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Competition and Laws and Regulations in Turkiye

Competition Comparative Guide: 2024
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Contributed by Nazali Tax & Legal.

1. What are the main competition-related pieces of legislation in Turkiye?

The basis of Turkish competition law practices is Act No. 4054 on the Protection of Competition and secondary legislation prepared based on this act. The substantial provisions of competition law in Turkiye are Articles 4, 5, 6, and 7 of Act No. 4054:

Pursuant to Article 4, agreements and concerted practices between undertakings, and decisions and practices of associations of undertakings which have as their object or effect or likely effect the prevention, distortion, or restriction of competition directly or indirectly in a particular market for goods or services are illegal and prohibited. Article 5 of the law relates to agreements that are exempted from the prohibition in Article 4 of this law on grounds of efficiency.

The abuse by one or more undertakings of their dominant position in a market for goods or services within the whole or a part of the country on their own or through agreements with others or concerted practices is illegal and prohibited by Article 6.

Article 7 set out the merger control regime in Turkiye. Accordingly, mergers and acquisitions that result in a significant lessening of effective competition within a market for goods or services in the entirety or a portion of the country, particularly in the form of creating or strengthening a dominant position are prohibited.

The powers of the Turkish Competition Board for dawn raids and information requests are designed in Articles 14 and 15 of Act No. 4054, and administrative fines in Articles 16 and 17. Accordingly, the Turkish Competition Authority (TCA) has a broad power to request all kinds of information and documents from undertakings and to carry out dawn raids. Administrative fines vary depending on the type, gravity, and duration of the violation but are determined as 10% of the annual turnover of the undertakings at most.

A set of secondary legislation has been prepared in line with the above provisions of Act No. 4054, either as communiques, regulations, or guidelines. The secondary legislation in force is listed as such:

Communiques:

  • Block Exemption Communique on Vertical Agreements (Communique No: 2002/2)
  • Communique On Agreements, Concerted Practices and Decisions and Practices Of Associations Of Undertakings That Do Not Significantly Restrict Competition (Communique No: 2021/3)
  • Communique on the Commitments to Be Offered in Preliminary Inquiries and Investigations Concerning Agreements, Concerted Practices And Decisions Restricting Competition, and Abuse Of Dominant Position (Communique No: 2021/2)
  • Communique on the Increase of the Lower Threshold for Administrative Fines specified in Paragraph 1, Article 16 of the Act no 4054 on the Protection of Competition, to be Valid until 31/12/2024 (Communique No: 2024/1)
  • Communique On the Payments to Be Made by Joint-Stock and Limited Companies Pursuant to Act No 4054 (Communique No: 2017/4)
  • Block Exemption Communique on Vertical Agreements in The Motor Vehicles Sector (Communique No: 2017/3)
  • Block Exemption Communique on Research and Development Agreements (Communique No: 2016/5)
  • Block Exemption Communique on Specialization Agreements (Communique No: 2013/3)
  • Communique On the Procedures and Principles To Be Pursued In Pre-Notifications And Authorization Applications To Be Filed With The Competition Authority In Order For Acquisitions Via Privatization To Become Legally Valid (Communique No: 2013/2)
  • Communique on the Application Procedure for Infringements of Competition (Communique No: 2012/2)
  • Communique on the Mergers and Acquisitions Calling for the Authorization of the Competition Board (Communique No: 2010/4)
  • Communique on the Regulation of the Right of Access to the File and Protection of Trade Secrets (Communique No: 2010/3)
  • Communique on Hearings Held vis-a-vis the Competition Board (Communique No: 2010/2)
  • Block Exemption Communique in Relation to the Insurance Sector (Communique No: 2008/3)
  • Block Exemption Communique on Technology Transfer Agreements (Communique No: 2008/2)
  • Communique on the Conclusion of the Organization of the Competition Authority (Communique No: 1997/5)

Regulations:

  • Regulation on Active Cooperation for Detecting Cartels (Active Cooperation/Leniency Regulation)
  • Regulation on the Settlement Procedure
  • Regulation on Fines to Apply in Cases of Agreements, Concerted Practices and Decisions Limiting Competition, and Abuse of Dominant Position
  • Regulation on Promotion and Title Change of Competition Authority Employee
  • Regulation on Competition Authority Professional Employee
  • Regulation on Competition Authority Disciplinary Supervisors
  • Competition Authority Budget and Accounting Regulation
  • Competition Authority Tender Regulation
  • Regulation on the Working Procedures and Principles of the Competition Authority

Guidelines:

  • Guidelines on the Examination of Digital Data during On-Site Inspections
  • Guidelines On Vertical Agreements
  • Competition Assessment Guidelines
  • Guidelines Explaining the Block Exemption Communique on Vertical Agreements in the Motor Vehicles Sector
  • Guidelines on the Application of Articles 4 and 5 of the Act no 4054 on the Protection of Competition to Technology Transfer Agreements
  • Guidelines On the Explanation of The Regulation On Active Cooperation For Detecting Cartels
  • Guidelines on the Assessment of Abusive Conduct by Undertakings with Dominant Position
  • Guidelines on the General Principles of Exemption
  • Guidelines on Cases Considered as a Merger or an Acquisition and the Concept of Control
  • Guidelines on the Assessment of Non-Horizontal Mergers and Acquisitions
  • Guidelines on the Assessment of Horizontal Mergers and Acquisitions
  • Guidelines on Horizontal Cooperation Agreements
  • Guidelines on Remedies That are Acceptable by the Turkish Competition Authority in Merger/Acquisition Transactions
  • Guidelines On Undertakings Concerned, Turnover and Ancillary Restraints in Mergers and Acquisitions
  • Guidelines on the Voluntary Notification of Agreements, Concerted Practices, and Decisions of Associations of Undertakings
  • Guidelines on the Definition of Relevant Market
  • Guidelines on Certain Subcontracting Agreements Between Non-Competitors

In Turkish competition law, Act No. 5236 on Misdemeanors is taken as a basis for the statute of limitations. Accordingly, the statute of limitations for competition law investigations is eight years. Any anti-competitive practice that has taken place in the last eight years can be investigated and penalized by the TCA.

