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Chapter 2 Cyprus Chapter 2 Cyprus TABLE OF CONTENTS A. The General Approach toward Relevant Market Definition in Competition Law in Cyprus 5 I. Introduction 5 1. Relevant Legislation 5 2. Relevant Competition Authorities 5 II. Relevant market definition in competition law in Cyprus 6 1. Definition of relevant product market 7 a) Demand side substitutability tests 8 aa. Characteristics of the product 9 bb. Intended use 10 cc. The price of the product 10 dd. SSNIP Test 11 b) Supply side substitutability tests 11 2. Definition of relevant geographic market 12 3. Entry barriers 13 4. Other tests 14 B. Repertoire of relevant product and geographic markets in the media sector in Cyprus 15 I. Publishing 15 II. Music-copyright 15 III. Broadcasting and associated rights 15 1. The upstream market for television broadcasting rights of football matches organized by the Cyprus Football Federation 16 2. The downstream market for securing advertising revenue on the basis of audience rates, and/or pay-TV subscribers 17 3. The upstream and downstream markets for the sale and acquisition of broadcasting rights of football matches for the new media (wireless/3G/UMTS and Internet) 18 IV Film sector 18 V. Internet 20 C. Comparative analysis of methodologies of the European Commission and the Commission for the Protection of Competition on market definition, and the findings of the both institutions 20 I. Broadcasting and associated rights 20 II. Film Sector 21 III. Internet markets 22 Conclusions 23 Table of relevant markets identified in Cyprus with regard to media sectors 24 D. Impact of Different Regulatory Frameworks on Market Definitions 26 Introduction 26 I Regulatory frameworks in Cyprus having an impact on the media sector 31 1. Legal framework 31 a) Constitutional provisions 31 b) Sector-specific regulations 31 aa. The Law on Radio and Television Stations of 1998 ( 31 bb. 7KHODZRQ&\SUXV%URDGFDVWLQJ&RUSRUDWLRQ &<%& 33 cc. The law regulating telecommunications and postal VHUYLFHVRI 34 dd. 7KHODZRQUDGLRFRPPXQLFDWLRQVRI 35 ee. 7KH3UHVVODZRI 36 ff. The law on the protection of commercial exploitation of FLQHPDWRJUDSKLFILOPVRI 37 gg. The law on the classification/rating of cinematographic works RI 37 2 hh. The laZRQFRS\ULJKWDQGQHLJKERXULQJULJKWVRI 37 2. Administrative regulation/rules 38 3. Other provisions 38 a) The journalistic code of conduct 38 b) The advertisers’ code of conduct 39 II. Regulatory authorities in Cyprus having an impact on the media sector 39 1. 5DGLRDQG7HOHYLVLRQ$XWKRULW\ 39 a) Legal Basis 39 b) Functions/competencies 39 c) Linkage with general competition authorities? 41 2. The board of directors of the Cyprus Broadcasting Corporation (CYBC) 41 a) Legal basis 41 b) Functions/competencies 41 c) Linkage with general competition authorities? 41 3 3UHVV&RXQFLODQG3UHVV$XWKRULW\ 42 a) Legal basis 42 b) Functions/competencies 42 4. 7KH&RPPLVVLRQRI-RXUQDOLVWLF(WKLFV 42 5. The Office of the Commissioner Regulating Telecommunications and 3RVWDO6HUYLFHV 43 a) Legal Basis 43 b) Functions/competencies 43 III. Market definitions and/or criteria upheld for market perception in the relevant sector focused legislation 44 1. Publishing 44 2. Music – copyright 44 3. Film 44 4. Broadcasting (radio and television) 45 5. Internet 47 IV. Market definitions and/or criteria for market perception in the media-sector, as upheld in sector specific practice of authorities and/or courts 47 V. Common factors and differences between these market definitions and the market definitions used in application of the national competition rules 47 3 VI. The impact of the non-competition framework and practice on the work of the competition regulator, in particular when defining the relevant markets 47 4 A. The General Approach toward Relevant Market Definition in Competition Law in Cyprus I. Introduction 1. Relevant Legislation The main legal provisions regarding competition law in Cyprus (from now on referred 2.1 to only as competition law) are Law No 207 of 1989 on the Protection of Competition Law of 19891 (“ ”; from now on referred to as Law 207/89), and Law No 22 (I) of 1999 on the Control of Concentrations between Enterprises (“ ”; from now on referred to as Law 22 (I)/99)2. Following the EC Treaty pattern of Article 81, section 4 (1) of Law 207/89 prohibits all 2.2 agreements between undertakings, all decisions by associations of undertakings and concerted practices of whatsoever kind, which have as their object or effect the prevention, restriction or distortion of competition. However, according to subsection 3 of the same section, derogations from the prohibitions of subsection 1 may be granted in individual cases either by virtue of an Order or after a decision of the Commission for the Protection of Competition. In addition, an exemption from the prohibition of section 4 (1) could be granted to a category of agreements by virtue of an Order of the Council of Ministers after a previous reasoned opinion of the Competition Commission, provided that in both cases certain conditions are fulfilled. Section 6 of the Law 207/89, the Cypriot equivalent to Article 82 EC Treaty, prohibits any abusive behavior by a dominant undertaking. 