Part II The Member State Reports on Transposition of the Directive, 4 Cyprus
Edited By: Barry Rodger, Miguel Sousa Ferro, Francisco Marcos
- Cartels — Abuse of dominant position — Damages — Application of EU competition rules — Jurisdictions — State and competition law
Before discussing the scope of the Damages Act, this section gives a brief overview of the Cypriot competition regime as well as the state of private enforcement in Cyprus. Such a discussion is warranted in order to contextualise the Damages Act, which was finally transposed (with a delay) on 7 July 2017 and published on 21 July 2017.
The current law in force against anticompetitive agreements and abuse of dominant position is the Protection of Competition Law 13(I)/2008, as amended by Law 41(I)/2014 (the Cypriot Competition Act).1 This section briefly discusses the evolution of Cypriot competition law and the provisions relevant to private competition law enforcement.
In the light of the second phase of the agreement establishing an association between the European Economic Community (EEC) and the Republic of Cyprus,2 Cyprus adopted Law 207/89 in order to align its national competition law with EU competition law. Interestingly, article 3 of Law 207/89 expressly listed the aims of the Cypriot competition law, nasmely the protection of market access, the protection of the competitive process, and the protection of consumer interests.3 The substantive provisions were essentially the same as then Articles 85 and 86 EEC. Article 4(1) of Law 207/89 concerned anticompetitive agreements, (p. 83) which have as their object or effect the restriction of competition within the Republic of Cyprus. Article 5 of Law 207/89 essentially corresponded to Article 85(3) EEC and provided for an exemption system based on prior notification. Article 6(1) and (2) of L 207/89 prohibited the abuse of a dominant or collective dominant position (the national equivalent to Article 86 EEC). Article 6(3) of Law 207/89, as introduced by Law 111(I)/99, prohibited the abuse of economic dependence. This provision concerns violations of unfair competition law.
Law 13(I)/2008 amended the Cypriot Competition Act (Law 207/89) in a bid to align the regime with Regulation 1/2003.4 Articles 3 and 6 of Law 13(I)/2008 replaced articles 4, 5, and 6 of Law 207/89, respectively. Articles 3 and 4 of the Competition Act prohibit anticompetitive agreements and were drafted after Article 101 TFEU. Article 6 prohibits the abuse of dominant position, including the abuse of economic dependence.
The previous regime already provided for an express legal basis for damages actions for competition law violations. Article 35(1) of Law 207/89 provided that ‘[a]ny person who suffers damage from an act or omission of an enterprise in contravention of section 4 or 6 of this Law, shall have a right to bring an action against this enterprise for the damages he has suffered’. Article 22(1) of Law 207/89 provided for the exclusive competence of the Cypriot Commission for the Protection of Competition (CPC) to investigate competition law violations. Arguably, this can be interpreted as meaning that only follow-on damages actions could be brought. It is worth noting that, despite the inclusion of an express legal basis in the Competition Act, this has rarely been invoked in litigation.5
Law 13(I)/2008 repealed article 35(1) of Law 207/89. Article 40(1) of Law 13(I)/2008 was introduced, which provides that
In case of an action for damages brought by any person who has suffered loss and/or financial injury from an act or omission of an undertaking or an association of undertakings in contravention of Articles 3 and/or 6 of this Law and/or Articles 81 EC and/or 82 EC, a final decision of the Commission or of other Competition Authority or of the European Commission, ascertaining the said infringement, shall constitute a rebuttable presumption about the truth of its content.
As discussed in more detail in subsection 3.3, this article is problematic from an EU law perspective and may need to be amended in the future.
Private competition law enforcement in Cyprus is almost non-existent. A previous in-depth study of the private litigation landscape identified only one case for the period 1999–2011,6 involving the Cypriot Telecommunications Authority (CYTA). A different study identified two failed damages actions (one concerned abuse of economic dependence)7 and a handful of cases on interim relief.8 In the former case, the action was rejected because the Cypriot CPC decision declaring the violation was annulled on procedural grounds. In Dairy King Ltd v Cypriot Dairy Association, the District Court of Nicosia found no abuse.9
Indicative of the reality of the relatively nascent competition culture and private competition law enforcement in Cyprus is the CYTA saga. In CYTA, the Supreme Court annulled the decision of the Cypriot CPC, imposing a fine on CYTA (the semi-governmental telecommunications operator in Cyprus) for abuse of its dominant position.10 The annulment was the result of a breach of article 9(4) of Law 207/89, and the Supreme Court did not examine the merits of the case. In particular, the appointment of the then president of the Cypriot CPC was found to be illegal, because the president at the time was also acting as the mayor of a local municipality. The Supreme Court held that the president could find himself in a situation where there was a conflict of interests, inasmuch as acts and omissions by the local municipalities are subject to the competence of the Cypriot CPC under Law 207/89. In a subsequent case (Revisional Appeal, Case No 48/2009), the same issue was raised again and the Supreme Court was called upon by the Attorney General of the Republic of Cyprus to change its case law and to confirm the legality of the president’s appointment. However, the Supreme Court reaffirmed its previous judgment and annulled the CPC decision.
Under the previous regime of article 35(1) of Law 207/89, it seems that the Cypriot courts, when ruling on an action for damages, were bound by the decisions of the Cypriot CPC in establishing a violation of the competition law provisions. Equally, when a Cypriot CPC decision finding a violation of competition law was annulled on procedural grounds, no action for damages could subsequently be brought. This was because the Cypriot CPC, under article 22(1) of Law 207/89 (now repealed), was granted exclusive competence for investigating violations of competition law.