Due to the proximity of competition investigations to criminal law investigations, in line with the approach of the European Union Court of Justice, competition investigations in Turkiye should also act in accordance with the basic principles of criminal law (presumption of innocence, the principle of legality in crime and punishment, etc.). Decisions taken by TCA as a result of an investigation to the contrary may be subject to annulment in the administrative jurisdiction in this context.

Finally, since the decisions taken by TCA are subject to judicial review and fall within the administrative jurisdiction, Act No. 2577 on the Administrative Jurisdiction Procedures, which regulates the procedures for appealing the decisions taken by the competition authority to the courts, gains importance in the judicial dimension of competition law. Appeals to the courts and higher courts against the decisions of the competition authority must be made in accordance with the rules outlined in this law.

2. Are there any notable recent (last 24 months) updates of the Turkish competition legislation?

The long-lasting bill of Law on The Act on the Protection of Competition (Competition Act) was ratified by the Turkish Parliament on June 16, 2020. This amendment is the most extensive reform of the antitrust enforcement system since the enactment of the Competition Act in 1994. The most significant changes for the last two years are explained below:

a) Leniency Procedure

The new Regulation on Active Cooperation for Detecting Cartels issued by the Turkish Competition Board entered into force upon publication in the Official Gazette dated December 16, 2023.

The Regulation on Regulation on Active Cooperation for Detecting Cartels, published in the Official Gazette dated February 15, 2009, and numbered 21142, has been in force for more than fourteen years. In light of the implementation results recorded during this period since the Regulation entered into force, the changes in the relevant legislation, particularly in the settlement procedure, and the practices of peer countries, it has become necessary to update the regulation on active cooperation.

The new version of the regulation basically includes the following:

  • To make a clear distinction between the active cooperation institution, which is essentially a method of obtaining evidence, and the settlement institution, which is an alternative file finalization procedure, the requirement to submit documents that create added value to those who will apply for active cooperation,
  • Providing legal certainty that those in a vertical relationship with the parties to the aggregation-distribution cartel or other cartel facilitators, who in practice are held liable for administrative sanctions in the same way as the cartel parties, may also benefit from active cooperation,
  • In some cases, a reasonable time limit should be imposed on applications for active cooperation in order to avoid disruption of investigations with a legal time limit,
  • In case new information and documents are obtained by the applicant, determining the deadline for their submission,
  • Determination of the fate of the application for active co-operation in the event that the applicants apply for active co-operation with the idea that they may have been a party to a cartel and the application in question is accepted and decided by the Competition Board, but the infringement is not considered as a cartel by the Board at the end of the investigation process,

b) Amendments in Communique Concerning the Mergers and Acquisitions Calling for the Authorization of the Competition Board, No: 2010/4

Communique on the Mergers and Acquisitions Calling for the Authorization of the Competition Board, No: 2010/4 (Communique) has been amended on March 4, 2022. With this amendment, the turnover thresholds for authorized mergers and acquisitions were updated, a special subparagraph was introduced for technology undertakings, changes were made to the test for significant lessening of effective competition, turnover calculations for financial institutions were revised and the notification form was completely changed.

One of the most significant amendments has been made in the thresholds that need to be exceeded for authorization from the Turkish Competition Board when there is a permanent change in control. Accordingly, the limit of TRY 100 million in subparagraph (a) of the first paragraph of Article 7 of Communique No: 2010/4 was amended to TRY 750 million, the limit of TRY 30 million was amended to TRY 250 million, the limit of TRY 30 million in subparagraph (b) was amended as TRY 250 million and the limit of TRY 500 million was amended as TRY 3 billion.

Additionally, the Amending Communique not only revises turnover thresholds but also outlines the notion of technology undertakings with a definition added to Article 4, first paragraph. These include businesses in digital platforms, software, gaming software, financial technologies, biotechnology, pharmacology, agricultural chemicals, and health technologies. According to the amendment, companies in these sectors operating in Turkiye or involved in R&D or service provision within Turkiye won’t need to meet the previously stipulated turnover threshold of TRY 250 million for acquisition.

Together with these amendments, a new version of the Article 7 of the Communique is as follows:

  • “if the transaction parties have TRY 750 million turnover in Turkiye in total and TRY 250 million turnover in Turkiye of at least two of the transaction parties separately, OR,
  • in acquisition transactions, the turnover of the asset or activity, in merger transactions, the Turkiye turnover of at least one of the transaction parties exceeds TRY 250 million and the world turnover of at least one of the other transaction parties exceeds TRY 3 billion,

then these transactions need to be notified to the Authority in order to be granted permission.

Operating in the geographical market of Turkiye or having R&D activities or providing services to users in Turkiye in the transactions related to the acquisition of technology undertakings that offer; in subparagraphs (a) and (b) of the first paragraph TRY 250 million thresholds are not sought.”

In 2020, an amendment to Article 7 of Law No. 4054 introduced the criterion of significantly lessening effective competition in the assessment of merger and acquisition transactions. This change was incorporated into the Amendment Communique to align Act No. 4054 with Communique No: 2010/4. Consequently, the regulation now prohibits mergers or acquisitions that lead to a substantial reduction in effective competition across the nation or in specific regions, especially those resulting in the establishment or reinforcement of a dominant market position.

Lastly, amendments were made regarding the turnover calculation for banks, financial leasing, factoring and financing companies, insurance, reinsurance and pension companies, and other financial institutions.

c) Increase on the Lower Limit of the Administrative Fine

On December 20, 2023, the lower limit of administrative fines stipulated in the first paragraph of Article 16 of Act No. 4054 on the Protection of Competition was increased to TRY 167,473, to be valid from January 1, 2024, to December 31, 2024, based on the revaluation rate of 58.46%.

3. What are the main concerns of the national competition authority in terms of agreements between undertakings? How about the sanctioning record of the authority?

