Representing corporations, business associations, investment banks, partnerships and individuals in a wide variety of competition law matters in Turkey. Collaborating with international law firms on Turkish competition law matters. Providing international and domestic clients with all types of legal services concerning competition law issues, including litigation. Defending companies before the Competition Board in all phases of an antitrust investigation. Representing defendants and complainants in complex antitrust investigations concerning all forms of abuse of dominant position allegations and all other forms of restrictive horizontal and vertical arrangements, including price-fixing, resale price maintenance, refusal to supply, territorial restrictions and concerted practice allegations.
Anti Competition Investigations in Turkey
Representing corporations, business associations, investment banks, partnerships and individuals in a wide variety of competition law matters in Turkey. Collaborating with international law firms on Turkish competition law matters. Providing international and domestic clients with all types of legal services concerning competition law issues, including litigation.
Defending companies before the Competition Board in all phases of an antitrust investigation. Representing defendants and complainants in complex antitrust investigations concerning all forms of abuse of dominant position allegations and all other forms of restrictive horizontal and vertical arrangements, including price-fixing, resale price maintenance, refusal to supply, territorial restrictions and concerted practice allegations.
Market Economy &Antitrust laws
Antitrust laws are considered to be the main components of market economy which requires a strong and solid legal framework. The Article 167 of the Turkish Constitution dated 1982 obliges the government to prevent cartelization and monopolization in the economy. The main legal source of the Turkish Competition Law is the Protection of Competition Act numbered 4054 which is entered into force on 13 December 1994.
The Competition Authority has been established in 1997 as the main enforcement body equipped with investigative, executive as well as rule-making powers.
The Protection of Competition Act numbered 4054 has been subjected to several amendments which mainly aimed at strengthening and rationalizing the operational efficiency of the Competition Authority and the enforcement system. The recent 2020 amendment has introduced important innovations such as “deminimis analysis”, “structural remedies”, “commitment” and “settlement”mechanisms” which are implemented already in the EU Competition Law.
The Amending Law provides the following noteworthy changes:
- implementation of the commitment mechanism within preliminary and full-fledged investigations, which do not involve severe and hardcore infringements,
- the opportunity for adopting settlement procedure for full-fledged investigations,
- introducing the test of “significant impediment of effective competition” for merger control analyses in addition to the “creation/strengthening a dominant position” criterion,
- the introduction of de minimis practice into the Turkish competition law,
- clarification of the individual exemption regime’s wording, so that the principle rule is indeed self-assessment of undertakings; whereas undertakings may prefer to file an exemption application for the Competition Board’s evaluation,
- prioritizing behavioral measures over structural measures, within remedies to be imposed to undertakings for competition violations, and
- providing a legal basis for the Competition Authority (“Authority”) for obtaining copies of computers and information systems of undertakings, which the Authority, indeed, applies in practice during on-site inspections.
The Competition Board decides to conduct a pre-investigation if it finds the notice or complaint to be serious. At this preliminary stage, unless there is a dawn raid (unannounced on-site inspection), the undertakings concerned are not notified that they are under investigation.
The Competition Authority’s experts’ preliminary report is submitted to the Competition Board within 30 days after a pre-investigation decision is taken. The Competition Board will then decide, within ten days from receipt of the preliminary report, whether to launch a formal investigation. If the Competition Board decides to initiate an investigation, it will send a notice to the undertakings concerned within 15 days.
The investigation must be completed within six months. If deemed necessary, the Competition Board can extend this period only once up to six months.
The following are the main stages of the formal investigation:
- The investigated undertakings have 30 calendar days from formal service of the notice to prepare and submit their first written defence.
- Subsequently, the Competition Authority issues its main investigation report.
- Once the main investigation report is served on the defendants, they have 30 calendar days to respond, extendable for a further 30 days (second written defence).
- The investigation committee then has 15 days to prepare an opinion concerning the second written defence, extendable for a further 15 days (additional opinion).
- The defending parties have another 30 days to reply to the additional opinion, extendable for a further 30 days (second written defence) (third written defence).
- When the parties’ responses to the additional opinion are served on the Competition Authority, the investigation process will be completed (that is, the written phase of investigation involving claim/defence exchange will close with the submission of the third written defence).
- The investigated undertakings can voluntarily offer commitments during a preliminary investigation or a full investigation. As a result, the Competition Board can decide not to launch a full investigation or to end an ongoing investigation without completing the entire investigation procedure.
- The Competition Board can initiate the settlement procedure which can only be offered in a full investigation. In this way, the investigated undertakings that admit an infringement can apply for the settlement procedure up to official service of the investigation report. If settled, the investigation will be closed with a final decision including the finding of a violation and an administrative monetary fine. If the investigation ends with a settlement, the administrative monetary fine can be reduced by up to 25%.
