Why sophisticated economic evidence is the key to Phase II clearance in Cyprus.

While meeting the jurisdictional thresholds under Law 83(I)/2014 is the first step, the success of high-stakes concentrations in 2026 increasingly depends on the “Effects-Based Approach.” As the Cyprus Commission for the Protection of Competition (CPC) aligns with broader EU trends, merging parties must prove not just that they aren’t creating a monopoly, but that the merger generates verifiable efficiencies that benefit the consumer.

At Trojan Economics, we specialise in the advanced econometric modelling required to navigate Phase II investigations and overcome “serious doubts” regarding market compatibility.

Key Economic Pillars of a Successful Clearance

1. Market Definition & The SSNIP Test

Defining the relevant market is often the most contested part of a merger review. We move beyond broad industry labels to perform Small but Significant and Non-transitory Increase in Price (SSNIP) tests. This empirical approach determines:

  • Product Substitutability: How likely are consumers to switch to a different product if prices rise by 5–10%?

  • Geographic Boundaries: In a localised market like Cyprus, determining the exact reach of competition is vital for avoiding over-regulation.

2. Merger Simulation & Unilateral Effects

For mergers between close competitors, the CPC focuses on “unilateral effects”—the risk that the merged entity will raise prices even in the absence of collusion. We use Merger Simulation Models to predict post-merger price levels based on:

  • Diversion ratios and profit margins.

  • Upward Pricing Pressure (UPP) indices.

  • Competitive constraints from remaining rivals and potential entrants.

3. The “Efficiency Defence”

In 2026, the Efficiency Defence is a powerful but strictly scrutinised tool. To successfully argue that a merger should be cleared despite high market shares, we quantify:

  • Variable Cost Savings: Reductions in production costs that can be passed on to consumers.

  • Dynamic Efficiencies: Improvements in innovation, R&D capabilities, and digital infrastructure.

  • Verification: Proving these gains are “merger-specific” and cannot be achieved through less restrictive means.

The Failing Firm Defence: Economic Survival

In a shifting 2026 economy, some mergers are driven by the potential exit of a market player. We provide the rigorous three-limb analysis required for a Failing Firm Defence:

  1. The allegedly failing firm would be forced out of the market in the near future if not taken over.
  2. There is no less anti-competitive alternative purchase.
  3. The assets of the failing firm would inevitably exit the market in the absence of the merger.

Our Role in Your Clearance Strategy

Trojan Economics provides the objective, expert analysis that bridges the gap between legal theory and market reality.

  • Drafting Annex III Notifications: Ensuring economic data is robust from Day 1.

  • Responding to RFI (Requests for Information): Providing data-driven answers to technical CPC queries.

  • Designing Remedies: If the CPC identifies concerns, we help design structural or behavioural remedies (like divestitures) that satisfy regulators while preserving the deal’s commercial value.

Strategic Economic Insight for Your Next Transaction

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