The main concerns of the Competition Authority in terms of horizontal agreements are any agreement between the parties that will affect their future competitive behavior. In this context, the exchange of information and agreements between competitors on strategic issues such as price, maturity, discount, quantity, new products, coverages, R&D, etc. are the main horizontal competition concerns. Additionally, territory or customer sharing between competitors is also among the horizontal concerns that are the main focus of the Competition Authority.

In addition to these core competition concerns, in the Guidelines on Horizontal Cooperation Agreements, the Competition Authority describes competition concerns regarding various behaviors listed as follows:

a) In Terms of Standardization Agreements Between Competitors

  • First, if undertakings were to engage in anti-competitive discussions in the context of standard-setting, this could reduce or eliminate price competition in the markets concerned, thereby facilitating a collusive outcome in the market.
  • Second, standards that set detailed technical specifications for a product or service may limit technical development and innovation. In addition, standards that require the exclusive use of a particular technology for a standard or that force the members of the standard-setting organization to exclusively use a particular standard may lead to the same effect. The risk of limiting innovation is increased if one or more undertakings are excluded from the standard-setting process without an objective reason.
  • Standardization agreements may lead to restrictive effects on competition by preventing certain undertakings from obtaining effective access to the results of the standard-setting process, that is to say, to the technical specifications and/or to the intellectual property rights essential for the implementation of the standard. In case an undertaking’s access to the results of the standard is either completely prevented or tied to prohibitive or discriminatory terms, there is a risk of creating restrictive effects on competition.

b) In Terms of Exchange of Information Between Competitors

  • The exchange of competition-sensitive information can result in restrictive effects on competition by artificially increasing transparency in the market, thereby facilitating the coordination of competitive behavior between undertakings. This can occur through different channels.
  • Information exchange may lead to undertakings arriving at common and collusive expectations concerning the uncertainties in the market. Thus, undertakings can then reach a common understanding in order to coordinate their competitive behavior, without an explicit agreement. Information exchange in this way may lead to a collusive outcome in the market. The exchange of information about the plans of the undertakings concerning future conduct is the most convenient means of such an understanding.
  • Through the use of a monitoring mechanism, information exchange can render the market transparent and allow a collusive outcome in the market or improve the sustainability of such conduct (internal stability) by making it easier for undertakings to identify any practice of their competitors that is in violation of an anti-competitive agreement between them and to retaliate against such practices. Such a monitoring mechanism may be created by the exchange of current or historical data.
  • Information exchange can lead to the exclusion of competitors who are not parties to the agreement (external stability) by improving the sustainability of collusive outcomes. When the market becomes sufficiently transparent due to exchanges of information, undertakings parties to the agreement can be informed on when and how potential competitors will enter the market, target the new entrants, and, as addressed in the next section, foreclose the market to potential competitors.

c) In Terms of Research and Development Agreements

  • R&D cooperation can restrict competition in various ways. First, it may reduce or slow down innovation, leading to fewer or lower-quality products coming to the market.
  • Secondly, R&D cooperation may lead to increasing prices by significantly reducing competition between the undertakings that are not parties to the agreement in product or technology markets, or by making coordination of competitive conduct in those markets possible.
  • Also, R&D cooperation may lead to market foreclosure for competitors. However, a market foreclosure effect may only arise if at least one of the parties holds, if not a dominant position, significant market power concerning a key technology and derives exclusive benefits from the results of the R&D efforts of the parties.

d) In Terms of Production Agreements

  • Production agreements, and in particular production joint ventures, may cause a restriction of competition by leading the parties to align output volumes, product quality, product price, and other competitively important parameters. This may happen even if the parties market the products independently.
  • Production agreements may lead to higher prices or reduced output, product quality, product variety, or innovation, that is to say, to a collusive outcome, as a result of the parties’ coordinating their competitive behavior as suppliers.
  • Production agreements may furthermore lead to the foreclosure of related markets to other undertakings. For instance, by gaining enough market power, parties engaging in joint production activities in the upstream market may be able to raise the price of a key component for a downstream market, and thus they could use the joint production activity to raise the costs of their competitors downstream and, ultimately, force these competitors off the market. This, as a result, could have adverse effects on the consumers by allowing the parties to increase their market power downstream and to sustain prices above the competitive level, or through other ways.

e) In Terms of Joint Purchasing Agreements

  • Joint purchasing arrangements may lead to restrictive effects on competition in the purchasing and/or downstream selling markets, such as an increase in product prices, reduction in output, product quality and variety or innovation, market allocation, or foreclosure of the market to other possible purchasers.
  • If downstream competitors purchase a significant part of their products together, the incentive for price competition on the selling markets may be considerably reduced.
  • In case the parties have a significant degree of market power in the purchasing market (buying power), there is a risk that they may force suppliers to reduce the variety or quality of products they produce. This situation may bring about certain restrictive effects, such as a reduction in quality, lessening of innovation efforts, or ultimately a sub-optimal amount of supply.
  • The buying power of the parties to the joint purchasing arrangement could be used to foreclose competing purchasers by limiting their access to efficient suppliers. This is more likely where there are a limited number of suppliers and there are barriers to entry on the supply side of the upstream market.
  • In general, however, joint purchasing arrangements are less likely to give rise to competition concerns if the parties do not have market power in the selling markets.

f) In Terms of Commercialization Agreements

  • Commercialization agreements can lead to restrictions on competition in several ways. First of all, commercialization agreements may lead to price-fixing.
  • Secondly, in commercialization agreements, the parties may restrict supply by determining the production volume to be put on the market.
  • Thirdly, commercialization agreements may become a means for dividing the markets or allocating customers, for example in cases where the parties’ production facilities are located in different geographic markets or when the agreements are reciprocal.
  • Finally, such agreements may also result in a collusive outcome by leading to an exchange of competitively sensitive information related to subjects falling within or outside the scope of the cooperation or by leading to a commonality of costs.