This situation arose in Case 8197/2006. Callsat brought an action for damages against CYTA before the competent district court. The court adjourned the hearing of the case until the Supreme Court had issued a ruling on Case No 3902/2007 (the CYTA case). After the annulment of the Cypriot CPC decision by the Supreme Court, the district court also rejected the action for damages on the basis of that annulment on procedural grounds. The district court could not have examined the action further. The Cypriot CPC has been criticised for its inaction. This is partly due (p. 85) to the challenges raised against the illegal appointment of its presidents and members. As with the cases already mentioned, in the case of Exxon Mobil Cyprus Ltd and others v Cypriot Competition Commission, a Cypriot CPC decision was annulled because its then president had been unlawfully appointed since he did not have the necessary qualifications according to article 9(2) of Law 13(I)/2008 (Revisional Appeals, Case Nos 1544/2009, 1545/2009, 1596/2009, and 1601/2009).
However, with a new CPC, appointed in 2013,11 and the competency of the people working at the Legal Service, one should be optimistic about the future. Already, the Cypriot CPC has displayed a considerable enforcement record, in relation to both investigations of infringement and the imposition of high fines, as well as in relation to the scrutiny of contemplated merger transactions.12 Between October 2014 and May 2017, the Commission imposed fines that were very high considering the level of the Cypriot economy. In October 2014, the CPC imposed a €2.1 million fine on the Cypriot Association of Cow Breeders for abusing its dominant position by fixing the price of milk and imposing excessive and unfair prices.13 In April 2015, the CPC imposed fines of €20 million and €700,000 on Daimler AG and Cyprus Import Corporation Ltd, respectively, in relation to their selective distribution system for original parts of Mercedes-Benz cars in Cyprus.14
During the respective period, the CPC also imposed fines of €2.9 million and €2.25 million on CYTA and Forthnet SA in relation to a price-fixing and market-sharing agreement.15 A fine of €1.016 million was also imposed on CYTA in relation to abusive prices in granting access to international cable systems ending in Cyprus.16 In May 2017, the CPC imposed a record fine of €31,009,766 on JCC Payment Systems Ltd and its affiliated banks.17
A lower fine (€39,667) was imposed on Lalizas SA (a company producing marine safety equipment) in regard to resale price maintenance limiting cross-supplies between its distributors. The CPC also fined Hermes Airports Ltd (the operator of Larnaka and Paphos airports) €750,000 for abusing its dominant position in relation to car rental contracts at airports.18
In relation to private litigation, stepping up the public enforcement record may facilitate private litigation in the future. This is due to the promotion of a competition culture coupled with the facilitation of damages actions with the Damages Act. Already, CPC decisions against CYTA have prompted follow-on litigation. (p. 86) Telecommunications operator Primetel has filed follow-on actions claiming €50 million in damages. Some of these actions may have been settled out of court.19
However, given the scarce litigation, it is difficult to discuss any anticipated legal disputes resulting from the transposition, notwithstanding specific issues discussed in section 3.
Despite various institutional and procedural limitations, which affected the level of private competition litigation in Cyprus,20 the Cypriot legislature undertook serious attempts at the timely transposition of the Damages Directive.21 However, the transposition of the Damages Directive into the domestic legal order took place approximately six months later than the transposition deadline of 27 December 2016, as per Article 21(1) of the Damages Directive. The Act on Damages Actions for Violations of Articles 3 and/or 6 of the Competition Act and/or Articles 101 and/or 102 of the Treaty on the Functioning of the European Union22 (the Damages Act) was finally adopted by the Cypriot Parliament on 7 July 2017 and was published in the Official Gazette on 21 July 2017. Due to this delay, the European Commission sent a reasoned opinion to Cyprus on 13 July 2017, requesting the full transposition of the Damages Directive.23 According to Article 258 TFEU,24 in the event that a Member State fails to fulfil an obligation under the Treaties, the Commission has the power to deliver a reasoned opinion, after giving the Member State concerned the opportunity to submit its observations.
Interestingly, prior to the adoption and publication of the Damages Act, a Draft Act in relation to Damages Actions for Violations of Articles 3 and/or 6 of the Competition Act and/or Articles 101 and/or 102 TFEU 201625 (the Draft Damages Act) was published in the Official Gazette. The Damages Act closely follows the (p. 87) Draft Damages Act, yet it is a much improved version in terms of the wording. The Damages Act also introduces important changes in relation to limitation periods, the quantification of damages, and the adoption of special guidance by the Council of Ministers and the Supreme Court on issues relevant to the application of the Damages Act, as will be discussed in section 3.
This subsection tracks the history, as well as the different steps, of the transposition process. Overall, the transposition procedure did not attract any criticism, which may be explicable in light of the low levels of private competition litigation in Cyprus.26
The initiative for the transposition of the Damages Directive was taken by the Ministry of Energy, Commerce, Business and Tourism. A key individual involved in the transposition procedure commented that this choice was rather unusual for the Cypriot legal order, given that the initiative to introduce new legislation lies with the Ministry of Justice. The choice of the Ministry of Energy, Commerce, Business and Tourism as the lead ministry in this case can be better explained in its historical context. In the arduous discussions leading to the adoption of the Damages Directive, it was always a representative of the Ministry of Energy, Commerce, Business and Tourism who took part in the deliberations. This explains, in part, why this ministry took the lead in the transposition of the Damages Directive into the Cypriot legal order. In addition, this choice may also be explained in light of the nature of competition law and its importance for the domestic economy, commerce, and business.
On 1 July 2015, the Ministry of Energy, Commerce, Business and Tourism launched a public consultation on the Damages Directive and published a preliminary draft of the Damages Act. Both texts were available on the Ministry’s website and interested parties had to submit their comments by 31 July 2015. The public consultation was also launched on the website of the Ministry’s Consumer Protection Service.27 This preliminary draft was the very first draft and was very similar to the text of the Directive, albeit with minor changes.