2. Relevant Competition Authorities The Commission for the Protection of Competition of the Republic of Cyprus (from now on referred to as the “Competition Commission”) was established in 1990 with the 2.3 enactment of the Protection of Competition Law 207/89. The Competition Commission is the investigative and decision-making authority responsible for the protection of competition. With the enactment of the Law 22(I)/99 in 1999 (Merger Control Act), the Competition Commission is empowered to investigate concentrations and decide their compatibility with competition law. In the enforcement of competition law, the Competition Commission is assisted by its Service, which was under the auspices of the 1 Law No. 207/89 [Official Gazette No 2463 of 8 December 1989] has been amended by Law No 111 (I) of 1999, Law No 87 (I) of 2000, Law No 155 (I) of 2000 and Law No 67 (I) of 2001. 2 Law No 22 (I)/99 [Official Gazette No 3310 of 9 March 1999 has been amended by Law No 107 (I) of 1999 and Law No 154 (I) of 2000. Ministry of Commerce, Industry and Tourism until the enactment of Law 155(I)/00 (at the end of 2000) when it became an independent body in accordance with harmonization guidelines. The Competition Commission is an “independent authority” and has the status of a 2.4 public administrative body, whose decisions are taken on the basis of the Law 207/89 and Law 22(I)/99 without any interference by the Government. It is composed of the Chairman and four Members, who are appointed by decision of the Council of Ministers, on the proposal of the Minister of Commerce Industry and Tourism. The Chairman and the Members are appointed for a five-year term that may be renewed according to the relevant provisions of the law. The Secretary of the Commission for the Protection of Competition is a public officer and is also responsible for the Service of the Commission. The Service of the Competition Commission is composed by ten officers, six lawyers, four economists and one economic consultant, who are responsible for the enforcement of Law 207/89 and Law 22(I)/99. The Service is assisted further by a supporting staff of six persons. Section 22 of Law 207/89 empowers the Competition Commission to investigate on its 2.5 own initiative, or upon a complaint launched by its Service or third parties agreements between undertakings, concerted practices, and/or the abusive behavior of a dominant undertaking, which may restrict competition. The Competition Commission is under duty to review such cases and if it considers that there are prima facie indications of an anti-competitive behavior, it instructs the Service to conduct an investigation. Upon receiving such instructions, the Service launches an official investigation. section 24 of Law 207/89 grants the Service the authority to obtain any kind of information (even trade secrets) necessary for the investigation. Upon the finding that anti-competitive conduct has occurred, the Competition Commission has the power to order the termination of the infringement and/or impose fines on the undertaking that has infringed the competition law. Any party seeking to annul a decision of the Competition Commission has the right to 2.6 submit an application for the annulment of the Competition Commission decision to the Supreme Court (“ ´ 7KHDGPLQLVWUDWLYHUHFRXUVHZLOOILUVWO\EHDW the level of one judge of the Supreme Court. His decision may also be appealed, whereby the judgment of the Supreme Court is final. II. Relevant market definition in competition law in Cyprus 2.7 The Competition Commission of Cyprus has thus far not issued any particular guidelines or similar materials concerning the methodology and the strategies it uses for defining the relevant markets. As a reply to an information request, it was communicated to the author that, as a rule, the Competition Commission employs the European Commission Notice on the definition of the relevant market for the purposes 6 of Community competition law3 and other relevant materials released by the European Commission, as helping materials for relevant market assessments. While screening the decisions of the Competition Commission, one realizes that, indeed, the Competition Commission employs to a great extent all materials produces by the European Commission concerning market definition. It also consults frequently the practice of the European Commission and the case law of the European Courts. In most of the decisions scrutinized for the purpose of this study, the Competition Commission had included findings of the European Commission and/or European Courts as obiter dicta in its market analysis. With regard to the media sectors, the Cyprus Competition Commission has not had the 2.8 chance to address a great number of cases.
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