The legal framework regulating Merger Control in Cyprus is set out in the Control of Concentrations between Undertakings Law of 2014 (Law 83(I)/2014) (“Law”). Transactions meeting the jurisdictional thresholds prescribed therein, constitute “concentrations of major importance”. Concentrations of major importance are subject to merger control and must therefore be notified to the Cyprus Commission for the Protection of Competition (“CPC”).
This article aims to provide an overview of the jurisdictional thresholds as set out in the Law.
In order for a concentration to be considered as one of “major importance”, the following conditions must be cumulatively met:
- The aggregate turnover achieved by each of at least two of the participating undertakings exceeds €3,5 million;
- At least two of the participating undertakings achieve a turnover within Cyprus; and
- At least €3,5 million of the aggregate turnover generated by all participating undertakings is achieved within Cyprus.
Calculation of turnover
Turnover is calculated in accordance with Schedule II of the Law.
Pursuant to the said Schedule, aggregate turnover is comprised of the amounts emanating from the sale of products and the provision of services by the undertakings concerned in the course of the preceding financial year that corresponds to the undertakings’ ordinary activities and excluding sales rebates, value-added tax, and other taxes directly relating to the turnover.
Moreover, the turnover of a participating undertaking includes the turnovers of parent undertakings and subsidiaries. Subsidiaries are defined within Schedule II as undertakings in which the undertaking concerned directly or indirectly owns more than half of the capital / business assets, or voting rights, or has the power to appoint more than half the members of the supervisory / administrative board or the representative bodies, or has the right to manage their affairs. It is noted that the aggregate turnover does not include internal transactions between any of the said undertakings.
The Schedule provides that, in derogation of the above, where the concentration arises from the acquisition of parts of one or more undertakings, the turnover of the seller(s) taken into account is only that which is related to the parts that are the subject of the transaction, irrespective of whether they are a legal entity.
In relation to banking or other credit institutions and insurance companies, special rules apply concerning the calculation of their turnover.
More information concerning the Cyprus Merger Control Procedure is available here.
More information concerning the services we offer in relation to Merger Control is available here.