ΚΥΠΡΙΑΚΗ ΔΗΜΟΚΡΑΤΙΑ Decision CPC: 74/2022 Case Number: 08.05.001.022.051 THE CONTROL OF CONCENTRATIONS BETWEEN ENTERPRISES LAW No. 83(Ι)/2014 Notification of concentration regarding the acquisition of the joint control of Aphrodite Hills Resort Ltd by MHV Mediterranean Hospitality Venture Ltd and W.R.A. Consultants Ltd Commission for the Protection of Competition: Mrs. Loukia Christodoulou Chairperson Mr. Andreas Karydis Member Mr. Aristos Aristeidou Palouzas Member Mr. Polynikis-Panagiotis Charalambides Member Date of Decision: 17th of November 2022 SUMMARY OF THE DECISION On 02/09/2022, the Commission for the Protection of Competition (hereinafter the “Commission”) received on behalf of MHV Mediterranean Hospitality Venture Ltd and W.R.A. Consultants Ltd, 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 MHV Mediterranean Hospitality Venture Ltd (hereinafter the “MHV”) and W.R.A. Consultants Ltd (hereinafter the “W.R.A.”), will acquire the joint control of Aphrodite Hills Resort Ltd (hereinafter the “AHRL” or the “Target”). The companies participating in this merger are the following: 1 A) MHV is a limited liability company, duly registered under the laws of the Republic of Cyprus. Its main activities are in the hospitality, tourism and real estate sectors. Its portfolio consists of luxury hotel complexes and developments both in Cyprus and abroad. It owns and manages luxury resorts such as Parklane Luxury Collection Resort & Spa (Cyprus), The Landmark Nicosia (Cyprus), Aphrodite Hills Resort (Cyprus) and Nikki Beach in Porto Heli (Greece). In real estate, the company has acquired projects such as Park Tower and the residential units at Aphrodite Hills and is evaluating the upcoming development of Landmark Tower. MHV currently owns and controls the following subsidiaries: (
- a)Cyprus Tourism Development Company Limited (hereinafter the “CTDC”), which owns, manages and operates the five-star (5*) Landmark Nicosia Hotel, Nicosia District (294 rooms), which is currently closed for renovation. In addition, CTDC has recently been active in the development and sale of real estate in the Nicosia region through the development of residential and commercial apartment buildings on the plot adjacent to the Landmark Hotel for sale. (
- b)Aphrodite Hills Resort Limited (AHRL) which owns, manages and operates the Aphrodite Hills Resort Hotel, in the district of Paphos, (
- c)Parklane Hotels Limited (hereinafter “Parklane”), which owns, manages and operates the Parklane Resort and Spa Hotel, in the district of Limassol, (
- d)Stromay Holdings Limited (hereinafter “Stromay”), whose sole activity is the holding of properties in Limassol which are used as staff housing and rented to Parklane for the accommodation of its staff. (
- e)Porto Heli Hotels & Marina Single Member S.A. (hereinafter “Porto Heli”) which owns, manages and operates the Nikki Beach Hotel in Greece, (
- f)MHV Bluekey One Single Member S.A. which has been incorporated for the acquisition and (subsequent development) of land and tourism assets in Porto Paros, Greece, (
- g)MHV Lifestyle Limited which owns, manages and operates clothing boutiques in certain of the group’s hotels, currently the Parklane Hotel, Limassol and Nikki Beach, Porto Heli, 2 (
- h)MHV IA Limited which is a company incorporated to provide equity management schemes. The current shareholders of MHV are: Prodea Real Estate Investment Company SA (hereinafter “Prodea”), with a shareholding of [………] %, Papabull Investments Limited (hereinafter “Papabull”), with a shareholding of [… ……] %, Invel Real Estate IREP3 through Flowpulse Limited with a shareholding of [………] % (hereinafter “Flowpulse”) and Ascetico Limited (hereinafter “Ascetico”), with a shareholding of […… …] %. MHV is controlled by Papabull, Prodea and Flowpulse. The activities of MHV’s shareholders are as follows: • Invel Group focuses on investment and asset management opportunities in the European real estate markets. • Flowpulse is a company registered under the laws of the Republic of Cyprus, which has no previous commercial activities and is used exclusively to hold the shares in MHV. Flowpulse is controlled by the Invel Real Estate group of companies, including Invel Real Estate Partners Three Limited (“IREP3”). Prodea is an anonymous real estate investment company (AIEAP) and is listed on the Athens Stock Exchange. It is indirectly controlled by Invel Real Estate Partners Greece SAS (hereinafter “IREP Greece”), a holding company. Castlelake LP is a global alternative investment firm that manages funds and asset vehicles on behalf of institutional investors (hereinafter “Castlelake”). Prodea and its subsidiaries are active in real estate investment and the active management and exploitation of real estate assets. Its real estate portfolio consists mainly of commercial properties (mainly offices and retail properties) owned directly or through its subsidiaries. These properties are located in prime urban areas across Greece, Italy, Cyprus, Bulgaria and Romania, and are mainly leased to top blue-chip tenants. Prodea, through its subsidiary CYREIT AIF Variable Capital Investment Company Plc (“CYREIT”) deals with:
