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Cyprus let off the hook

Following Cyprus’ action to abrogate the law requiring lawyers to charge a minimum fee for out-of-court work, the EC has closed infringement proceedings against Cyprus and an antitrust investigation.

European Commission closes infringement proceesdings against CyprusTHE EUROPEAN Commission decided today to close infringement proceedings against Cyprus concerning a minimum fee scale for out-of-court legal work, such as the drawing up of wills, contracts, the administration of estates and the registration of companies.

EU law requires Member States to refrain from encouraging undertakings or associations of undertakings to favour or encourage anti-competitive behaviour that would breach Article 101 of the Treaty on the functioning of the European Union.

In April 2018, the Commission raised concerns with the Cypriot authorities that certain legislative provisions, by empowering the Cyprus Bar Association to adopt a minimum fee scale for out-of-court work, encouraged behaviour that could prevent, restrict or distort competition within the EU’s Single Market.

In response to the concerns raised, Cyprus has amended its law. The Commission welcomes the new legislation, which removes the specific provision empowering the Cyprus Bar Association to set these fees.

In parallel, the Commission today also closed an antitrust investigation into the minimum fee scale adopted by the Cyprus Bar Association, based on the empowerment contained in the national legislation.

The Commission welcomes the decision of the Cyprus Bar Association to abrogate this minimum fee scale after the Commission raised concerns that these rules were not compatible with Article 101 of the Treaty on the Functioning of the EU.

The Commission’s intervention means that lawyers can now freely determine their fees when providing out-of-court legal services and that citizens will benefit from more competitive prices in this sector.

Further reading

European Commission Press Release

 

Readers' comments

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  • Aggis Demetriou says:

    For sure in Cyprus they restrict and distort competition within the EU market, take a look at the real estate license? They won’t allow any EU real estate agent to practice unless they have this License which is impossible to get, where is article 101 here?

    There so much money being made by the real estate agents some have resulted to being bombed as they don’t keep their promises.

  • Costas Apacket says:

    It’s one thing for the Cypriot Bar association to say it has ended this practice, and it’s another thing to see if anything actually changes or if the instruction remains, hidden from public view.

    Now it’s time for the EU to have a look at the Estate Agent 5% fees cartel.

    Ed: Not all Estate Agents charge 5%. Here’s a comment a few weeks ago by an estate agent:

    “I am an Estate Agent in the Polis area and would like to reply to the comments made about extortionate fees of 5%. I have also sold property in USA, Spain and Portugal where the standard fees are 5% and in France often 10%.

    In the UK fees are lower and often 1.5%, but house prices in the UK are usually at least twice the price of Cyprus and often more. The normal selling time in the UK is about two months whereas here in Cyprus it is quite common to list a property for two years before a sale is achieved. Therefore over a period of a year the UK estate agent will probably achieve a higher income than here in Cyprus.

    It should also be remembered that the marketing of a property in Cyprus is totally different. Advertise a property in England, and a potential buyer will probably drive up at the weekend and look at the property. Our normal time frame is three months from an inquiry until they visit Cyprus, and all this time wanting more information – once here a potential buyer will want to tour the different areas, take them to meet different Independent Lawyers, and a whole range of other services. Once a property is sold, we are still on call to provide information on electric, property improvements, and a whole host of other services that are not necessary in England. For our commission we provide a great value service.

    Regarding the real estate cartel – I agree with this. Under EU law I can sell property here in Cyprus, but under Cyprus Law I need to be licensed and not normally available to people who are not Cypriot. I have challenged this in the Supreme Court and not made progress – so I now have to work with a Cypriot Licensed agent and pay him 10% of any commission that we receive.

    Regarding commission rates, and marketing – all agents are different. On lower priced properties where the owner lists with many agents we charge 5% however for most of the properties that we list, our charges are 4% and on high priced properties we will negotiate the fees. On marketing, many agents just take a quick photo with a mobile phone – we take professional pictures, prepare floor plans, a video of a property, and a 3D tour – each property that we market takes one day to prepare all the information.

    PLEASE do not package all estate agents together, some of us work very hard on behalf of our clients – and our commission is well earnt.”

  • Deanna says:

    There are times like this when you give thanks for being an EU member.

    When UK leaves we will have all this to worry about thanks to a referendum held before the population realised the consequences…..

    Ed: The legal challenge to the European Competition Commission about the minimum lawyers’ fees was taken by a Cypriot.

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