At the end of 2015, a pool of experts was appointed to work on the draft. No official executive decision was available in the public domain for the appointment of the experts. The expert committee comprised representatives of the Ministry of Energy, Commerce, Business and Tourism, the Legal Service, and the Cypriot CPC, as well as one judge with expertise on competition matters. Inasmuch as, in Cyprus, there is a strict separation of powers between the executive, legislature, and judiciary, special permission from the Cypriot Supreme Court was granted for the participation of the judge in the expert committee.
The group of experts was appointed with the mandate to go through each of the provisions of the Directive and suggest the most appropriate version to be transposed into the domestic legal order. Once appointed, the group of experts held approximately three or four meetings in a very short period of time and completed (p. 88) the draft of the Damages Act. In the last stages of their work, they also held a teleconference with European Commission officials.
The draft was then sent to the Legal Service for a legal and technical check around March 2016. By November 2016, the preliminary draft was still with the Legal Service. This can be explained by the multitude of procedural and remedial issues posed by the Directive. Following the completion of the legal and technical check by the Legal Service, the revised draft was sent back to the Ministry of Energy, Commerce, Business and Tourism. An impact assessment exercise was also undertaken.
As the clock was ticking for the expiration of the transposition deadline, senior officials were pressing to adopt the legislation within the time frame. The Council of Ministers approved the Draft Act during their meeting on 12 December 2016 and authorised the Minister of Energy, Commerce, Business and Tourism to bring the Draft Damages Act before the Parliament of Representatives to vote it into law.28 The Draft Act (as Annex 1), together with the Justification Report by the Advocate General of the Cypriot Republic (as Annex 2), the Impact Assessment Questionnaire, together with the comments of the interested parties (as Annex 3), and the table of contents (as Annex 4), was brought before the relevant parliamentary committee (Committee of Energy, Commerce, Business and Tourism) on 14 December 2016. At that point, Cyprus was within the transposition deadline. Nonetheless, the Committee of Energy, Commerce, Business and Tourism decided to send the Draft Damages Act to the Committee for Legal Affairs as well, which delayed the final adoption. No changes were introduced at that stage.
The Act was finally adopted on 7 July 2017, with some changes in the wording, as well as some substantive changes, primarily to the limitation periods, the quantification of damages, and the administrative guidance. It has been in force since its publication in the Official Gazette on 21 July 2017. The Cypriot legislature opted for the transposition of the Directive in a single legislative text, as autonomous law, which to a large extent reflects the respective provisions in the Damages Directive. As such, it has not introduced any changes in the general scope of the national legal framework; only in relation to damages actions for competition law violations.
Overall, the Cypriot transposition procedure depicts self-restraint and a reluctance to deviate from the text of the Damages Directive. Nonetheless, it was not a mere copy-and-paste exercise. Detailed discussions were undertaken in order to transpose the Damages Directive in a manner fit for the Cypriot legal system. All of the stakeholders worked effectively and, despite a short delay in the final stages, the transposition process was completed smoothly. The delay was due to the complex nature of some of the provisions of the Damages Directive, partially harmonising national civil procedural and remedial law, which resulted in key stakeholders (i.e. the relevant parliamentary committee) exercising increased scrutiny.29
The Damages Act was largely drafted to follow the Damages Directive. Nonetheless, there are certain issues on which the Cypriot legislature opted for measures that went beyond the obligations arising from the Directive, which fall within the exercise of the national legislator’s discretionary margin. Overall, the Cypriot legislature opted for a transposition of the Damages Directive that preserves the Directive’s wording. The Damages Act omits certain provisions that present more general, directions to Member States, such as Article 4 on the principles of equivalence and effectiveness. Overall, the final transposition of the Damages Directive into the Damages Act involved a mixture of copying and elaboration.30 This ultimately depended on the scope and wording of each provision, whether it was specific or general, and whether it allowed some leeway for Member States to go beyond the provisions of the Damages Directive.
Article 3(1) of the Damages Act establishes its scope, focusing on the effective exercise of the right to claim full compensation for harm caused by an infringement of competition law, and its wording closely resembles that of Article 1 of the Damages Directive. It only omits the second subsentence of Article 1(1) of the Directive, which provides that the Directive ‘sets out rules fostering undistorted competition in the internal market and removing obstacles to its proper functioning, by ensuring equivalent protection throughout the Union for anyone who has suffered such harm’. This is not an important omission, since the latter sentence has more of a guiding declaratory nature for national authorities, and as long as the national implementation measure provides for equivalent protection, there is no need to positively declare this.31
The wording of article 3 on the scope of the Damages Act was amended from the version in the Draft Damages Act. In relation to the coordination between public and private enforcement, the Draft Damages Act followed the Directive and referred to the coordination of enforcement between the CPC and the courts.32 The Damages Act follows the wording of the Directive more closely: instead of referring to the CPC, it refers to the national competition authorities (NCAs). However, there may be a problem in the transposition here, which can be attributed to oversight rather than deliberate choice. A ‘national competition authority’ in the Damages Act is defined as ‘an authority, which is designated by a Member State in accordance with Article 35 [of] Regulation 1/2003 (p. 90) as responsible for implementing Articles 101 and 102 TFEU’. This appears to include the Cypriot CPC, yet the latter is also empowered to enforce national competition law—and the coordination between public and private enforcement also captures national law.