Lastly, certain risks have arisen in the field of human resources in terms of “labor markets” in Turkish competition as revealed by the recent investigations carried out and decisions made. TCA underlines in its past decisions that labor should be considered as input, and thus agreements to be made among undertakings in labor markets would be different from “purchasing cartels.” In this context, we come across two basic types of infringement which are: i) information exchange/agreement related to employee wages and benefits, and (ii) no-poaching agreements among undertakings engaged in the field of human resources.

Wage-fixing agreements refer to the agreements made among undertakings for fixing wages of employees working in the same sector or keeping their wages at a certain level. No-poaching and no-hiring agreements refer to agreements intending to ensure that undertakings do not poach or hire the employees of each other. In other words, agreements concluded directly or indirectly intending to make sure that no job offers are made by an undertaking to the employees of another undertaking or that undertakings do not hire the employees of other undertakings cause risks to arise. This kind of agreement can also be perceived as an infringement of competition law rules. Thus, information exchange among undertakings in relation to employee wages and benefits may be interpreted as an exchange of competitively-sensitive information even if they do not reach the extent of an agreement, and may cause grounds for the establishment of an infringement.

In this regard, several investigations initiated by the TCA in the past two years against numerous industries. Considering the problems in labor markets and the benefits to be derived if these problems are addressed by means of using competition law instruments, the TCA underlines that it aims to maintain the competitive structure of the labor law by being aware of the contribution made by employees to the process of making the products and services available for consumers in a digital era where creativity and innovative intelligence have become particularly important. Thus, the authority may consider gentlemen’s agreements concluded to make sure that undertakings do not hire the employees of each other or agreements/information exchanges intending to fix employee wages and other benefits, which mainly include financial benefits, as infringement in this regard.

The number of horizontal infringement decisions taken by the TCA in recent years is as follows:

  • 2023: 55
  • 2022: 38
  • 2021: 30
  • 2020: 31
  • 2019: 23
  • 2018: 36
  • 2017: 35
  • 2016: 26
  • 2015: 32
  • 2014: 67
  • 2013: 71

4. Which competition law requirements should companies consider when entering into agreements concerning their activities on Turkiye’s territory?

In Turkiye, competition law rules are set in Act No. 4054 on the Protection of Competition. Similar to global practice, there are three main rules regarding the anti-competitive behavior of undertakings and in addition to that one exemption method is arranged under Turkish competition law. These rules will be explained with their purposes below.

Agreements, Concerted Practices, and Decisions Limiting Competition (Article 4):

Article 4 prohibits agreements and practices between undertakings that have the effect of preventing, restricting, or distorting competition. According to the article, the term agreement is used to refer to all kinds of compromise or accord to which the parties feel bound, even if these do not meet the validity conditions set in civil law and it is not important whether the agreement is written or oral. Even if the existence of an agreement between the parties cannot be established, direct or indirect relations between undertakings that replace their own independent activities and ensure coordination and practical cooperation are prohibited if they lead to the same result. Thus, it is intended to prevent the undertakings from legitimizing acts limiting competition via fraud against the law. Most of the time, in order to deal with their common problems, undertakings form associations among themselves that may or may not have a legal personality. These associations can make decisions that serve to generate more earnings for their members by preventing competition between the members. Such behaviors are also prohibited.

Vertical or horizontal agreements can restrict competition. It is accepted that horizontal agreements have competition-distorting effects by object since they are between competitors.

In a legal regime where agreements restricting competition are prohibited, these agreements are generally made in secret, and proving their existence is quite difficult, sometimes even impossible. For this reason, in some cases, it can be accepted that undertakings are engaged in a concerted practice. Thus, the burden of proof for not being engaged in concerted practice has been passed to the relevant undertakings and the intent was to prevent the act becomes unworkable due to the difficulty of proof.

Exemption (Article 5):

Implementation of the prohibition of Article 4 in an absolute manner may have some unwanted consequences. Hence, if the beneficial effects caused are greater than the harmful effects, agreements restricting competition can be exempted from the prohibition of Article 4. For such an exemption to be granted, four conditions listed in the article must exist at the same time. First, the agreement or concerted practice or decisions of an association of undertakings limiting competition must have positive effects on the economy. In case these positive effects are not reflected on the consumer and stay as firm profits, the exemption will not be implemented. The fact that the consumer receives a just share of the benefit created also reveals the social side of competition law. Also, if less limitation on competition can be sufficient to achieve these beneficial effects, the litigious agreements will not benefit from the exemption. Only those competition limitations that are necessary and compulsory for achieving the beneficial effect will be granted an exemption. It is such that, with these limitations, competition must not be eliminated in a significant part of the relevant product market.

Exemption decisions will be made for certain periods and these decisions will be renewable if the specified conditions exist. Thus, the board will be given the opportunity to monitor the changes that may emerge or the developments that may cause a restriction in competition within the relevant market, after the exemption decision has been taken.

Also, the chance to be granted a block exemption is given to the groups of agreements that carry the conditions. Thus, both a legal certainty is secured for these agreements and the beneficial effects of these agreements are brought into the economy.

Besides the block exemption, an individual exemption mechanism also exists. Undertakings can carry out a self-assessment and if their agreement fulfills the requirements, their agreement will be considered valid.

Abuse of Dominant Position (Article 6):

In terms of competition law, an undertaking’s growth through its own internal dynamics and obtaining a dominant position in various sectors is not an objectionable situation. On the other hand, it is prohibited for undertakings that obtain a dominant position in a market to abuse their position to restrict, prevent, or distort competition in Turkiye, or use their position in a way that would cause these effects.

In some cases, the undertaking may gain a dominant position because of the protections provided by law. Especially industrial and trade property rights grant such protection. The use of these rights must in no way serve the purpose of eliminating competition. Most encountered abuse cases in practice are as follows:

a) preventing, directly or indirectly, another undertaking from entering the area of commercial activity, or actions aimed at complicating the activities of competitors in the market;

b) making direct or indirect discrimination between purchasers with equal status by offering different terms for the same and equal rights, obligations, and acts;

c) purchasing another good or service together with a good or service, or tying a good or service demanded by purchasers acting as intermediary undertakings to the condition of displaying another good or service by the purchaser, or imposing limitations with regard to the terms of purchase and sale in case of resale, such as not selling a purchased good below a particular price;

d) conducts that aim to distort competitive conditions in another market for goods or services by means of exploiting financial, technological, and commercial advantages created by dominance in a particular market; or

e) restricting production, marketing, or technical development to the prejudice of consumers.