An oral hearing can be held at the parties’ request. The Competition Board can also decide to hold an oral hearing ex officio. Oral hearings are held within at least 30 and at most 60 days following the completion of the investigation process.
The Competition Board renders its final decision within either:
- 15 calendar days from the hearing, if an oral hearing is held.
- 30 calendar days from the completion of the investigation process, if no oral hearing is held.
It usually takes around six to eight months, from the announcement of the final decision, for the Competition Board to serve a reasoned decision.
Due to the COVID-19 pandemic, oral hearings can now be held by video conference if decided by the Competition Board.
Publicity and confidentiality
The reasoned decisions of the Competition Board are published on the Competition Authority’s website after confidential business information is redacted.
The main legislation regulating the protection of commercial information is Communiqué No. 2010/3. Communiqué No. 2010/3 places the burden of identifying and justifying information or documents as commercial secrets on the undertakings.
The Competition Board can evaluate information or documents ex officio. However, the general rule is that information or documents that are not requested to be treated as confidential are accepted as not confidential.
Undertakings must request confidentiality in writing from the Competition Board. They must justify their reasons for the confidential nature of the information or documents that they request to be treated as commercial secrets.
Investigating Potentially Restrictive Agreements or Practices
The Competition Law gives the Competition Authority considerable authority to conduct dawn raids. A judicial authorisation must be obtained by the Competition Board only if the relevant undertaking refuses to allow the dawn raid (in which case the undertaking will be subject to monetary fines).
Officials conducting a dawn raid must have a deed of authorisation from the Competition Board that specifies the subject matter and purpose of the investigation.
The Competition Authority can also use formal information request letters when investigating potentially restrictive agreements or practices.
Reaching Settlements with Regulators
Amendments introduced a settlement mechanism into Article 43 of the Competition Law. This mechanism offers a new alternative to undertakings that are willing to admit their anti-competitive actions and obtain a reduction to their fines. Most importantly, the settlement procedure applies to all forms of violations and is not confined to cartels. Furthermore, unlike leniency applications, the undertakings are not required to submit additional evidence about the infringement to be able to reach a settlement.
The settlement mechanism will enable the Competition Board, ex officio or on the parties’ request, to initiate the settlement procedure. Settlement can only be requested or offered after the initiation of a full investigation. In this respect, parties that admit an infringement can apply for the settlement procedure up to the official service of the investigation report.
The Competition Board will set a deadline for the submission of the settlement letter and, if settled, the investigation will be closed with a final decision including the finding of a violation and administrative monetary fine. If the investigation ends with a settlement, the Competition Board can reduce the administrative monetary fine by up to 25%.
Where the investigation ends with a settlement, the parties are precluded from bringing an action for annulment before the administrative courts.
Accepting Remedies (commitments) from the Parties
Another mechanism introduced in amendments to Article 43 of the Competition Law is the commitment procedure. This procedure allows undertakings, or an association of undertakings, to voluntarily offer commitments during a preliminary investigation or a full investigation to eliminate the Competition Board’s competitive concerns under Articles prohibiting restrictive agreements and abuse of dominance.
Depending on the sufficiency and the timing of the commitments, the Competition Board can decide not to launch a full investigation, or to end an ongoing investigation without completing the entire procedure. However, commitments will not be accepted for clear and hardcore violations such as price fixing between competitors, territory or customer sharing and the restriction of supply.
The Competition Board is expected to provide details of these new procedures through secondary legislation and can re-open an investigation if there is:
- A substantial change in any aspect of the basis of the decision.
- Non-compliance with the commitments from the relevant undertakings.
- A decision based on deficient, incorrect or fallacious information provided by the parties.
Penalties and enforcement
The sanctions that can be imposed under the Competition Law are administrative in nature. Therefore, breaches of the Competition Law lead to administrative fines, but not to criminal sanctions. However, there are circumstances where the matter is referred to a public prosecutor after the competition law investigation is complete. For example:
- Bid-rigging activity can be subject to criminal prosecution under section 235 of the Criminal Code.
- Illegal price manipulation can also carry up to two years’ imprisonment and a civil monetary fine under section 237 of the Criminal Code.
The Competition Board is authorised to take all necessary measures to:
- Terminate the restrictive agreement.
- Remove all factual and legal consequences of every action that has been taken unlawfully.
- Take all other necessary measures to restore the level of competition and status as before the infringement.
