen by another independent trustee (audit firm) whose name has also been notified to the Commission, while the Commission will be kept informed for the sale process of this equipment by submitting to it quarterly reports.
v. The buyer of the For Sale Equipment is subject to the Commission’s approval.
vi. Pending the sale of the Equipment, it will remain on the premises of the companies where it is today, it will not be integrated in the production process, but it would continue to be maintained properly and will be in working condition for purposes of presentations to interested buyers.
This commitment aims at limiting the capacity of the New Company and then ensuring that the creation of conditions for the development of new competition within the Cyprus market that will perform the necessary competitive pressures, as a countervailing factor against the new entity which is created.
4. Commitment that the New Company will not purchase or acquire the same or new magazine printing equipment, for purposes of increasing the production capacity of the New Company for a period of four (4) years following the establishment of the new Company.
5. Commitment of two of the three founding companies that they will act in confidentiality and will not disclosure any business information and issues concerning the newspapers printing department operated by a founding company and a subsidiary of the second founding company. This commitment aims to avoiding any possible leak or/and transfer of confidential information among them in order to prevent coordination in newspapers printing market.
6. Commitment of the Members of the Board of Directors of the New Company that they will act in full confidentiality and will not disclosure any business information to any other company may participate as members and/or Directors and/or members of its management team and/or its employees and/or agents, any business information brought to their knowledge due to their participation in the Board of Directors of the New Company, of other publishing companies competing Phileleftheros Public Company Ltd and N & M Mediamorfosis Ltd.
7. Commitment for the replacement of the members of the Board of Directors, of the subsidiary of one of the founding companies which is active in printing weekly and daily newspapers.
8. All actions other than the sale of the For Sale Equipment will be made within one (1) month from the notification to undertakings participating in the concentration of the Commission decision.
The Commission underlines that on the basis of Section 52(1)(e) of the Law, in a case that the concentration implemented without fulfilling the conditions imposed by it in accordance with Section 26(a)of the Law, may impose a fine up to ten percent (10%) of the total turnover of the participating undertakings of the immediate preceding financial year and additional fine of up to € 8,543 for each day the offense continues.
Finally, the Commission notes that on the basis of Section 41 of the Law, it may at any time revoke a decision taken regarding the compatibility of any concentration with the competitive market or may amend the conditions of the decision if it finds -
(a) that false or misleading information was given or that necessary information regarding this concentration was hidden by the sender of the notification or any other participant of the concentration or by any interested person, or
(b) that any condition imposed on the participants of the concentration of this decision is not met or ceases to be met.
The Commission will publish a full text of the decision in Greek upon its publication in the Gazette.