Mergers or Acquisition (Article 7):

According to Article 7 of the act, any merger or acquisition that would result in a significant lessening of effective competition within a market for goods or services in the entirety or a portion of the country, particularly in the form of creating or strengthening a dominant position, is prohibited.

Accordingly, parties to a merger should submit an application to the TCA for authorization, if (i) the total turnovers of the transaction parties in Turkiye exceed TRY 100 million, and turnovers of at least two of the transaction parties in Turkiye each exceed TRY 30 million, (ii) The asset or activity subject to an acquisition, and at least one of the parties of the transaction in merger transactions have a turnover in Turkiye exceeding TRY 30 million and the other party of the transactions has a global turnover exceeding TRY 500 million.

5. Does a leniency policy apply in Turkiye?

There is a leniency procedure under Turkish competition law. Any leniency application must be submitted before the settlement application. If both leniency and settlement applications are accepted, the parties may benefit from both discounts. With the leniency procedure, full immunity or reduction from the penalty may be granted if the undertaking meets the conditions. In Turkish competition law, cartel facilitators can also apply for leniency just as cartel competitors.

Under Turkish competition law, the leniency procedure is only applicable to cartels. A cartel is defined, according to the Regulation on Active Cooperation for Detecting Cartels dated December 16, 2023, as:

  • price determination,
  • sharing of customers, suppliers, regions, or trade channels,
  • limiting the amount of supply or setting quotas, and
  • agreements that restrict competition and/or concerted actions, regarding consensual action in tenders,
  • between competitors.

The TCA expects that:

  • a list of the products affected by the cartel subject to the application, the duration of the cartel, the names of the undertakings that are parties to the cartel, the dates and locations of the negotiations related to the cartel, the participants, and the information and documents owned about the cartel must be submitted;
  • information and documents submitted by the applicant must be value-added documents.
  • information and documents regarding the cartel subject to the application should not be concealed or destroyed;
  • unless otherwise stated by the unit in charge that it would make it difficult to detect the cartel, being a party to the cartel subject to application is terminated;
  • unless otherwise specified by the unit in charge, the application is kept confidential until the notification of the investigation report; and
  • active cooperation continues until the final decision of the Board after the completion of the investigation.

Finally, another necessary condition for not imposing a fine by making use of full immunity is that the undertaking applying for leniency should not have forced other undertakings to form the cartel.

Applicants may be given time to complete their applications by submitting a list of the products affected by the cartel, the duration of the cartel the names and/or trade names of the undertakings party to the cartel, and, if any, the cartel facilitators.

If additional information and documents are obtained by the applicant after the completion of the applications, such information, and documents must be submitted to the records of the Authority as a matter of urgency and before the end of the second written defense period.

In order to be considered for a full immunity:

First, before the board decides to conduct a preliminary investigation, it is regulated that, independently from other undertakings that are parties to the cartel, the first undertaking fulfilling the conditions or the first manager or employee who filed an application independent of the undertaking would not be fined (managers and employees of the undertaking can also file a leniency application).

The second possibility envisaged to benefit from full immunity is that the application is made within the time frame determined as “from the preliminary investigation decision to the notification of the investigation report.” However, in this case, there should not be a leniency application made before the board’s preliminary research decision. If there is such an application, only that applicant will benefit from full immunity. In this second possibility, the board does not have sufficient evidence to prove the cartel, and the information and documents to be submitted in the application must conclude that the violation exists. In this case, it is possible to say that the board has a discretionary power to grant full immunity. In this way, it aims to prevent cartel members from waiting for an investigation to begin in order to apply for the leniency program.

From the board’s decision to conduct a preliminary investigation to the notification of the investigation report, undertakings that present information and documents specified in the directive and fulfill the conditions but fail to benefit from the regulation on non-penalty mentioned above, independently of their competitors, will benefit from a fine reduction.

In this scope:

  • The penalty to be imposed on the first undertaking is reduced between 25% and 50% of the total fine. In this case, the penalties to be imposed on the managers and employees who accept the violation of the attempt and actively cooperate are also reduced or penalties may not be imposed on the condition that they are not less than 25%.
  • The penalty to be imposed on the second undertaking is reduced between 20% and 40%. In this case, the penalties to be imposed on the managers and employees who accept the violation of the attempt and actively cooperate are also reduced or penalties may not be imposed on the condition that they are not less than 20%.
  • The penalties to be imposed on other undertakings are reduced between 15% and 30%. In this case, the penalties to be imposed on the managers and employees who accept the violation of the attempt and actively cooperate are also reduced or penalties may not be imposed on the condition that they are not less than 15%.
  • Finally, if, as a result of the evidence presented, the fines increase due to the prolongation of the violation period or similar reasons, the first undertaking presenting the relevant evidence and the managers and employees who accepted the violation of this undertaking and actively cooperated will not be affected by this increase.

The requirements expected from the parties and the process in the leniency process are similar whereas full immunity from the fine is possible for the first comer in the leniency mechanism. The rest of the lenient undertakings may be eligible for discounts. The penalty to be imposed on the second undertaking is reduced between 20% to 40%. The penalties to be imposed on other undertakings are reduced to 15% and 30%.

6. How is unilateral conduct treated under Turkish competition rules?

Article 6 of Act No. 4054 prohibits one or more undertakings from abusing their dominant position in the goods or services market. The purpose of this regulation is to limit the competitive power of one or more undertakings that have the power to determine the economic parameters such as price, supply, production, and distribution amount by acting independently from the customers of the competitors in the market. Meaning that the aim is to prevent a monopoly situation that will occur with non-competitive practices in the markets.