This is relevant since the Cypriot legislature opted for the application of the Damages Act to both EU and national competition law infringements. This can be deduced from the definition of an ‘infringement of competition law’ in the Damages Act.33 The Damages Directive defines an ‘infringement of competition law’ as ‘an infringement of Article 101 or 102 TFEU, or of the national equivalent’. For the purposes of the Damages Directive, though, ‘national competition law’ is defined in Article 2(3) as:
… provisions of national law that predominantly pursue the same objective as Articles 101 and 102 TFEU and that are applied to the same case and in parallel to Union competition law pursuant to Article 3(1) of Regulation (EC) No 1/2003, excluding provisions of national law which impose criminal penalties on natural persons, except to the extent that such criminal penalties are the means whereby competition rules applying to undertakings are enforced.
Based on this definition, ‘national law’, for the purposes of the Directive, means national competition law provisions, when applied together with EU competition law provisions, i.e. when applied to practices that may have an effect on inter-State trade and are not purely national in scope.
The Damages Act defines an ‘infringement of competition law’ as an infringement of articles 3 and/or 6 of the Competition Act and/or Articles 101 and/or 102 TFEU. On this point, the Cypriot legislature went a step further than the Directive, as the Damages Act is applicable to infringements of EU competition law and national competition law even when there is no effect on trade between EU Member States. This can be deduced from the definition of the ‘infringement of competition law’ in the Damages Act.
Finally, in terms of the temporal scope, the Damages Act does not expressly address this issue; hence it is to be expected that, should a problem arise in litigation, the courts will interpret it in the light of Article 22 of the Damages Directive.
This section engages in a detailed analysis of the different provisions of the Damages Act and issues that arose during the transposition. In particular, it alludes to instances where the provisions were changed and revised in the draft and final texts, as well as instances where the Cypriot legislature opted to go beyond the requirements in the Damages Directive.
The Cypriot legislature has adopted the definitions included in the Damages Directive. Nonetheless, there are certain problems with some of the adopted definitions, such as an ‘infringement decision’ and a ‘final infringement decision’.
The Damages Directive (Article 2(11) and (12)) defines an ‘infringement decision’ and a ‘final infringement decision’ (with related definition at Article 2(8)) as follows:
‘infringement decision’ means a decision of a competition authority or review court that finds an infringement of competition law;
‘final infringement decision’ means an infringement decision that cannot be, or that can no longer be, appealed by ordinary means’; and
‘competition authority’ means the Commission or a national competition authority or both, as the context may require.
These terms were defined differently in the Draft Damages Act:
• ‘“infringement decision” means a decision of the Cypriot CPC that finds an infringement of competition law’ (thereby omitting decisions by the European Commission and review court); and
• ‘“final infringement decision” means the decision of a review court, which upholds the decision of the Cypriot CPC’ (thereby omitting instances in which the decision of the CPC is final, because it is no longer subject to appeal).
These problems have fortunately been remedied in the Damages Act, since the respective definitions therein correspond to the wording of the Damages Directive. However, in relation to the definition of infringement decisions, the Damages Act still omits decisions by the European Commission.
Furthermore, the definition of ‘concerted practice—cartel’ in the Damages Act, while following the wording of the Damages Directive, is different from the definition of ‘concerted practice’ in the Cypriot Competition Act. In the Damages Act, ‘concerted practice—cartel’ is defined as equivalent to hard-core cartel arrangements, including naked price fixing and bid rigging, whereas in the Cypriot Competition Act, ‘concerted practice’ encompasses any type of coordination. These inconsistencies can be attributed to oversight, rather than deliberate design, and they may be remedied through subsequent judicial interpretation.
The time limits for filing a claim for damages presents an interesting issue for the Cypriot legal order, as the issue was settled rather recently.34 Law 66(I)/2012, (p. 92) entitled ‘Law to Provide for the Prescription Actionable Right—Limitation Periods for Miscellaneous Causes of Action, was adopted and entered into force on 1 July 2012.
Article 3 provides that ‘the limitation period commences when the basis of the claim is complete: Provided that, without prejudice to the provisions of articles 24 and 29, the time limitation period shall start to be measured from the 1st January 2016’. Article 4, on the general limitation period, provides that ‘[u]nless otherwise provided for in any other law, no action shall be brought upon, for, or in respect of, any cause of action after the expiration of ten years from the day of completion of the basis of the claim’. Arguably, damages actions for competition law would fall under article 6 on civil wrongs (torts), which provides for a six-year limitation period for damages actions, unless they concern a claim for negligence or breach of statutory duty, which have a three-year limitation period. The limitation period starts when all of the conditions of the right to bring the damages action are fulfilled (article 3, in conjunction with article 2).
The Draft Damages Act set a five-year limitation period (article 10(2)), opting for the minimum amount of time possible under Article 10(3) of the Damages Directive, providing that ‘Member States shall ensure that the limitation periods for bringing actions for damages are at least five years’. An important difference between the Draft Damages Act and the Damages Act is the fact that the latter provides for a six-year limitation period (article 10(1)), which goes beyond the five-year minimum, as provided for in the Directive.
Given the wording of Law 66(I)/2012, as well as the nature of damages claims for competition law violations, which may be classified as torts or breach of statutory duty, the six-year limitation period is a welcome development that clarifies the issue on time limitation with regard to this type of claim. It appears to align the limitation period for competition damages claims with the general six-year limitation period for civil wrongs under Law 66(I)/2012.
In relation to the effect of decisions of the NCA, the Cypriot legislature has followed the wording of the relevant provision of the Damages Directive. Article 9(1) of the Damages Act provides that a final decision of the Cypriot CPC on a competition law violation is an irrebuttable presumption before the national courts. The Damages Act (article 2) defines a ‘final infringement decision’ as a decision of the review court that confirms the decision of the Cypriot CPC or a decision of the CPC when it can no longer be appealed.35
As mentioned in section 2.3, the definition of a ‘final infringement decision’ in the Draft Damages Act was somewhat flawed and inconsistent with the respective definition in the Damages Directive, which defines a ‘final infringement decision’ as ‘an infringement decision that cannot be, or that can no longer be, appealed by (p. 93) ordinary means’. This has now been remedied. Note, here, that the definition of an ‘infringement decision’ in the Damages Act is still somewhat problematic, and comprises the decision of the Cypriot CPC and a review ruling on the violation, but does not include the decision of the European Commission, as is the case in the Damages Directive.
