← Κύπρος

Decision CPC 58_2022

ΚΥΠΡΙΑΚΗ ΔΗΜΟΚΡΑΤΙΑ Decision CPC: 58/2022 Case Number: 08.05.001.022.027 THE CONTROL OF CONCENTRATIONS BETWEEN ENTERPRISES LAW No. 83(Ι)/2014 Notification of a concentration concerning the acquisition from Pacific Investment Management Company LLC (PIMPCO) of a Hellenic Bank investment package that includes the share capital of Kohira Holdings Ltd which will hold a MED portfolio, the share capital of APS Debt Servicing Cyprus Ltd and bonds, via Oxalis Holdings S.a.r.l Commission for the Protection of Competition: Mrs. Loukia Christodoulou Chairperson Mr. Panayiotis Oustas, Member Mr. Aristos Aristidou Palouzas, Member Mr. Polinikis Panayiotis Charalambides Member Date of decision: 1st September 2022 SUMMARY OF DECISION On the 23 of May 2022 the Commission for the Protection of Competition (hereinafter the “Commission”) received on behalf of Oxalis Holding S.à r.l. a notification of a proposed concentration. The notification was filed according to Section 10 of the Control of Concentrations between Enterprises Law 83(I)/14 (hereinafter the “Law”). The notification concerns a concentration, according to which Pacific Investment Management Company LLC (hereinafter "PIMCO"), through Oxalis, will acquire an investment package of Hellenic Bank, which includes the share capital of Kohira Holdings Ltd (hereinafter the "Credit Acquisition Company" or "EEP") which will hold a portfolio of Non-Performing Loans (hereinafter "NPL"), the share capital of APS 1 Debt Servicing Cyprus Ltd (previously APS Holding) (hereinafter "APS") and senior bonds. Companies participating at this merger are the following: Oxalis, is a company duly registered under the laws of the Grand Duchy of Luxembourg. Themis Portfolio Management Holdings Limited (formerly CYCMC III Limited) (hereinafter "Themis"). As part of this Transaction, Oxalis will acquire 100% of the equity capital of EEP (directly) and 100% of the equity capital of APS (indirectly through Themis), and will operate in the following markets: I. Purchase of possession of non-performing loans in Cyprus, II. Non-performing loan management and recovery market in Cyprus, and III. Purchase of real estate management, which has been acquired by execution measures or by the repayment of credit rights arising from mortgage loans in Cyprus, and/or by the acquisition of a portfolio with said properties (Real Estate Owned properties, hereinafter "REOs")).

  1. PIMCO is a global investment management firm focusing on active fixed income management and providing services to specialist institutions, financial intermediaries and institutional investors. The current presence of the funds managed and advised by the PIMCO Group in Cyprus concerns the following: • Poppy S.àr.l., a company wholly owned by the PIMCO Group, which owns 17% of Hellenic Bank's share capital and has a non-executive position on its board of directors. • In the ordinary course of business, funds managed by the PIMCO Group may from time to time invest in fixed income securities issued by Cypriot companies (such as corporate bonds or loans).
  2. EEP is a private limited liability company, duly registered under the laws of the Republic of Cyprus, which is a subsidiary of Hellenic Bank. The assets of the Starlight Portfolio will be transferred to EEP, upon completion of the 2 transaction. Starlight Portfolio includes non-performing loans. Starlight Portfolio also includes REO properties with a value of [….], which have been acquired from foreclosure or credit rights payment processes of the said nonperforming loans. The transfer of the Starlight Portfolio to EEP will be completed once it is approved as a Credit Acquisition Company (EEP) in accordance with the provisions of the Credit Facility Sales Law of 2015 (169(I)/2015). Following the transfer of the Starlight Portfolio by Hellenic Bank, EEP will also be licensed as a "non-credit institution" under the provisions of the Credit Agreements for Consumers in relation to Residential Properties Law of 2017 (41(I)/2017).
  3. APS Debt Servicing Cyprus Limited (hereinafter "APS Debt") is a private limited liability company duly registered under the laws of the Republic of Cyprus. Around October 2021, APS Debt was fully acquired by Hellenic Bank since before the said acquisition it was 51% owned by APS Delta SA, a company registered in Luxembourg (APS Holding SA (LU)). The company in question, manages all the non-performing loans owned by Hellenic Bank and is also active in the management of real estate acquired by credit institutions through execution or payment procedures against credit rights arising from mortgage loans and in the management and recovery of non-performing loans loans granted by credit institutions or other persons with overdue claims and related ancillary debts. In the proposed merger, Oxalis upon completion of the transaction will acquire sole control of EEP, which will hold the Starlight Portfolio. Also, based on the second agreement, Oxalis through Themis will acquire 100% of the share capital of Hellenic Bank's non-performing loan management platform, namely APS Debt. The Commission taking into account the Commission's Codified Notice on Jurisdiction under Regulation (EC) No. 139/2004 on the control of concentrations between undertakings (2008/C 95/01) (hereinafter the "Notice"), concluded that the notified concentration is carried out on the basis of interrelated acts and successive stages, which constitute a single concentration as stated in the article 7 of the Law, since the result of said actions is the acquisition, directly or indirectly, of control over the activities of one or more companies, as from the study of the Purchase and Sale 3 Agreements dated April 8, 2022, the interdependence of the two agreements emerges, since the application of one is a condition for the completion of the other. The Transaction will lead to acquiring sole control of (i) a legal entity, AEP, which will hold the Starlight Portfolio (Target 1), and (ii) the APS legal entity (Target 2) by PIMCO Group. The Commission, taking into account the aforementioned facts and events surrounding the merger under consideration, and after evaluating them based on the concept of concentration, as defined in the above article, concluded that the merger under consideration constitutes a merger within the meaning of Article 6