The law does not prohibit being in a dominant position or taking a dominant position, but the abuse of this situation restricts competition. In this context, it is of great importance to determine the dominant position.

In determining the dominant position, factors such as market share, barriers to entry to the market, vertical integrity, substitutability of the product, and the quality of the product are taken into account, and it is evaluated whether an undertaking (or association of undertaking) can act independently from its competitors and customers.

Some examples of abuse are given by the law. In this context, making the activities of a rival undertaking difficult, preventing an undertaking from entering the market, applying different conditions to the buyers in an equal situation, and stipulating the purchase of a good with another good, are considered as abuse of dominant position. However, it should be noted that cases of abuse are not limited to the examples mentioned above. For example, applying an excessively high selling price can also be considered an abuse of a dominant position.

7. Are there any recent local abuse cases of relevance?

Significant abuse of dominant position decisions of the Turkish Competition Authority in recent years can be summarized as follows:

1. Google Decision (27.10.2022, 22-49/717-300): TCA’s investigation regarding Google resulted in a decision to monitor the compliance measures submitted by Google for a period of time to see whether the obligations set forth by TCA are met and to review the measures if deemed necessary. With the investigation, TCA decided that Google has a dominant position in the general search services market and violated Article 6 of Act No. 4054 by placing text advertisements at the top of the general search results in an indefinite and intensive manner, making it difficult for organic results that do not generate advertising revenues to operate in the content services market. In order to address the TCA’s competitive concerns, Google committed to changing the labeling of the paid nature of text ads from “advertisement” to “paid sponsored ad” and to reduce the scale of text ads by reducing the volume of text ads on the results page. TCA assessed that these commitments were not sufficient to address the competition concerns. Subsequently, Google offered a broader package of commitments and offered to:

  • Reduce the maximum number of ads at the top of the search page from four to three,
  • Eliminate user uncertainty about the paid nature of the ads by replacing the “ad” label in the search results with a “paid sponsored ad” label,
  • Reduce the volume of text ads on the search results page.

2. Obilet Decision (29.09.2022, 22-44/649-280): TCA concluded that the allegations that Obilet abused its dominant position by preventing the bus companies, to which Obilet sells tickets through exclusivity agreements, from working with competing online ticket comparison and sales websites are not clear and serious violations, and therefore, the existing competition concerns can be addressed with the commitment procedure. Accordingly, Obilet has made the following commitments in order to address the competitive concerns:

  • The contracts to be concluded with the carrier companies shall not include exclusivity provisions that cause competitive concerns, the provisions in this respect in the existing contracts, if any, shall be amended within six months and notified to the Authority in writing, and such provisions shall not be included in the new contracts to be concluded,
  • No contractual provision will be included for the carrier companies to work only with Obilet and no non-contractual behavior, guidance or pressure will be made in order to create this effect, and
  • The commitments will be valid for three years.

3. Tadim Decision (07.07.2022, 22-32/505-202): With the allegation that Tadim abused its dominant position in the packaged dried nuts market and made it difficult for its competitors to operate competitive concerns raised before the TCA as follows;

  • Ensuring the removal of the competitors through various ways such as the installation of stands at the points where the rival undertaking is located, free products, discount applications, and prepayments,
  • To enter the sales points where Tadim is not present in a way that forces retailers to only work with Tadim,
  • Not leaving enough space for the stands of competing products by placing stands at the points where this cannot be achieved, trying to reduce the visibility of the products of competing brands by exhibiting all product groups of Tadim together in their own stands, and-

To ensure that Tadim, as a single brand, maintains its loyal customer quality by continuing its support at the points where it is present, with practices that have caused competitive concerns.

A number of commitments were made binding by TCA to ensure that the market remains competitive. Accordingly, Tadim and its dealers:

i. Shall not establish a verbal or written exclusivity relationship with small retailers such as grocery stores, monopoly dealers, kiosks, and fuel station stores operating in the field of packaged dried nuts sales.

ii. Shall not provide any benefits under any name whatsoever such as additional discount, additional premium, higher or more premium, free goods, free stand or product, service fee, or promotion in return for the retail outlet purchasing more than 60% of the packaged sunflower seeds or other packaged dried nuts from Tadim in any period (e.g., one year).

iii. Shall not pay any premiums (e.g., prepaid premiums, wholesale prepaid premiums, annual prepaid premiums, etc.) before the purchase or sale of packaged dried nut products to the consumer in return for exclusive work, not buying competing products, stopping the purchase of competing products or single brand work.

iv. Shall not offer special premiums, free goods, or other benefits in return for exclusive work, competitor exclusion, single brand work, and similar forms of work, even if a retail outlet that buys and sells the products of more than one undertaking, including Tadim, requests it.

v. Shall ensure that each of its dealers sells to retail sales points with a fixed discount rate to be determined on a district basis independently of Tadim.

vi. Shall sign and submit to the Turkish Competition Authority the attached protocol with its dealers in relation to the matters set out in (i) (v) above (Annex Draft Additional Protocol to the Dealership Agreement).

vii. The relevant employees of Tadim and its dealers will be trained on competition law and the matters set forth in this commitment.

viii. In the event that a written contract is concluded between a Tadim dealer and a retail outlet, such contract shall be prepared to reflect the matters contained in this commitment and a copy of the contract signed by the parties shall be left to the retail outlet that is a party to the contract.

ix. The notification text below will be shared with all Tadim retail sales points in return for signature and one copy will remain at the point.

“We sincerely thank you for choosing Tadim products! You, our esteemed retailer who delivers Tadim products to our consumers: The decision to sell only Tadim products is entirely yours. You are completely free to choose the products of the company you want. Any promise, commitment, contractual clause, or obligation that requires you to sell only Tadim products is invalid. Any promise, commitment, contractual clause, or obligation that would prevent you from selling TADIM products together with dried nuts or sunflower seed products of competing brands is also void. No premium, promotion, or discount application made by Tadim and Tadim dealers shall put you under the obligation not to buy from a competitor, to exclude a competitor, or to work with Tadim as a single brand. You can purchase Tadim’s sunflower seeds, each type of dried nuts, dried fruits, and bar products separately and independently from others. Tadim will continue to compete with its quality as before.”