In relation to the effect of decisions of NCAs of other Member States, article 9(2) of the Damages Act provides that the final decision of other NCAs serves as prima facie evidence of a competition law infringement and may be assessed, on a case-by-case basis, together with other evidence adduced by the parties. Article 9(3) of the Damages Act provides that the ‘final decision’ for the purposes of article 9(2) means the decision of an NCA or review court that rules on a violation and which can no longer be appealed. Article 9(3) of the Damages Act amended the respective provision in the Draft Damages Act and addressed certain shortcomings in the wording of the latter.
In addition, in regard to the binding effect of NCA decisions, which was a much- debated topic in deliberations leading to the adoption of the Damages Directive,36 the Damages Directive appears to allow Member States to go beyond the wording of the Directive. The Cypriot legislature opted for treating NCA decisions as prima facie evidence, not for giving them a binding nature upon national courts. In fact, in Cyprus, this was the case even before the adoption of the Damages Act by virtue of article 40(1) of Law 13 (I)/2008. Article 40(1) of the Cypriot Competition Act provides that, in damages actions, the final decision of the Cypriot CPC or another NCA or the European Commission, finding a competition law infringement, is a rebuttable presumption for the truth of its content. Three points need to be made here. First, the Cypriot legislature has already treated NCA decisions as rebuttable proof of a competition law infringement. Second, the Damages Act changes the treatment of decisions of the Cypriot CPC and the European Commission. In relation to the latter, the Cypriot Competition Act is inconsistent with EU law, since Article 16(1) of Regulation 1/2003 provides that, ‘[w]hen national courts rule on agreements, decisions or practices under Article  or Article  of the Treaty which are already the subject of a Commission decision, they cannot take decisions running counter to the decision adopted by the Commission’.37 Third, in light of article 9(1) of the Damages Act, according to which the decisions of the Cypriot CPC provide irrebuttable proof of an infringement, article 40 of the Cypriot Competition Act should no longer apply.
In private law, attributing liability to the parent company for the conduct of its subsidiaries is difficult and may also raise constitutional concerns in some jurisdictions. This issue is not included in the Damages Act and was not included in the deliberations leading to the adoption of the Damages Act. Some indications as to the treatment of this issue can be inferred from the definition of ‘agreement’ in the Cypriot Competition Act. Article 2 of the Cypriot Competition Act provides that an ‘agreement’38 means any formal or informal, written or unwritten, or binding or legally non-binding agreement between two or more undertakings or an association of undertakings, or the decision of an association of undertakings, but it does not include an agreement or concerted practice between:
(a) a parent company and its subsidiary, if these comprise a single economic entity within which the subsidiary does not have the freedom to define its own course of action, and the agreement or the concerted practice concerns exclusively the division of activities between the parent company and the subsidiary; and
(b) two or more subsidiaries, provided that they comprise a single economic entity with the parent company.
This suggests that national competition law follows EU law in terms of the notion and approach to a ‘single economic entity’; hence this should also be followed in regard to the imposition of fines and liability in damages. Having said that, this issue is likely to raise problems before national courts, although it is yet to be decided. It may be even more complicated in light of the pending changes to parental company liability, intended to enhance NCA powers to hold parent companies accountable.39
In relation to the quantification of damages and the presumption of damage caused by cartels, article 16 of the Draft Damages Act followed the relevant provision in the Damages Directive (Article 17), providing that national rules on the burden and standard of proof for the quantification of harm should not render the exercise of the right to damages practically impossible or excessively difficult. National courts may estimate the amount of harm if it is established that the claimant suffered harm, but it is impossible or excessively difficult to quantify based on the available (p. 95) evidence (Article 17(1) of the Damages Directive). It also provides for a rebuttable presumption of harm in cartel cases and the possibility of NCAs assisting national courts with the quantification of damages.
Unfortunately, article 16(1) of the Damages Act was amended, and the final text appears to conflate Article 17(1) and (3) of the Damages Directive and is not in line with the latter. Article 16(1) of the Damages Act provides that,
‘[f]or the quantification of damages, the court may, after ruling that the claimant has suffered harm, although it is practically impossible or excessively difficult to quantify such harm in the light of the available evidence before the court, on its own motion or following a claimant’s request, ask for the contribution of the Cypriot CPC, if necessary’.
Thus the power of national courts to estimate the amount of harm is no longer provided in the Damages Act. It remains to be seen whether that will be remedied by national courts. Yet it should be mentioned that Cypriot courts are very cautious in the quantification of damages: claimants need to precisely quantify their respective damage. This is supported by Dairy King.40 In this case, despite rejecting the claim for lack of abuse, the court addressed as obiter the point that the claimant had also failed to strictly quantify the respective damage.
Two additional points are worth mentioning here. First, an important change has been made to the national procedural laws on the introduction of a rebuttable presumption for cartels. The rebuttable presumption covers the existence of damage and does not appear to cover the concrete amount of harm. This can be deduced from Recital 47 to the Damages Directive, which states that ‘[d]epending on the facts of the case, cartels result in a rise in prices, or prevent a lowering of prices which would otherwise have occurred but for the cartel. This presumption should not cover the concrete amount of harm.’ Judicial practice will determine how this provision plays out in practice; however, it is important to stress here that, ultimately, the Directive—and the respective national provision in the Damages Act—would need to be interpreted by the courts in accordance with the principles of equivalence and effectiveness.
