The relevant legislation establishing competition law principles in Turkey is Law No. 4054 on Protection of Competition of 13 December 1994 (‘Law No. 4054’). This legislation is reinforced by various regulations, communiqués and guidelines, which are adopted in parallel to secondary legislation of EU competition law. The national competition agency enforcing competition law rules is the Turkish Competition Authority (the ‘Authority’), a legal entity with administrative and financial autonomy.
In 2020, Law No. 4054 was subject to essential amendments which passed through the Grand National Assembly of Turkey on 16 June 2020 and entered into force on 24 June 2020 (‘Amendment Law’) – on the day of its publication in Official Gazette No. 31165.
The Amendment Law continues to set out main rules under Article 4 (Agreements, Concerted Practices and Decisions Restricting Competition) and Article 6 (Abuse of Dominant Position) alongside Article 7 (Merger or Acquisitions), yet the amendments which aim to achieve further compliance with the EU competition regime (i) introduce efficient enhancing procedures and mechanisms and (ii) clarify mechanisms to sustain legal certainty in practice to a certain extent.
The Amendment Law introduces, inter alia, the following key changes:
• De minimis principle: The Board can decide not to launch a full-fledged investigation for agreements, concerted practices and/or decisions of undertakings/associations of undertakings which do not exceed the market share and/or turnover thresholds that will be determined by the Board. The de minimis principle is applicable to agreements falling under Article 4 yet it is not applicable to ‘hard core’ violations including price fixing, territory or customer sharing and restriction of supply.
• SIEC test: In relation to merger control assessments, the dominance test set out under Article 7 is replaced by the new substantive “significant impediment of effective competition” test.
• Behavioural and structural remedies: In cases where the behavioural remedies have failed, structural remedies may be applied for anti-competitive conducts. Application of the remedy mechanism has been newly introduced to Articles 4 and 6, and the mechanism previously applicable to Article 7 has changed. Accordingly, the new mechanism applicable for all anti-competitive conduct assessments sets application/proof of ineffectiveness of behavioural remedies as a precondition for structural remedies.
• Settlement: The Board, ex officio or upon parties’ request, can initiate a settlement procedure. Parties that admit to an infringement can apply for the settlement procedure until the official notification of the investigation report.
• Commitment: Undertakings or associations of undertakings can voluntarily offer commitments during a preliminary investigation or full-fledged investigation to eliminate the Authority’s competitive concerns in terms of Articles 4 and 6. Depending on the sufficiency and the timing of the commitments, the Board can decide not to launch a full-fledged investigation following the preliminary investigation or to end an ongoing investigation without completing the entire investigation procedure. In any event, the commitments will not be accepted for violations such as price fixing between competitors, territory or customer sharing, or the restriction of supply.
• On-site inspections: The Authority’s inspection powers have broadened and aligned with the current practice of the case handlers, the Authority can now inspect and make copies of all information and documents held in the electronic media and information systems of the companies.
• Self-assessment procedure: Further clarification and legal certainty is provided in relation to the individual exemption regime, and it is now clearly stipulated that “self-assessment” principle applies to certain agreements, concerted practices and decisions that potentially restrict competition.
• Time extension for additional opinions: The 15-day period for submission of the Authority’s additional opinion can be now doubled if deemed necessary.
Overall, clarification of the majority of the amendments via enactment of secondary legislation is awaited. The Authority published its Guidelines on Examination of Digital Data during On-site Inspections on 8 October 2020, which set forth the general principles with respect to the examination, processing and storage of data and documents held in electronic media and information systems, during on-site inspections. Furthermore, the Authority conducted its public consultations in relation to the Draft Communiqué for De Minimis Practices and the Draft Communiqué for Commitments.
Moving on to the Authority’s practice, the Board initiated important market researches and rendered significant reasoned decisions related to Article 4, 6 and 7 matters in the past year.