4. Nadirkitap Decisions (July 18, 2022, 22-16/273-122 and April 7, 2022, 22-16/273-122): TCA decided that Nadirkitap, which provides intermediary services in the online sales platform of second-hand books, abused its dominant position by not providing the data of its seller members who want to market their products through rival intermediary service providers and by making the activities of rival undertakings more difficult. Therefore, TCA decided to impose an administrative fine against Nadirkitap.

5. Meta Decision (October 20, 2022, 22-48/706-299): In 2021, the TCA identified competitive concerns that Meta and its subsidiaries violated Article 6 of the Act No. 4054 and decided to open an investigation against the undertakings on the grounds of making it difficult for competitors operating in the personal social networking services and online display advertising markets by combining data collected from Facebook, Instagram, WhatsApp, and Messenger services, and creating an entry barrier in the market. With its findings and examinations, TCA decided to:

  • Impose an administrative fine on Facebook for abusing its dominant position,
  • Make Facebook take the necessary measures to end the infringement and to ensure the establishment of effective competition in the market and submit them to the TCA,
  • Make Facebook submit a report to the TCA annually for a period of five years from the start of implementation of the first compliance measure.

6. Trendyol Decisions (September 23, 2021, 21-44/650-M , May 18, 2022, 22-23/364-154 , January 5, 2023, 23-01/2-2, February 27, 2023, 23-11/177-54, April 4, 2023, 23-19/355-122): Starting in 2021, the findings made by the TCA and the measures made binding upon these findings with the Trendyol decisions, which include multiple preliminary investigations and interim injunctions, can be summarized as follows:

Firstly, the TCA has found that Trendyol has a dominant position in the multi-category online marketplaces market and Trendyol abused this dominant position by interfering with the algorithm and using the data of third-party sellers who sell on the Trendyol marketplace, giving an unfair advantage to its own retail activity and thus making the activities of its competitors more difficult. TCA has decided that this was a violation of Article 6 of Act No. 4054 and imposed an administrative fine on the undertaking.

In addition, in order to end the infringement and to ensure the establishment of effective competition in the market, Trendyol was obliged to (i) take necessary measures by avoiding interventions made through algorithms and coding that would provide an advantage over its competitors, (ii) avoid the use of any data obtained and generated/generated from the marketplace activity for private label products related to its retail activity and take all necessary technical, administrative and organizational measures to ensure this, (iii) keep certain data requested by the TCA for three years.

Following this decision, multiple preliminary investigations were opened against Trendyol and it was found that; (i) Trendyol intervened in the algorithms to increase the number of followers of Trendyol-branded products and (ii) manipulated the real numbers. (iii) It was also found that low seller ratings for Trendyol-branded products were deleted, (iv) Trendyol’s own brand Trendyolmilla was listed high in brand filters as a result of algorithm intervention, (v) and data of competing sellers were used to make analysis and predictions regarding Trendyol-branded products.

Even though these preliminary investigations have not concluded with an investigation yet, TCA decided that late interventions in digital markets may cause irreparable harm and therefore an interim measure was mandatory. Accordingly, TCA decided that Trendyol must (i) cease all kinds of actions, behaviors, and practices, including interventions through algorithms and coding, that provide an advantage over its competitors, (ii) not share and use data for other products and services, and (iii) not discriminate against sellers using the platform.

8. What are the consequences of a competition law infringement?

The substantive penalties for violations of competition are regulated in Article 16 of Act No. 4054. An administrative fine of up to 10% of the annual gross income generated at the end of the fiscal year preceding the decision date, and up to 5% of the fine imposed on the employees of the undertaking or association of undertakings that are found to have a decisive effect on the violation. The following aggravating/mitigating factors are taken into account in the appraisal of the penalty:

  • the recurrence of the violation,
  • the duration of the violation,
  • the market power of undertaking or associations of undertakings,
  • the decisive effect of the undertaking or associations of undertakings in the realization of the violation,
  • whether undertakings or associations of undertakings comply with the commitments given,
  • whether undertaking or associations of undertakings assist in the investigation, and
  • the weight of the actual or potential damage.

It should be noted that the above-mentioned penalties may not be imposed or the fines may be reduced, taking into account the nature, effectiveness, and timing of the cooperation, to undertaking or associations of undertakings and their employees, who actively cooperate with the institution within the framework of the repentance program in order to reveal the violation of the law.

Act No. 4054 does not only contain penalties to be applied to competition law infringements. In this context, it envisages fines in case of preventing on-site inspections, which is one of the most important tools in revealing competition violations. Considering that it will be difficult to obtain information and documents regarding the violation in the ongoing process if an on-site investigation is prevented, the fine to be applied in this case has been determined to be a deterrent, at the level of five per thousand of the annual gross income of the undertaking at the end of the previous financial year.

In cases where mergers and acquisitions subject to permission are carried out without permission, false or misleading information is provided in exemption/negative clearance applications, and the information requested in accordance with the law is not provided fully and accurately, an administrative penalty of one thousandth of the annual gross income generated at the end of the previous fiscal year is in accordance with the law.

Finally, another type of punishment brought by Act No. 4054 is temporary fines. These fines are penalties given for each day in case of the occurrence of the situations listed in Article 17 of the law. They were regulated as fixed penalties in the first version of the law. Later, these penalties were made proportional to the gross income of the undertakings or associations of undertakings, in order to ensure deterrence and the application of penalties commensurate with the power of the undertaking.

9. Is there any competition law requirement in case of mergers & acquisitions occurring in or impacting the Turkish market?

According to the Communique on the Mergers and Acquisitions Calling for the Authorization of the Competition Board, No:2010/4 (Communique) when there is a permanent change in control either by a merger of two or more undertakings or acquisition of direct or indirect control of all or part of one or more undertakings by one or more undertakings or persons by means of the purchase of shares or assets, contract or any other means and if the transaction is above the turnover thresholds given in Communique, then the transaction needs to be notified to the TCA in order to be evaluated whether the said transaction will adversely affect competition on the market or not.