Second, in the Cypriot context, concerns were expressed in relation to the role of the national courts in quantifying damage. In particular, during the deliberations leading to the adoption of the Damages Act, concerns were expressed in relation to empowering the court to ask for the assistance of the Cypriot CPC in the quantification of damages. This may remain an empty shell in practice—given the fact that the CPC does not have the necessary resources to intervene in such cases. In addition, it was stressed that Cypriot civil procedure requires the parties to prove their damage. Specifically, in the Cypriot legal system, it falls upon the claimant to quantify its damage. The initial draft of the Damages Act stated that if the claimant was unable to do so, the court may award nominal damages. However, this was removed from the final draft and the provision was watered down in the Damages Act to the point at which it is now inconsistent with Article 16 of the Damages Directive.
(p. 96) The Damages Act 2017 omitted Article 16 of the Damages Directive on the Commission guidelines for national courts. It would have been beneficial if the probative value of these guidelines had been addressed.
Article 12 of the Damages Directive, on the right to full compensation and the passing on of overcharges, is very closely reflected in article 12 of the Damages Act. However, Article 12(2) of the Damages Directive provides that, ‘[i]n order to avoid overcompensation, Member States shall lay down procedural rules appropriate to ensure that compensation for actual loss at any level of the supply chain does not exceed the overcharge harm suffered at that level’. Article 12(3) of the Damages Act merely restates this principle without changing or introducing procedural rules in that regard.
In relation to joint and several liability between co-infringers, article 11 of the Damages Act follows Article 11 of the Damages Directive and adopts very similar wording. The Damages Act does not adopt any specific criteria on the apportionment of liability between co-infringers and this is an issue that is yet to be decided by the Cypriot courts.
The Damages Act omits reference to limitation periods here, as provided in Article 11(4) of the Directive on the joint and severable liability of an immunity recipient, which states that ‘Member States shall ensure that any limitation period applicable to cases under this paragraph is reasonable and sufficient to allow injured parties to bring such actions’. However, this can be explained, as such a reference is not important and falls under the general rules on the effective exercise of the right to damages.
The Law amending Competition Act 2008 and 2014 purports to amend the Cypriot Competition Act in relation to access to information in the file of the Cypriot CPC. It provides that information collected in the course of a competition investigation may be used only for the purposes of the application of the national and EU competition law provisions before the CPC. Confidential information and business secrets collected in the course of these proceedings are part of the file, which may be submitted to the review court. The parties shall not have access to this information, unless the review court, following a reasoned request, deems the disclosure necessary in order to defend a superior interest.41 A public consultation on (p. 97) this amendment was launched on 28 November 2016 and interested parties had to submit their comments by 23 December 2016. The deliberations on the proposed amendments are still ongoing.42
In the light of this contemplated amendment to the Competition Act, the rules on access to evidence and disclosure in the Damages Directive, and the ensuing changes in national law, are particularly timely. Article 5(4) of the Damages Directive on the power of national courts to order the disclosure of evidence containing confidential information when it is relevant for an action for damages, while protecting the confidentiality of such information, has been transposed in the Damages Act (article 5(4)). The Cypriot legislature has opted for the inclusion in the Damages Act of an indicative list of effective measures to protect confidential information (article 5(4)), such as:
Article 6, in relation to the disclosure of evidence included in the file of a competition authority, has been closely followed in the Damages Act, which has improved the wording and accuracy of the respective provision compared to the Draft Damages Act. Nonetheless, the Damages Act, in the title of the respective provision, refers to the file of an NCA—yet the provisions of article 6 also refer to the European Commission, which is the correct transposition of the relevant provision in light of the definition of ‘competition authority’ in the Damages Directive.
The Draft Damages Act addressed certain procedural details in the Damages Act regarding evidence disclosure (article 6(12)–(13)). In order to allow the Cypriot CPC or the European Commission to express their opinions on the proportionality of disclosure requests, the registrar of the courts was to keep a registry of damages claims. In addition, the party that requested the disclosure of evidence contained in the file of the Cypriot CPC or the European Commission would have to submit the respective request to the registrar. Unfortunately, the provision on the damages claims registry has been omitted from the Damages Act.
Similarly, article 7 (on the limits of the use of evidence) reveals confusion regarding the notion of a ‘competition authority’. The title of the provision in the 2017 Act refers only to NCAs, whereas article 7(1) also mentions the European (p. 98) Commission. This is most likely a mistake in the title of the respective provision and can also be traced back to the first draft. However, it may create interpretational difficulties before the courts.
It is rather interesting how the Cypriot legislature chose to transpose Article 8 (on penalties for failure to comply with a disclosure order and for destruction or hiding of evidence) into the Cypriot legal order—especially the interpretation of ‘effective, disproportionate, and dissuasive sanctions’. Article 8(2) of the Damages Directive provides that:
Member States shall ensure that the penalties that can be imposed by national courts are effective, proportionate, and dissuasive. The penalties available to national courts shall include, with regard to the behaviour of a party to proceedings for an action for damages, the possibility to draw adverse inferences, such as presuming the relevant issue to be proven or dismissing claims and defences in whole or in part, and the possibility to order the payment of costs.
Apart from these powers, depending on the nature, gravity, and duration of each infringement, the Cypriot legislature has also provided for the possibility of imposing a monetary penalty of up to €250,000 and/or imprisonment for up to six months (article 8(2) of the Damages Act). The Draft Damages Act provided for a monetary penalty of up to €80,000, which was tripled in the final Damages Act.