Similar to the rest of the world, technology firms and digital platforms were under the Authority's radar. The Authority announced plans for the strategy development unit to focus to digital markets in May 2020 and launched a sector inquiry focused on electronic marketplace platforms on 16 July 2020.
Accordingly, the Authority announced on its official website that it launched an ex officio investigation against Facebook and WhatsApp in relation to their data sharing arrangement (11 January 2021, 21-02/25-M).
On the other hand, under Article 6 assessment, the Authority continued investigating refusal to deal matters, and Varinak was found to be in a dominant position in the market for maintenance and repair of linear accelerator devices as well as treatment control devices, and it was concluded that Varinak abused its dominance by way of refusing access to training certifications of the relevant devices and effectively foreclosing the market to its competitors. Accordingly, the Board imposed an administrative fine of 1% of Varinak’s annual gross income (19 December 2019, 19-45/768-330).
In relation to Article 4 assessments, the Authority recorded increased cartel enforcement under horizontal agreement assessments. The Board found that certain ready-mixed concrete producers operating in the Yozgat province infringed Article 4 by way of establishing two legal entities (namely, Güven Beton and Sorgun Emek Beton) in order to coordinate sales, collectively determine prices and allocate customers. Accordingly, the Board imposed an administrative fine of 1.2% of the annual gross income of the investigated parties (19 March 2020, 20-15/215-107). Furthermore, in an investigation concerning the traffic signalisation market, the Board concluded that nine of the ten investigated parties violated Article 4 by way of bid rigging. Among other practices, the Board essentially found that these undertakings prepared offers and entered into bids based on a mutually reached consensus. As a result, all but one of the investigated undertakings had an administrative fine imposed on them of either 2% or 3% of their annual gross income (12 March 2020, 20-14/191-97). During the investigation process, one of the investigated undertakings – Mosaş – was fined separately for hindering the on-site inspection conducted by the Authority (21 June 2018, 18-20/356-176) and refusing to grant access to the Authority for 17 days (5 July 2018, 18-22/378-185). In another decision, the Board concluded that petrol stations located in the Burdur province violated Article 4 by way of fixing prices. The Board found that the cartel arrangement was essentially formed via WhatsApp groups and messages created between certain employees of the relevant petrol stations. Despite an explicit finding of a cartel violation, the Board took into consideration the lowest base fine rate stipulated under the Regulation on Fines applicable for violations other than cartel violations, since the profit margins of the investigated undertakings were significantly low, and imposition of a high fine would restrict the sustainability of their business (9 January 2020, 20-03/28-12). Moving on, in a recent leniency case, which began with Arçelik’s leniency application upon discovery of the sharing of insider information by an Arçelik employee with various companies including Arçelik’s competitor Vestel, the Board concluded no violation as the investigated practices took place without knowledge of the senior management, the practices did not meet the mutual agreement criteria and it did not constitute concerted practice (2 January 2020, 20-01/13-5).
As for vertical agreement assessments under Article 4, the Board was observed to adopt a strict approach with regard to individual exemption applications. In its assessment of Roche’s negative clearance/exemption application for a distribution system which, among certain other restrictions, intends to limit the number of pharmaceutical warehouses that supply human medicine to pharmacies and private hospitals to no fewer than five but no more than ten entities, the Board assessed that the market is well regulated and highly concentrated, and noted that system may create barriers to entry especially for smaller warehouses and result in market foreclosure. Accordingly, evaluating the agreement within the scope of Article 4 of Law No. 4054, the Board did not provide negative clearance and refused to grant individual exemption for the distribution system. The decision included one dissenting opinion of a Board member which argued that (i) the decisions made unilaterally by pharmaceutical companies in terms of limiting the number of warehouses they will work with would not give rise to competition law concerns, (ii) consumer welfare cannot be determined through assumptions, (iii) the purpose of Law No. 4054 is not to protect undertakings, but competition, (iv) interventions do not guarantee service quality in terms of pharmacies and consumers, and (v) the intended practice would not negatively affect the pharmaceutical distribution level of the market (12 December 2019, 19-44/732-312).