As an outcome of the amendments, Article 9 of the Competition Law grants the Competition Board the authority to order behavioural and structural remedies for anti-competitive conduct infringing:
- Article 4, which prohibits restrictive agreements and concerted practices between undertakings.
- Article 6, which prohibits abuse of dominant position.
- Article 7, which prohibits mergers and acquisitions that would result in a significant lessening of effective competition within a relevant market.
A structural remedy can come in the form of an order to divest certain activities, shareholdings or assets. A behavioural remedy can come as an order to engage in certain actions (for example, to grant access to a certain input) or to refrain from conducting certain practices (for example, line of business restrictions). In any case, behavioural and structural remedies must be proportional to the violation and necessary to end the violation in an effective way.
The Competition Board is authorised to order structural remedies, if and only if it is understood that the behavioural remedies that had previously been ordered are inconclusive. Where the Competition Board determines with a final decision that the behavioural remedies proved to be inconclusive, undertakings or associations of undertakings will be granted at least six months to comply with structural remedies.
In the case of a proven cartel activity, the companies concerned are separately subject to fines of up to 10% of their Turkish turnover generated in the financial year preceding the date of the fining decision (if this is not calculable, the turnover generated in the financial year nearest to the date of the fining decision is taken into account).
Article 17 of the Law on Minor Offences requires the Competition Board to take a number of factors into consideration when determining the amount of the monetary fine. In line with this, the Competition Authority enacted the Regulation on Monetary Fines for Restrictive Agreements, Concerted Practices, Decisions and Abuses of Dominance (Regulation on Fines). The Regulation on Fines sets out detailed guidelines on the calculation of monetary fines applicable in the case of an anti-trust violation. The Regulation on Fines applies to both cartel activity and abuse of dominance, but does not cover illegal concentrations.
In a proven cartel activity, employees and managers of the undertakings, or association of undertakings, who had a determining effect on the creation of the violation, are also fined up to 5% of the fine imposed on the undertaking or association of undertakings. The Regulation on Fines also applies to managers or employees who had a determining effect on the violation and provides for certain reductions in their favour.
The Leniency Regulation provides the main principles for the immunity and leniency programmes. The leniency programme is only available to cartel participants. It does not apply to other forms of anti-trust infringements. A cartel participant can apply for leniency until the investigation report is officially served. Depending on the application order, there may be total immunity from, or a reduction of, a fine. This immunity or reduction covers both the undertakings and their employees/managers, with the exception of the ringleader, who can only benefit from a second-degree fine reduction.
That said, the Competition Board’s recent precedent indicates that a leniency applicant can enjoy total immunity from fines, even when the subject matter falls under another form of anti-trust violation (Syndicated Loans 11 November 2017, 17-39/636-276).
Impact on agreements
A restrictive agreement is deemed legally invalid and unenforceable, with all its legal consequences. Similarly, the Competition Board can take interim measures until the final resolution on the matter, if there is a possibility of serious and irreparable damage.
Right of Appeal against decision of the regulator
Final decisions of the Competition Board, including its decisions on interim measures and fines, can be submitted to judicial review before the administrative courts by filing a lawsuit within 60 days of receipt by the concerned parties of the Competition Board’s reasoned decision.
Filing an administrative action does not automatically stay the execution of the Competition Board’s decision (Article 27, Administrative Procedural Law). However, on request from the claimant, the court, providing its justifications, can decide to stay the execution of the decision if it is likely to cause serious and irreparable damage and if the decision is highly likely to be against the law (that is, the showing of a prima facie case).
Third parties can challenge the Competition Board’s decision before the competent judicial tribunal, provided that they prove their legitimate, current and concrete interest (Ankara 7th Administrative Court (29 March 2018, 2018/73 E; 2018/652)).
The judicial review period before the administrative courts usually takes about 12 to 24 months. If the challenged decision is annulled in full or in part, the administrative court remands it to the Competition Board for review and reconsideration.
After the recent legislative changes to the Law on Establishment and Duties of Regional Administrative Courts, administrative litigation cases (and private litigation cases) are now subject to judicial review before the newly established regional courts. The amendments have created a three-level appellate court system consisting of administrative courts, regional courts and the Council of State (the Court of Appeals for private cases). The regional courts will:
- Go through the case file both on procedural and substantive grounds.
- Investigate the case file and render their decision considering the merits of the case.
The regional courts’ decisions are considered as final in nature. The decision of the regional court is subject to the Council of State’s review in exceptional circumstances. In this case, the decision of the regional court is not considered as a final decision and the Council of State can decide to uphold or reverse it. If the decision is reversed by the Council of State, it will be remanded back to the deciding regional court, which will in turn issue a new decision taking into account the Council of State’s decision.
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