No effective collective redress mechanism exists in Cyprus. A previous empirical project showed that there is a need for such a mechanism.43 From the practitioners’ side, it has been pointed out that if collective redress procedures were to be introduced, they would be willing to pursue the relevant litigation.44
There are no specialised courts in Cyprus for the hearing of competition law cases. In the first instance, a damages action or an action for interim measures is filed before the competent district court and its judgments are appealed before the Supreme Court, which acts as an appellate court in the last instance (according to Courts of Justice Law 14/1960, as amended). The Damages Act has not introduced any changes. Commentators have stated that, given the very low number of private actions for competition law violations, there is no need for specialised courts; they have also pointed out that a number of Cypriot judges participate in the DG-Comp judicial training programme. They have, however, called for an increase in Commission funding, so that a larger number of judges can take part in these schemes.45
Cognisant that the Damages Act may, in a country with nascent competition litigation culture, create problems in its application, article 19(1) of the Draft Damages Act allowed the Cypriot Supreme Court to issue procedural regulations, to be published in the Official Gazette, in order to define any issue occurring in relation to the Damages Act. The Damages Act, in the revised article 19(1), has transferred this power to the Council of Ministers generally, although article 19(2) still provides a list of issues on which the Supreme Court may issue guidance, including procedural arrangements for the disclosure of evidence and protective measures for the disclosure of evidence that includes confidential information. Article 19(2) of the Draft Damages Act also included the power to issue guidance on rules for the calculation of the share of the extra charge passed on to the indirect purchasers and rules on the quantification of damage by the court. Regrettably, these have been omitted from the Damages Act. Article 19(3) of the Damages Act also provided that the regulations issued by virtue of this provision may provide for criminal offences, which may be punishable by fines of up to €85,000—a provision that has also been omitted.
This provision suggests that the Cypriot legislature is conscious of the vagueness of some provisions, which are subsequently identified in article 19(2). These issues seem to be the thorniest for the Cypriot legal order.
In general, the Damages Act closely follows the wording of the Damages Directive and opts for the least restrictive provisions, with the exception of the six-year limitation period instead of the five-year period in the Damages Directive and the €80,000 monetary penalty for refusal to comply with a disclosure order or destruction of evidence. As the analysis of the specific options indicates, there are certain provisions that may raise doubts in terms of their judicial interpretation, particularly the provision on the quantification of damages.
In addition, the Cypriot legislature went beyond the Damages Directive in relation to the protection of confidential information. It opted for an indicative list of measures to protect confidential information, as well as the adoption of specific dissuasive penalties for refusing to comply with a disclosure order, or hiding or destroying evidence. In relation to scope, the Damages Act also went further than the Directive, since it applies to damages claims for a violation of EU, as well as (purely) national, law, including the abuse of economic dependence. Certain definitional problems in relation to ‘infringement decisions’ and ‘competition authorities’ may require judicial interpretation in the future. Cognisant of future interpretational problems, the Damages Act has also enabled the Council of Ministers and the Supreme Court to issue special guidance, although the final provision is a more modest version than the one in the Draft Damages Act. In addition, the binding nature of the Cypriot CPC may create certain problems in light of Cypriot competition law and the constitutional context.
(p. 100) Overall, the transposition of the Damages Directive in Cyprus was competently orchestrated and executed, notwithstanding the delay in the process. The delay can be attributed to certain reservations on legal issues that were expressed when the Damages Act was discussed before different parliamentary committees. Ultimately, the transposition did not attract any good or bad publicity, but was viewed more as a technical legal issue.
The Cypriot authorities involved in the transposition should be commended for their efforts, especially taking into account the nascent competition culture in Cyprus. It is hoped that, in the future, private litigation levels will rise, but one needs to be pragmatic, as the main obstacles to bringing damages claims before the Cypriot courts (such as the lack of an effective collective redress mechanism) still exist. In fact, the Cypriot CPC is hopeful that the Damages Act will increase public awareness of competition law.46
1 L Christodoulou, ‘Cyprus: Commission for the Protection of Competition’ (20 July 2016) Global Competition Review, available at http://globalcompetitionreview.com/benchmarking/the-european-middle-eastern-and-african-antitrust-review-2017/1067830/cyprus-commission-for-the-protection-of-competition.
2 Final Act to the Protocol laying down the conditions and procedures for the implementation of the second stage of the Agreement establishing an Association between the European Economic Community and the Republic of Cyprus and adapting certain provisions of the Agreement  OJ L393/25.
5 See subsection 1.2. See V Brisimi and M Ioannidou, Cyprus: Report (2012), prepared for an Arts and Humanties Research Council funded project led by Professor B Rodger. The report is available at http://www.clcpecreu.co.uk/pdf/final/Cyprus%20report.pdf. On the findings of this project, see B Rodger (ed), Competition Law: Comparative Private Enforcement and Collective Redress across the EU (Alphen aan den Rijn: Wolters Kluwer, 2014). See also P Christofides and L Liassides, ‘National report: Cyprus’ in G Bandi, P Darak, P Lancos, and T Toth (eds), Private Enforcement and Collective Redress in European Competition Law (FIDE Congress 2016) (Congress Proceedings Vol. 2) (Budapest: Wolters Kluwer, 2016), 325.
6 Brisimi and Ioannidou (n5).
8 Christofides and Liassides (n5), 325.
11 See Christodoulou (n1).
12 On these cases, see L Christodoulou (n1); T Anastasis, ‘Five record fines of the Cypriot Commission for the Protection of Competition that cause concern to Cypriot companies’ (24 May 2017) Offsite, available at http://www.offsite.com.cy/articles/eidiseis/oikonomia/214028-pente-prostima-mamoyth-tis-epitropis-antagonismoy-poy (in Greek).