Furthermore, there have been a number of cases concerning resale price maintenance (‘RPM’). In a recent decision, the Board found that Bellona had violated Article 4 by setting their dealers' resale prices and limiting the additional discount rates offered by the dealers, and imposed an administrative fine of TRY5,778,480.84 on Bellona (26 March 2020, 20-16/231-112). In the fuel and LPG sector, the Board investigated the practices of five entities and decided that four of out those five entities (BP, Petrol Ofisi, Shell and OPET – excluding Total) interfered with their dealers’ pump prices. It accordingly imposed administrative fines of TRY213,563,152.66, TRY507,129,085.76, TRY348,154,458.54 and TRY433,932,124.60 respectively (12 March 2020, 20-14/192-98). The Board also investigated the agreements entered between Baymak and its dealers, and assessed that (i) the agreements contained provisions serving as RPM instruments, (ii) the undertaking was observed to carry out RPM practices in line with those agreements, (iii) the agreements contained non-compete obligations exceeding the five-year period foreseen by the block exemption mechanism, and (iv) the agreements included online sale restrictions. Accordingly, the Board concluded that the agreements cannot benefit from the exemption mechanism and violated Article 4. In this regard, the Board imposed an administrative fine of TRY26,813,704.10 on Baymak and ordered revision of the agreements (26 March 2020, 20-16/232-113). In another case, the Board assessed allegations against Yataş and Doğtaş in relation to (i) determination of their dealers' resale prices and discount rates and (ii) limitation of their payment methods in its pre-investigation. Pursuant to the pre-investigation, the Board decided not to initiate a full-fledged investigation since it did not determine any RPM practices, yet it scrutinised online sales restrictions adopted by Yataş and Doğtaş and ordered the entities to cease and desist from their passive sales practices by amending their dealership agreements and practices (6 February 2020, 20-08/83-50).
Moving on to merger control assessments under Article 7, the Board conditionally approved a transaction regarding the acquisition of sole control of OMNOVA Solutions by Synthomer based on the commitments submitted to the European Commission. In this regard, the Board evaluated that Synthomer’s commitment to transfer its global VP latex business to a buyer approved by the European Commission eliminated the competition concerns arising due to overlap between the activities of the parties in the relevant market. Accordingly, under the Article 7 assessment applicable prior to the Amendment Law, the Board concluded that the transaction did not result in the creation or strengthening of a dominant position (6 February 2020, 20-08/90-55). In a decision that stands out from the pack, the Board analysed the failing firm defence within the scope of the acquisition of certain assets of Yıldız MDF by Yıldızlar Holding. The Board assessed (i) Yıldız MDF’s cessation of production activities and composition with the creditors, (ii) if any, unsuccessful negotiations with several foreign groups for acquisition, and (iii) the opportunity to activate the machinery/equipment and facilities that became idle due to cessation of operations, and the Board further scrutinised (iv) Yildiz MDF's debt structure and claimants to determine whether there had been collusion between the transaction parties that aims to benefit from the failing firm defence and bypass the relevant legislation and (v) the activities of the parties to assess whether the transaction would result in restriction of competition in the horizontally overlapping markets, namely, the markets for medium density fibreboards (MDF) and parquets. The Board concluded that the transaction did not result in the creation or strengthening of a dominant position and approved the transaction unconditionally (13 August 2020, 20-37/525-233).
As a final note, over the past year, the Authority gave Covid-19 pandemic-related infringement warnings to various stakeholders. On separate occasions, the Authority announced on its official websites different complaints received over price hikes in various sectors such as the fresh fruit and vegetables sector as well as the health, hygiene and food sectors. In this context, the Authority invited third parties to report any competition-sensitive practices and emphasised that they will be further investigating such practices. During this term the Authority launched various preliminary and full-fledged investigations for evaluation of practices adopted during the pandemic period.