As mentioned in the second question, the Communique has been amended in 2022. With this amendment, the turnover thresholds for authorized mergers and acquisitions were amended, a special subparagraph was introduced for technology undertakings, amendments were made to the test for significant lessening of effective competition, turnover calculations for financial institutions were revised and the notification form was completely changed.

One of the most significant amendments has been made in the thresholds that need to be exceeded for authorization from the Turkish Competition Board when there is a permanent change in control. Accordingly, the limit of TRY 100 million in subparagraph (a) of the first paragraph of Article 7 of Communique No. 2010/4 was amended as TRY 750 million, the limit of TRY 30 million was amended as TRY 250 million, the limit of TRY 30 million in subparagraph (b) was amended as TRY 250 million and the limit of TRY 500 million was amended as TRY 3 billion.

Additionally, the Amending Communique not only revises turnover thresholds but also outlines the notion of technology undertakings with a definition added to Article 4, first paragraph. These include businesses in digital platforms, software, gaming software, financial technologies, biotechnology, pharmacology, agricultural chemicals, and health technologies. According to the amendment, companies in these sectors operating in Turkiye or involved in R&D or service provision within Turkiye won’t need to meet the previously stipulated turnover threshold of TRY 250 million for acquisition.

Together with these amendments, a new version of the Article 7 of the Communique is as follows:

  • “if the transaction parties have TRY 750 million Turkiye turnover in total and TRY 250 million Turkiye turnover of at least two of the transaction parties separately, OR,
  • in acquisition transactions, the turnover of the asset or activity, in merger transactions, the Turkiye turnover of at least one of the transaction parties exceeds TRY 250 million and the world turnover of at least one of the other transaction parties exceeds TRY 3 billion,

then these transactions need to be notified to the Authority in order to be granted permission.

Operating in the geographical market of Turkiye or having R&D activities or providing services to users in Turkiye in the transactions related to the acquisition of technology undertakings that offer; in subparagraphs (a) and (b) of the first paragraph 250 million TRY thresholds are not sought.”

In 2020, an amendment to Article 7 of Law No. 4054 introduced the criterion of significantly lessening effective competition in the assessment of merger and acquisition transactions. This change was incorporated into the Amendment Communique to align Act No. 4054 with Communique No. 2010/4. Consequently, the regulation now prohibits mergers or acquisitions that lead to a substantial reduction in effective competition across the nation or in specific regions, especially those resulting in the establishment or reinforcement of a dominant market position.

Lastly, amendments were made regarding the turnover calculation for banks, financial leasing, factoring and financing companies, insurance, reinsurance and pension companies, and other financial institutions.

10. What is the normal merger review period?

For merger or acquisition agreements that fall within the scope of Article 7 of the Turkish Competition Act and exceed the turnover thresholds within the scope of the Communique, the Board must make a preliminary examination within fifteen days from the date of notification and decide whether it has given permission for the transaction or that the transaction should be taken into final examination and notify the parties. However, when the authority requests information from the undertaking while the investigation continues, the fifteen-day examination period starts again after the reply letter of the undertaking is submitted to the institution’s records. In this case, it can be said that the first phase merger review period takes approximately one to two months in practice.

11. Are there any fees applicable where transactions are subject to local competition review?

No fee is charged by the TCA for mergers and acquisitions that are subject to the examination.

12. Is there any possibility for companies to obtain State Aid in Turkiye? If yes, under what conditions?

In Turkiye, companies can obtain State Aid. However, there is no control for State Aid in terms of competition law.

13. What were the major changes brought by the COVID-19 crisis in the field? How likely is it for these changes to stick?

Foremost there is no major legislative change in competition law that came with the COVID-19 crisis in Turkey. Besides that, several preliminary investigations and investigations were launched for specific sectors such as FMCG, healthcare, etc., due to the concerns that increased with the COVID-19 crisis. During the COVID-19 crisis, the following developments occurred:

  • The TCA initiated an examination of food price increases in the COVID-19 period based on the observations that food prices and fresh fruit and vegetable prices in particular are rising excessively. The authority announced that the highest possible available in the legislation will be applied to individuals and institutions engaged in anti-competitive actions in this period.
  • The TCA President issued a press statement that the people and institutions that caused the increase in prices and supply shortages, especially in the food market, during this harsh period will be punished severely under Act No. 4054.
  • The oral hearings are to be held online for a long period of time. During the COVID-19 crisis, several oral hearings were held online and with third parties participating online.
  • As part of COVID-19 measures, the TCA announced that all applications, petitions, and document submissions to the authority, should be made online.
  • The TCA initiated an investigation against 29 companies that operate in the beauty/hygiene/health, food, and chain retailing sectors.

To sum up, while there were no major legislative changes in this field during the COVID-19 crisis, and although the physical system is now being used again for oral hearings, many meetings, such as settlement and leniency meetings and other meetings, can be held online upon the request of the party and with the approval of TCA.

Guide Contributors For Turkiye

Metin Pektas, Partner/Head of Competition Law
metin.pektas@nazali.com
+90 532 23 07 505

Dervis Boran Beysulen, Associate
boran.beysulen@nazali.av.tr 
+90 534 05 67 014

Beyza Saripinar, Associate
beyza.saripinar@nazali.av.tr 
+90 541 78 21 088

Ahmet Onder, Associate
ahmet.onder@nazali.av.tr 
+90 539 29 66 460

Buse Guler,Associate
buse.guler@nazali.av.tr 
+90 539 91 12086

Alper Yanar, Associate
alper.yanar@nazali.av.tr 
+90 531 84 64 299

Huseyin Taha Kaya, Associate
huseyintaha.kaya@nazali.av.tr 
+90 507 43 99 424

Zeynep Berfin Kiziltas, Associate
zeynep.kiziltas@nazali.av.tr 
+90 531 97 23 764