Amendment of Turkish Competition Act

Amendment of Turkish Competition Act

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The long-lasting bill of Law on The Act on the Protection of Competition (The Competition Act) was ratified by Turkish Parliement on 06.16.2020. This amendment is the most extensive reform of antitrust enforcement system since the enactment of the Competition Act in 1994. The most significant changes are explained below:

  1. Legal Uncertainties Regarding Exemption Regime Has Been Clarified:

The exemption regime has been already changed in the 2005 amendment and the application for exemption has been turned to be optional since then. The current amendment aims to reinforce and clarify that the officialapplication is optional and that the undertakings do has the option of submitting an application when they are not clear about the legality of the conduct or when they seek legal certainty.

Accordingly; the first paragraph of Article 5, which defines the exemption regime in the Act No. 4054, has been changed as follows and the following paragraph has been added to the article after the first paragraph.

“In case all the terms listed below exist, agreements, concerted practices between undertakings, and decisions of associations of undertakings are exempt from the application of the provisions of Article 4:

a) Ensuring new developments and improvements, or economic or technical development in the production or distribution of goods and in the provision of services,

b) Benefitting the consumer from the abovementioned,

c) Not eliminating competition in a significant part of the relevant market,

d) Not limiting competition more than what is compulsory for achieving the goals set out in sub-paragraphs (a) and (b).

The undertakings or associations of undertakings may apply to the Authority to determine by the Board that the agreement, concerted action or decisions of associations of undertakings under the Article 4 meets the exemption conditions. ” 

This new design of the article clarifies the “optionality” of exemption application and legal uncertainties are eliminated.

  1. Test Change in the Merger-Acquisition Control

So far, TCA has been carrying out merger control based on dominance test. The current amendment introduce the “significant impediment of effective competition test” (SIEC test) to merger control regime and a hybrid model is being built. The Article 7 of the Act that defines the merger control is amended as such:

“Merger by one or more undertakings, or acquisition by any undertaking or person from another undertaking-except by way of inheritance-of its assets or all or a part of its partnership shares, or of means which confer thereon the power to hold a managerial right, which would result in significant lessening of competition, especially create or strengthen a dominant position of one or more undertakings,  in a market for goods or services within the whole or a part of the country, is illegal and prohibited.”

Accordingly, more prohibition decisions are expected in merger cases.

  1. Structural Measures for Termination of the Violation:

Article 9 of the Act contains provisions for the termination of the violation and interim measure. The current design of the Article allows the Authority to impose behavioral measures along with final violation decision. The current amendment empowers the Authority to impose structural measures when necessary to terminate the violation. Accordingly, the first paragraph of Article 9 of the Act has been changed as follows:

“If the Board determines that the article 4, 6 or 7 of the Act has been violated upon notice, complaint or the request of the Ministry or ex officio, notifies the relevant undertakings or associations of undertakings about the behaviors that must be followed or avoided for the establishment of competition, and/or structural measures in the form of transferring certain activities or partnership shares or assets. Behavioral and structural measures should be proportionate with the violation and necessary for the effective termination of the violation. Structural measures may applied only in cases where the behavioral measures introduced earlier do not yield results. If it is determined by the final decision that the behavioral measures do not yield results, at least 6 months are given to the relevant undertakings or associations of undertakings to comply with the structural measure.”

Thus, it has been clarified that in cases where the Competition Authoraity detects violations, it may take structural measures as well as behavioral measures.

  1. On the Spot Investigation Powers Regarding Digital Documents of Digital Media

Paragraph (a) Article 15 of the Act has been changed as follows:

“May examine its Notebooks, any data and documents kept in the physical and electronic media and information systems, and take their copies and physical samples”

Accordingly, The Turkish Competition Authority's on-the-spot investigation powers regarding electronic data and digital media have been clarified.

  1. De Minimis Application

“De Minimis” has been introduced to the Act as such:

“The Board, except for hardcore violations such as price determination,  territory or customer sharing, and restriction of supply among competitors based on criteria such as market share and turnover, may not initiate an investigation against the decisions and actions of the associations of undertakings, agreements, and concerted practices that do not significantly restrict competition in the market. The procedures and principles regarding the implementation of this paragraph are determined by the communiqué issued by the Board.”

With the implementation of this practice, the Competition Authority has been granted discretion not to open an investigation in violations other than certain types of severe violations.

  1. Settlement and Commitment

The title of the article 43 of the Act has been changed as "Starting an Investigation, Commitment and Settlement" and the following paragraphs have been added to the Article as follows.

“A commitment may be submitted by the relevant undertakings or associations of undertakings to eliminate the competition concerns that arise under Article 4 or 6 during a preliminary investigation or investigation in progress. If the Board considers that the competition concerns can be resolved through these commitments, it may be decided not to open an investigation or to terminate the investigation by making these commitments binding for the relevant undertakings or associations of undertakings. Commitment are not accepted for hardcore violations such as price determination, territory or customer sharing or restriction of supply among competitors. The procedures and principles regarding the implementation of this paragraph are determined by the communiqué issued by the Board.

After the Board makes a decision according to the third paragraph of this Article, it may initiate an investigation in the following cases:

a) There is a substantial change in any element that constitutes the basis for decision.

b) The related undertakings or associations of undertakings violate the commitments.

c) The decision has been based on incomplete, incorrect or misleading information provided by the parties.

After the investigation is initiated, the Board may initiate the procedure of settlement, at the request of those concerned or ex officio, taking into account the procedural benefits arising from the rapid completion of the investigation process and differences of opinion regarding the existence or scope of the violation. The Board may reconcile with undertakings or associations of undertakings that have undertaken an investigation and accepted the existence and scope of the violation before the notification of the investigation report.

As a result of the settlement procedure, up to twenty-five percent reduction in administrative fines can be applied. The reduction in administrative fines in accordance with this article does not prevent the reduction under the sixth paragraph of article 17 of the Law of Misdemeanor.

The Board gives the parties a certain time to submit a declaration of settlement, through which they accept the violation and explain the scope of the violation. Notifications made after the given period are not considered. The investigation is ended with a final decision involving a violation decision and the administrative fine.

In the event that the process results in settlement, the administrative fines and the matters included in the settlement text cannot be the subject of case by the parties.

Other procedures and principles regarding reconciliation are determined by the regulation issued by the Board. ”

Settlement and commitment institutions will ensure the procedural economy in the investigations carried out and to reestablish competition in the markets as early as possible.

By Metin Pektas, Antitrust and Compliance Partner, Nazali Tax & Legal