- i)the lease of a four-star (4*) hotel in Protaras under the name “Althea Hotel”,
- ii)the lease of offices in Larnaca, Limassol, Nicosia and Paphos, iii) the rental of retail stores in Limassol, Nicosia and Paphos, and
- iv)the 3 use of properties such as commercial warehouses, industrial buildings, special use properties (casino). In addition, through its subsidiary Quadratix Limited, Prodea owns properties (supermarket and offices) in Limassol, which are leased to third parties. Furthermore, through its Cypriot subsidiary, Lasmane Properties Ltd, it owns real estate in Nicosia, which formerly operated as a “Holiday Inn” hotel. • Papabull is a company incorporated under the laws of the Republic of Cyprus, which operates in the field of real estate investment and hospitality. IQ EQ Trustee Services (Cyprus) Limited is a Cypriot legal entity under the ownership of IQ EQ (Cyprus) Limited, which is supervised by the Cyprus Securities and Exchange Commission and engaged in the provision of administrative services. In addition, Papabull is the owner of two properties (offices) in Nicosia. • Ascetico Limited is a wholly owned holding company of the MHV Group. It was incorporated on 19/01/2021 and its direct shareholder is Bluedove Limited, which constitutes a holding company with sole investment in Cyprus its participation in MHV through Ascetico. B) W.R.A., is a company duly registered under the laws of the Republic of Cyprus. Its parent company is Twighlight Ltd, a company duly registered under the laws of the Republic of Cyprus. Twighlight Ltd has had no activity to date. W.R.A. wholly owns (100%) the shares of Aesara Investment Ltd (hereinafter “Aesara”), a company duly registered under the laws of the Republic of Cyprus, which owns and operates the Atlantica Mare Village Ayia Napa Hotel in Ayia Napa, which is 5 stars (5*), with 341 rooms and 682 beds. It has no other activity. (
- i)Atlantica Golden Resorts Limited, which owns and controls the four-star (4*) Atlantica Golden Beach hotel (372 beds and 186 rooms) in Paphos District. (
- ii)Kimrar Properties Ltd, which owns and controls the five-star hotel (5*) Atlantica Mare Village Paphos (918 beds and 327 rooms), in Paphos District 4 C) The Target Company, AHRL, is a company duly registered under the laws of the Republic of Cyprus and is a wholly owned subsidiary of MHV. It is mainly active in the development of resorts and recreational areas as well as in the management and exploitation of hotel accommodation. AHRL is also engaged in the development and sale of properties in Aphrodite Hills and provides administrative and other support services to its subsidiaries. Its wholly owned ([………]%) subsidiaries are: (
- a)Aphrodite Hotels Ltd, which operates a 5-star (5*) hotel in Aphrodite Hills, (
- b)Aphrodite Hills Property Management Ltd, which engaged in the provision of property management and related services and rental services, (
- c)Aphrodite Hills Tennis and Spa Ltd, engaged in the operation of a tennis academy, and (
- d)Aphrodite Hills Services Ltd, engaged in the provision of drainage, security and other services to property owners located in Aphrodite Hills. The company also owns [………] % of the shares of Aphrodite Pantopoleion Ltd, which is active in the sale of goods. This concentration is based on the following Agreements: (
- a)Share Purchase Agreement (“SPA”), dated September 1, 2022, entered into between MHV acting as the Seller and W.R.A. acting as the Buyer. Pursuant to said Agreement, MHV will sell and W.R.A. will purchase [………] % of the total issued share capital of the Target. (
- b)Shareholders’ Agreement (“SHA”) between W.R.A, MHV and AHRL which provides for matters such as the composition of the Board of Directors and the Administration of AHRL. Furthermore, based on the information contained in the notification, the Commission found that the criteria set by section 3
(2)(
- a)of the Law were satisfied and therefore the notified concentration was of major importance falling within the scope of the Law. The relevant product/services market in this case were defined as the (
- i)the management and operation market of four (4*) and five (5*) star hotel, (
- ii)the real estate rental market, (iii) the real estate services market. In addition, the Commission concluded that the geographical market is defined, for the relevant markets under reference, as the following: 5
- i)For the market of management and operation of 4* and 5* hotels: - Paphos district, regarding the hotels Aphrodite Hills Resort Hotel, Atlantica Golden Beach and Atlantica Mare Village Paphos, - Nicosia district, regarding the Landmark Hotel, - Limassol district, regarding the Parklane hotel, - Famagusta district, regarding Atlantica Mare Village Ayia Napa.