(1)(a)(
  1. ii)of the Law and meets the meaning of concentration, as it will bring about a change of control on a permanent basis in Target 1 and Target 2 and Oxalis will acquire their exclusive control. The Commission has concluded that for the purposes of evaluating this concentration, the relevant product market is defined as the purchase of (
  2. a)possession of a NPL portfolio / the acquisition of NPLs and (
  3. b)management of NLPs, either in-house or through third parties and (
  4. c)management of properties acquired by credit institutions through execution procedures or payment against credit rights arising under mortgage loans (REO). In addition, the Commission concluded that the geographical market for the relevant markets in question is that of the territory of the Republic of Cyprus. The Commission, taking into account the data provided by the participating companies regarding the market shares before and after the PIMCO Group Transaction in Cyprus, but also of Target 1, concluded that an affected market arises due to a horizontal relationship in (
  5. a)the NED holding market, since the market share resulting from the concentration of the activities of the two parties involved, PIMCO and Target 1 (which includes the Starlight portfolio) reaches [10-20] %. Based on the above-mentioned market shares, the Commission concluded that an affected market as defined in Article 3(
  6. a)of Annex I of the Law, regarding the horizontal relationship in the activities of the PIMCO Group and Target 1 in the market (
  7. a)market possession of NEDs in the Cypriot territory, as their total market share exceeds 15%. According to the participants, as a result of the transaction, PIMCO Group's market share upon completion of the merger will reach [20-30] % in (
  8. b)the relevant non- 4 performing loan management market. The calculated market share is derived from the sum of PIMCO Group's market share ([10-20] %) before the present merger and the market share that will increase with the acquisition of Target 2 ([5-10] %). Based on the above market shares, the Commission concludes that there is an affected market as defined in article 3(
  9. a)of Annex I of the Law, regarding the horizontal relationship between the activities of the PIMCO Group and Objective 2 in the NED management market in the Cypriot territory. A possible vertical relationship between PIMCO Group as a non-performing loan manager and Target 1 as a non-performing loan holder has been identified in the present concentration. PIMCO group's market share in the NPL management in Cyprus amounts to [20-30] % upon completion of this transaction. EEP's market share as holder of non-performing loans in Cyprus amounts to [0-5] %. PIMCO Group's market share upon completion of the present concentration in the non-performing loan management market in Cyprus is [….] [20-30] %, which is below the 25% threshold that creates an affected market according to the Annex I of the Law. At the same time, a vertical relationship has also been identified between PIMCO Group and APS Debt where PIMCO Group is in the market of holding NPLs and Target 2 in NPL management. APS Debt manages non-performing loans with a gross book value of approximately [….]. APS Debt's market share in the NPL management market is [5-10] %. PIMCO Group's market share in the NPL acquisition/holding market is approximately [10-20] %. […..] [10-20] % which is below the 25% threshold that creates an affected market according to Annex I of the Law. In conclusion, by virtue of Annex I of the Law and the minimum threshold of 15% that it sets in cases where the undertakings participating in a concentration operate at the same market level (horizontal concentration) and taking into account the shares of the participating undertakings, the Commission found that there is an affected market at a horizontal level in the market of possession of NPLs and in the market of NPL management, either internally (in-house) or through third parties. 5 Therefore, the Commission proceeded with the analysis of the compatibility criteria in accordance with the criteria set out in Article 19 of the Law and in the guidelines for the evaluation of horizontal mergers in accordance with the Council Regulation on the control of mergers between undertakings regarding Coordinated and Uncoordinated results that may arise upon completion of the concentration. The Commission noted that under the Horizontal Merger Guidelines, market shares and levels of concentration are useful indicators of market structure and the competitive importance of the parties involved and their competitors. As stated, in the market for the acquisition/possession of non-performing loans, according to the data of the notification, at least 11 other credit acquisition companies are active: i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. KEDIPS / SEDIPS GORDIAN HOLDINGS LIMITED ALPHA BANK (CYPRUS) GREEK BANK BANK OF CYPRUS ASTROBANK CAC CORAL / BAIN CAPITAL CREDIT B2KAPITAL CYPRUS OTHER BANKS NATIONAL BANK