Competition Law Update: Amendments to Turkish Competition Law
- Law Amending the Law on Protection of Competition No. 7246
The Law Amending the Law on Protection of Competition No. 7246 (the “Amending Law”) which was published on the Official Gazette No. 31165 dated 24.06.2020 brings important changes to the Law on Protection of Competition (the “Law”) which was published on the Official Gazette No. 22140 dated 13.12.1994. Amending Law aims to ensure harmonization of the current legislation with the European Union competition laws that havebeen closely followed by the Competition Board (the “Board”) and to introduce new methods in order to provide faster and effective implementation of competition laws.
In line with this principle; the Amending Law brings many important and innovative changes such as significant impediment to effective competition test in mergers and acquisitions, settlement and commitment procedures, de minimis principle.
2. Changes to the Turkish Competition Law by the Amending Law
2.1 “De Minimis” Exception
Having amended the Article 41 of the Law, the Amending Law introduces an exception for the Competition Board according to which the Board may not initiate investigations if the violation does not harm the competition in the market significantly. However, this exception cannot be applied in the event of clear and gross violations such as price settings, market or customer allocation and limitation of supply of supply.
2.2 Individual Exemption
The Amending Law amends the Article 5 of the Law, so that theagreements, concerted practises and decisions of association of undertakings will be exempt from the Article 4 of the Law provided that the following conditions are fulfilled:
(i) New developments, improvements or economical or technical improvements are provided in manufacture and distribution of the goods,
(ii) Consumers benefit from such situation,
(iii) Competition is not violated in an important part of the relevant market,
(iv) The competition is not restricted more than it is necessary for achievement of (i) and (ii).
In this vein, the associations of undertakings are given the opportunity to evaluate whether they fulfil the requirements for exemption and to submit an application to the Board for determination of whether their acts would fall within such exemption.
2.3 Significant Impediment to Effective Competition Test in Mergers and Acquisitions:
Having amended the first paragraph of Article 7 of the Law, the Amending Law introduces “significant impediments to the effective competition test” which has already been adopted and used in European Union Competition Law in addition to the dominant position test during the merger control review. This new test enables the Board to evaluate the effects of a merger or acquisition more effectively. In this vein, the Board is entitled to evaluate whether a merger or an acquisition is creating or strengthening a dominant position and prohibit transactions that may significantly reduce effective competition in the market.
2.4 Behavioural and Structural Remedies:
According to the Amending Law, amending the first paragraph of Article 9, the Board may adopt behavioural and structural remedies such as transferring commercial activities, shareholding or assets of an association of undertaking.
Behavioural and structural remedies may only be applied provided that behavioural remedies were applied but failed and the structural remedy is proportionate with the violation and required for the cease of the relevant violation. Additionally, in the event of a final decision of the Board regarding the failure of behavioural remedies, the undertakings or association of undertakings will be entitled to at least 6 months’ period to comply with the structural remedies.
2.5 Investigation of the Experts
According to the amendment in the Article 15 of the Amending Law, the experts of the Board may examine the booksany data and documents stored in physical and electronic media and information systems and receive copies and physical samples of them. This amendment does not only expand the authority of the Board to investigate the data at the place but also explicitly provides that digital assets can be accessed and investigated by the Competition Authority.
2.6 Commitment and Settlement Procedures:
Commitment and settlement procedures which have been in force and used effectively within the European Union took their place in the Article 43 of the Law amended by the Amending Law.
According to the new paragraphs added to the Article 43 of the Law, if the undertaking or association of undertakings makes a commitment for elimination of the competition concerns within the scope of Article 4 and 6 of the Law, and the Board, taking into consideration the timing and sufficiency of the commitments, accepts such commitments; an investigation may not be initiated or an ongoing investigation may be terminated.
According to the relevant article, after a commitment is approved, the Board is entitled to re-open an investigation in the following circumstances:
(i) there is a significant change in the merits that form the basis of the decision;
(ii) violation of commitments by the undertakings or association of undertakings; or
(iii) the decision had been rendered on incomplete, incorrect or misleading grounds submitted by the parties.
It should also be noted that gross violations such as price-fixing, market sharing are explicitly excluded from the commitment mechanism.
Amending Law brings settlement mechanism to the Law. Taking into account the benefits of prompt investigation and different opinions in terms of the existence and scope of the violation, the Board, may initiate the settlement mechanism upon the request or parties or ex officio.
The Board may settle with the undertakings and associations of undertakings that are subject to investigation and admitting the violation until the investigation report is served. According to the relevant article, the Board is entitled to determine the time required for the parties to submit settlement letter and the Board will disregard the notices made after the relevant deadline.
Additionally, in the event of implementation of settlement mechanism, administrative fines may be reduced by up to 25%. A regulation will be published by the Board regarding the procedure and principles of this mechanism. After the settlement procedure is applied and finalised, the parties are prohibited from initiating lawsuits regarding the administrative fine or other matters included in the settlement decision.
Having reviewed the amendments brought to the Law by the Amending Law, we recognize that the Law was amended o meet the needs of the market and provide a faster and more effective implementation in line with the European Union competition law. In this vein; we consider the effective mechanisms brought to the Law such as de minimis exception, structural and behavioural remedies, commitment and settlement mechanisms significant in terms of compliance with the European Union laws and modernisation of the competition law in Turkey.
@ Sena Güngördü | Kesikli Law Firm