- ii)For the real estate rental market: with respect to the activities of the Target Company (and through it, MHV), the district of Paphos and with respect to the activities of MHV through its subsidiaries Parklane and Stromay Holdings Limited, the district of Limassol. As regards MHV’s shareholder, Prodea, the geographical market for the relevant product/service market under reference is defined as all the districts of Cyprus. iii) For the real estate services market: in relation to the activities of the Target Company, the district of Paphos, and in relation to the activities of one of MHV’s shareholders, Prodea, all the districts of the Republic of Cyprus. As regards the relevant market for the management and operation of 4* and 5* hotels, the Commission observes that there is a horizontal relationship between the participating companies. According to the participants, in the Republic of Cyprus, including Aphrodite Hills, there are a total of 29 five-star (5*) hotels with a total number of 13.778 beds and “therefore, both Cypriot and foreign visitors have many choices in market for the services offered by five-star (5*) hotels”. The Commission also notes that, with regard to Paphos district, which constitutes the geographical reference market, there are currently 10 five-star (5*) and 23 four-star (4*) hotels. As submitted by the participants, there are other five-star (5*) hotels in Paphos district which were under construction and have recently been completed or are about to be completed, while maintaining that there are no restrictions in Paphos district for the construction of five-star hotels (5 *) while, other five-star hotels in the mentioned district are comparable in amenities and services to AHRL so that guests have various options. 6 According to the Parties, AHRL - and through it MHV - has a market share in the said market amounting to [0-5%] in terms of the number of rooms/units and [0-5%] in terms of number of beds. As they further state, the final beneficial owners of W.R.A., 2 natural persons, have a market share amounting to [5-10%] in terms of the number of rooms/units, and in [5-10%] in terms of the number of beds. Based on the above, the Commission observes that although there is a horizontal relationship between the participants in the said market, the combined share of W.R.A and MHV in it will nevertheless amount to [10-20%] in terms of number of rooms /units and [10-20%] in terms of the number of beds, with the result that the combination of these market shares, both in terms of the number of rooms/units and in terms of the number of beds, does not exceed the limit of 15% specified in paragraph 1(
- a)of Annex I of the Law to be considered an affected market. Based on the above, the Commission concludes that this transaction with regard to the horizontal relationship created between the activities of the participants in the relevant market of management and operation of four (4*) and five (5*) star hotels, it does not constitute an affected market in based on Annex I of the Law since the market shares of the participants, taking into account the factors taken into account, are expected to be below the 15% limit set by the Law. The Commission additionally notes that, in the relevant market in question, no vertical and/or other relationship is created with regard to the activities of the participants in the merger. The Commission also concludes that, based on the information in the notification, with regard to the other designated relevant markets, i.e. the relevant real estate rental market and the relevant real estate services market, no horizontal, and/or vertical, and/or other relationship emerges regarding the activities of the participants in this merger act. Taking into account the above, the Commission concludes that in this concentration no affected market is created based on Annex I of the Law. In addition, there are no other markets in which the notified concentration may have a significant effect. 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 7 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. Mrs. Loukia Christodoulou President of the Commission for the Protection of Competition Mr. Andreas Karydis Member of the Commission for the Protection of Competition Mr. Aristos Aristeidou Palouzas Member of the Commission for the Protection of Competition Mr. Polynikis-Panagiotis Charalambides Member of the Commission for the Protection of Competition 8