OF GREECE (CYPRUS) APS DELTA According to the participating companies, PIMCO Group will continue to face serious pressure from competitors that will hold a larger market share, even after the completion of this transaction, such as KEDIPES / SEDIPES and Gordian Holdings and Cerberus Capital Management after the completion of the "Project Sky" transaction. These competitors will continue to be viable and effective alternatives to the PIMCO Group as players in the NPL acquisition/holding market. Therefore, these competitors will continue to be a truly effective alternative for the provision of services related to the management of non-performing loans in Cyprus, apart from the PIMCO Group. The Commission proceeded to examine the levels of concentration based on the Herfindahl-Hirschman Index (hereinafter the "HHI"). According to the information in the notification, the HHI index in the (
  10. a)NPL holding market before the transaction is estimated at 2023. Following the transaction, the 6 index is estimated at [….]. However, the delta, which shows the extent to which the market is further concentrated by the specific act of concentration, does not exceed 150. In particular, the delta amounts to [….]. Therefore, as the Delta is well below 150 and following the approach of the European Commission which does not consider competition problems to exist when the delta is below 150, the Commission considered that there is no competition issue. Regarding the non-performing loan management market and according to the data of the notification, the present concentration may not, according to the participating companies, affect competition because the PIMCO Group will continue to face serious competitive pressures from competitors that will hold a larger market share, even after the completion of the transaction. It’s noted that at least 7 other credit acquisition companies are active in the nonperforming loan management market: i. DOVALUE S.P.A ii. GORDIAN HOLDINGS iii. BANK OF CYPRUS iv. QQUANT MASTER SERVICER v. B2KAPITAL CYPRUS vi. NATIONAL BANK OF GREECE (CYPRUS) vii. APS DELTA The HHI concentration index in this market before the transaction is estimated at [….]. After completion of transaction, this index is estimated at [….]. The Delta HHI calculated as the difference between the post-merger and pre-merger HHI is [….], which is above 150. Based to the Guidelines for the assessment of horizontal mergers, above indicators prove the existence of competition on the market. According to the participants, PIMCO Group will continue to face severe competitive pressures in the NPL management market from competitors with larger or near market share, even after the completion of the transaction, such as doValue and GORDIAN HOLDINGS LTD. Furthermore, after the completion of Project Sky, the portfolio of non-performing loans acquired by Cerberus Capital Management will be managed either by Cerberus Capital Management itself or by a third party, it is recommended that either a new player enters the market with market share [10 20%], or an increase of [10-20%] in the market share of an existing player in the non- 7 performing loan management market. Accordingly, these competitors will continue to be a truly effective alternative for the provision of services related to the management of non-performing loans in Cyprus, apart from the PIMCO Group. In the present case, it is pointed out that the intended concentration will not reduce the providers of NLD holding or management services. However, according to the data of the notification, no reliable forecast can be made in relation to the wider sector of non-performing loans. It is noted that with the activity of credit acquiring companies in Cyprus in recent years and with the tightening of the relevant Regulations of the Central Bank of Cyprus, the rate of creation of new nonperforming loans has significantly decreased. However, the recent COVID-19 pandemic, highlights the critical role played by exogenous parameters in the NPL sector. The Commission, on the basis of the factual and legal circumstances, unanimously decided that this concentration does not create or strengthen a dominant position as there is no affected market and therefore the concentration does not raise serious doubts as to its compatibility with the operation of the competition in the market. Therefore, the Commission, acting in accordance with section 22 of the Law, unanimously decided not to oppose the notified concentration and declare it as being compatible with the operation of the competition in the market. Loukia Christodoulou Chairperson of the Commission for the Protection of Competition Panayiotis Oustas Member of the Commission for the Protection of Competition Aristos Aristidou Palouzas Member of the Commission for the Protection of Competition Poliniks Panayiotis Charalambides Member of the Commission for the Protection of Competition 8

🔗 Στην επίσημη πηγή

Επεξήγηση AI βάσει του επίσημου κειμένου του νόμου. Ενδεικτική, δεν υποκαθιστά νομική συμβουλή.