13 Anastasis (n12).
15 On these cases, see Christodoulou (n1).
16 Anastasis (n12).
17 CPC press release (22 May 2017), available at http://www.competition.gov.cy/competition/competition.nsf/All/214BA3C52F300D8DC2258128003FE6A6?OpenDocument.
18 On these cases, see Christodoulou (n1). See also Anastasis (n12). For a discussion of the highest fines imposed by the CPC up to October 2015, see D Lantou, ‘CPC’s 10 highest fines’ (16 October 2015) IN Business, available at http://archive.inbusinessnews.com/inbusiness/news/financials/cyprus/ta-10-megalytera-prostima-ths-epa.
19 P Theocharides, ‘Primetel claims EUR50 million in compensation against CYTA’ (4 January 2017) Fileleftheros, available at http://archive.philenews.com/el-gr/oikonomia-kypros/146/346775/apozimioseis-50-ekat-diekdikei-i-primetel-apo-ti-cyta.
20 On these limitations, see Brisimi and Ioannidou (n5).
21 Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (‘Damages Directive’)  OJ L 349/1.
23 European Commission, ‘July Infringements Package—Part 1: Key Decisions’ (Factsheet) (13 July 2017) MEMO/17/193, available at http://europa.eu/rapid/press-release_MEMO-17-1935_en.htm.
25 Official Gazette no 4196 (12 April 2017). Last published draft available at http://www.moh.gov.cy/mof/gpo/gpo.nsf/All/965E49D34252E82BC2258100002998FB/$file/4196%20%2012%20%204%202017%20PARARTIMA%20EKTO.pdf (in Greek). This has also been published on the website of the Ministry of Energy, Commerce, Business and Tourism, at http://www.consumer.gov.cy/mcit/cyco/cyconsumer.nsf/All/54129C9DAF864287C2257F550040F6E3/$file/%CE%A4%CE%B5%CE%BB%CE%B9%CE%BA%CF%8C%20%CE%BD%CE%BF%CE%BC%CE%BF%CF%83%CF%87%CE%AD%CE%B4%CE%B9%CE%BF%20%CF%80%CE%BF%CF%85%20%CE%BA%CE%B1%CF%84%CE%B1%CF%84%CE%AD%CE%B8%CE%B7%CE%BA%CE%B5%20%CF%83%CF%84%CE%B7%20%CE%92%CF%84%CE%91.pdf (in Greek).
28 See http://theopemptou.com/info/vouli/comtees/mcit/191-enla/705-876 (in Greek).
29 On various reasons for the non-timely transposition of directives, see B Steunenberg and M Rhinard, ‘The transposition of European law in EU Member States: between process and politics’ (2010) 2 European Political Science Review 495.
30 On the different transposition methods (distinguishing between forms and methods of transposition), see R Kral, ‘On the choice of methods of transposition of EU directives’ (2016) 41(2) European Law Review 220. On transposition guidance, see HM Government, Transposition Guidance: How to Implement European Directives Effectively (April 2013).
31 A different point is whether ‘equivalent protection’ is indeed provided throughout the Union—given the leeway afforded by the Directive and the difference in various national implementation measures.
33 A list of various definitions is contained in article 2 of the Damages Act. See subsection 3.1.
34 Limitation law had been suspended since 1964 given the specific historical situation. See http://www.mondaq.com/cyprus/x/200138/Class+Actions/New+Law+On+Limitation+Of+Actions; on limitation periods in Cyprus, see also http://www.mondaq.co.uk/cyprus/x/492946/Civil+Law/Limitation+Period+For+Actions, which states that one needs to note that ‘the limitation period is measured from the 1st of January 2016’.
35 The Draft Damages Act defined the review court as the Administrative Court, which was established by the Establishment and Functioning of the Administrative Court Act 2015. The definition of the review court has been omitted from the Damages Act.
36 See, for example, A Jones, ‘Private enforcement of EU competition law: a comparison with, and lessons from, the US’ in M Bergström, M Iacovides, and M Strand (eds), Harmonising EU Competition Litigation: The New Directive and Beyond (Oxford: Hart, 2016), text to n136; N Dunne, ‘The role of private enforcement within EU competition law’ (2014) 16 Cambridge Yearbook of European Legal Studies 143, text to n130.
38 Please note, though, that the Greek term used is closer to the meaning of ‘cartel’ in English. This is reflected in the definition of ‘cartel’ in the Damages Act, which uses the same term. This is likely to be an oversight; yet it does lead to terminological confusion.
39 See European Commission, Proposal for a Directive of the European Parliament and of the Council to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market, COM(2017) 142 final, Recital 31, Article 12(3).
41 ‘Law amending Competition Act 2008 and 2014’ (2016), available at http://www.consumer.gov.cy/mcit/cyco/cyconsumer.nsf/All/561583764D151E90C2258072004693B0/$file/%CE%A0%CF%81%CE%BF%CF%84%CE%B5%CE%B9%CE%BD%CF%8C%CE%BC%CE%B5%CE%BD%CE%B7%20%CF%84%CF%81%CE%BF%CF%80%CE%BF%CF%80%CE%BF%CE%AF%CE%B7%CF%83%CE%B7%20-%20%CE%BA%CE%B5%CE%AF%CE%BC%CE%B5%CE%BD%CE%BF.pdf (in Greek).
42 For the public consultation by the Ministry of Energy, Commerce, Industry and Tourism (completed on 26 December 2016), see http://www.consumer.gov.cy/mcit/cyco/cyconsumer.nsf/All/561583764D151E90C2258072004693B0?OpenDocument.
43 Brissimi and Ioannidou (n5).
45 Christofides and Liassides (n5), 331.
46 Christodoulou (n1).