After 26 years Turkey changes its Competition Act

Turkey

On 24 June 2020, the Law on Amendment to the Competition Protection Law No. 4054 ("Amending Law") came into force in Turkey and was published in the Official Gazette, which introduces significant changes to Turkish competition law.

The main objective of the Amending Law is to align the Turkish legal framework with the EU acquis in line with the accession negotiations, as set out in the European Commission's 2019 Report on Turkey. The Amending Law also updates Turkey's 26-year-old competition law to meet today's requirements

More specifically, the Act on the Protection of Competition No 4054 ("Act") was amended as follows:

Clarification regarding the determination of exemption

Up until now, it was not clear as to whether the exemptions with regards to the concerted practices and decisions were directly applicable to the parties in the existence of the conditions set forth under Article 5 of the Act. By the amendment of Article 5 of the Act, in line with EU Regulation 1/2003, a system of "directly applicable exemption" is established ; where the parties to an agreement must determine for themselves whether or not concerted practices and decisions are covered by the exemptions provided under the Act and the related block exemptions. Accordingly, it became clear that in the event of existence of the conditions set forth under the same Article, such exemptions shall be directly applicable.

Further, the amendment to Article 5 of the Act clarifies that the directly applicable exemption system does not prevent the parties from submitting a request to the Competition Authority ("Authority") to confirm the applicability of the exemptions in a particular transaction.

Significant impediment to effective competition

With the amendment of Article 7 of the Act, the "test of significant impediment to effective competition" will replace the market dominance test and will be applicable for the purpose of establishing abuse of dominant position. In addition, the amendment clarifies that the scope of application of the prohibition of abuse of dominant position is not limited to the creation or strengthening of a dominant position. The potential effects of mergers and acquisitions must be carefully assessed and transactions that significantly restrict competition may be subject to the prohibition of abuse of dominant position although the parties do not have per se a dominant position in the market.

Structural measures may be imposed

The amendment to Article 9 of the Act gives the Authority the power to impose structural measures such as asset transfers or restructuring in addition to behavioral measures. Such structural measures may be taken only if they are proportionate and necessary to remedy an identified competition infringement and if the behavioral measures already imposed are not sufficient to restore competition.

Clarification on on-site investigations

Although the Authority also accesses electronic data during investigations in order to search them, this authority was not clearly regulated in the Act.

The amendment to Article 15 of the Act now clarifies the Authority's powers by stating that the Authority may examine the books and all physical and electronic data and documents and make copies as necessary.

Investigation threshold will be established

Article 41 of the Act is amended to provide time efficiency and legal certainty for competitors in the market. As a result, the Authority may decide not to carry out an investigation if an infringement does not significantly restrict competition, except in cases of gross infringements such as price fixing, allocation of customers or territories and restriction of supply, where the threshold as to certain criteria such as market shares and revenues to be set by the Authority is not exceeded. The Authority will issue communiqués providing further details on such specific thresholds and criteria. It is expected that the details will be in line with the EU De Minimis Notice of 2014.

Conciliation procedure

The amendment to Article 43 of the Act adopted commitment and settlement procedures in order to comply with EU practices, improve time efficiency and reduce losses and costs for the public.

As a result, undertakings or associations of undertakings may submit commitments during a preliminary investigation or an inquiry, except in the case of the gross infringements referred to above. The Authority accepts the commitments and decides not to carry out an investigation or to close an ongoing investigation only if it is satisfied that the commitments are sufficient to resolve the competition issues. However, the Authority is entitled to open a new investigation if there has been a significant change in the factors affecting the decision, such as breaches of obligations arising from a commitment and the appearance of evidence that false or incomplete statements were made during the application procedure.

In addition, settlement procedures may be applied at the request or on the initiative of the Authority from the start of the investigation until the notification of the investigation report. The undertaking or associations of undertakings against which the investigation is directed, and which has submitted a written statement accepting the existence and extent of the breach may be granted a reduction of up to 25% of the administrative fine. The Authority may propose a settlement if a speedy conclusion of the case brings significant procedural advantages or if there is disagreement within the Authority about the existence of an infringement. 

The details of the practice of commitment and settlement procedures will be set out under further communiqués to be published by the Authority.

Extension of deadlines

As per Article 45 of the Act, the Authority could, for duly justified reasons, extend the period within which investigated parties may make their written submissions. However, no extension period to be granted to the Authority’s investigation staff as to submission of their additional written comments was foreseen under the Act. By amending Article 45 of the Act, the Authority, now, may also extend by a further fifteen (15) days the period granted to the Authority's investigating staff to submit their additional written comments. However, such extensions may be granted only once.
Other changes concerning the organization of the Authority

Articles 31, 33, 36 and 60 of the Act dealing with civil and criminal liability Act, the status and number of staff of the Authority and the administrative function of the Authority have been amended.

For further information on the application of the new provisions, please contact your regular CMS consultant or local CMS experts: Dr. Döne Yalçın or Arcan Kemahlı.