State Aid Commissioner Stella Michaelidou has reiterated that the bidding process in all privatisations must be conducted in an open, transparent manner that ensures equal access to information and avoids any conditions that might depress the final sale price. This principle is especially critical in the forthcoming privatisation of the Cyprus Stock Exchange.
Open And Transparent Bidding Process
Commissioner Michaelidou emphasized that competitive tenders should be free from restrictions that could lower the ultimate valuation of the asset. Speaking with the Cyprus News Agency, she clarified that the tender process for the Cyprus Stock Exchange must be rigorously assessed under EU state aid rules. This assessment will be carried out by her office and, if necessary, by the European Commission, ensuring that market standards are maintained.
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Independent Valuation And Fair Pricing
The Commissioner stressed the necessity of an independent valuation conducted by a certified firm to ascertain fair market value. “The sale must be conducted at a price that reflects fair value, without being undervalued,” she stated. This insistence on an unbiased valuation prevents any mispricing that could arise from state-imposed conditions or undisclosed arrangements.
Safeguarding The Market Economy Principle
Michaelidou made it clear that the privatisation process must avoid incorporating elements that represent state intervention post-sale, such as special privileges or exclusive rights. She noted that retaining a state stake allows the government to monitor and influence the new owner’s management, contrary to the market economy investor principle where conditions that could lead to state aid should be avoided.
Mitigating State Aid And Ensuring Legal Certainty
Highlighting the broader framework of EU state aid rules, the Commissioner advised that each privatisation case be examined based on its specific data. Conditions imposed in the tender documents must be assessed to ensure they do not translate into state aid. Michaelidou referred to legal precedents where private investors would not impose such conditions, thereby reinforcing the necessity for market-compliant processes.
Ensuring Competitive And Unbiased Tenders
In addition to rigorous evaluations, potential conditions such as tax benefits, guarantees, or debt conversions must be scrupulously examined to ensure they do not provide undue advantages. The assessment should consider realistic market behaviors, risk profiles, and expected returns. The Finance Ministry has been advised to subject any tender conditions to this evaluative process, with the option of using the European Commission’s preliminary notification process to secure legal certainty.
In summary, Commissioner Michaelidou’s guidance underlines the importance of adhering to market standards. By ensuring that bids are invited in an open, transparent manner and that the sale is underpinned by an independent valuation and free of state intervention, the privatisation process can maximise revenues while maintaining fair competition and legal clarity for all parties involved.
