On 24 June 2020, Law No. 7246 on the Amendment of the Law on Protection of Competition (“Amendment Law”) was published on the Official Gazette No. 31165 and entered into force on the same day. Most of the provisions of this Amendment Law attempt to harmonise Law No. 4045 on the Protection of Competition (“Law”) with EU Competition Law practices and eliminate the difficulties encountered in practice.
This article analyses the recently introduced Commitment Procedure through Article 9/3 of the Law.
Application of Article 9/3
When considering the practices in the US, EU and Turkey, it is clear that mechanisms similar to the Commitment Procedure have been developed. This is particularly true of Turkey where a quasi-Commitment Procedure exists in Article 9/3 of the Law. For many years, this codification has been interpreted and applied similarly to the European Commission Commitment Practice, and many cases have been closed using this article.
The main features of decisions of the Turkish Competition Board in the light of Article 9/3 include:
- behaviour has not been implemented;
- behaviour has no or limited competitive effect in the relevant market;
- competitive loss is not substantial (i.e. the theory of harm); and
- investigation is not an effective method.
In many cases, undertakings have been notified of the conditions stipulated by the Board and have been asked to give feedback by a certain period. In one example, the Board takes an interim decision on how to terminate a tender after the research report and notifies the undertakings on the investigation to be conducted. If a commitment is made to fulfil the conditions, the case is closed with a final decision.
Commitment concerns of Article 9/3
As for concern about whether the Board acknowledges Article 9/3 as a commitment mechanism, the differences in approach in these similar cases have raised concerns.
In the Çaykur case and Kale Pazarlama case the decision was made not to launch an investigation, but to close the file by changing the issues that can be considered as violations and notifying the Board within the given period. In the Türk Telekom case, however, the Board closed the file. In later decisions such as Philip Morris/BTA, the files were closed with the performance of certain behaviours.
Another situation that causes confusion is the imposition of sanctions despite compliance with the decision pursuant to Article 9/3. Although the associations of undertakings under investigation in the PÜİS/TAGBİS files complied with the decision to end the violation, they could not escape punishment. On the other hand, in the Warner Bros case, Warner Bros’s decision to consider the investigation notification as an opinion letter on the termination of the violation pursuant to Article 9/3 and the commitments to be followed after the investigation did not result in the termination of the investigation and were considered during sentencing.
The Commitment Procedure of Turkish Competition Law
The Commitment Procedure does not aim to eliminate serious violations, but addresses potential competition law violations without the completion of preliminary investigation and full-fledged investigation procedures.
Through Article 43 of the Law, undertakings can make a commitment to the Board during the preliminary investigation or full-fledged investigation stages by voluntarily adopting the Commitment Procedure. If the Board finds these commitments to be sufficient to resolve ‘competition concerns’regarding Article 4 and 6 of the Law, they can be made binding for the undertaking. In this case, the Board does not impose an administrative fine or initiate an investigation. An ongoing investigation may be terminated.
There is no commitment mechanism for evident and severe competition violations. Price fixing, regional and customer sharing, supply restrictions, the exchange of sensitive information, and horizontal agreements between competitors can be counted as severe and evident competition violations.
Article 9/3, which is considered a quasi-commitment procedure, is sufficient (according to the purpose and the wording of the codification) to terminate a possible breach, and the Board has utilised this Article in this way. The sanctions for not complying with the quasi-commitments are codified in Article 16-17.
The difference is the involvement of third parties in the process. In the current situation, the Board can take the opinions of the complainant and third parties about a commitment if it deems the commitment presented to be appropriate. However, Article 9/3 contains no explicit provision for making an announcement to third parties.
Secondly, Article 9/3 is utilised in cases during the initial review stage. The new commitment mechanism, however, utilises the “preliminary investigation or the full-fledged investigation.”
The Board’s decisions pursuant to Article 9/3 include certain statements about the existence of a violation, while some decisions include more flexible statements such as “there may be a violation”. In fact, the Board even uses Article 9/3 in cases that may qualify as cartels. Nevertheless, the new commitment mechanism will be used in cases of potential violations only.
Finally, if the commitment is accepted, the procedure to be followed for non-compliance of a commitment is clear: an investigation will be initiated or reopened, and the punishment will be aggravated. Thus, there is a limited revision right when it comes to the Commitment Procedure. When Article 9/3 is applied, however, the Board appears to prefer writing an undertaking again without applying sanctions when the commitments given are not met.
Although Article 9/3 has been used for many years with a quasi-commitment method, the Board applies different approaches from case to case. With the newly developed commitment mechanism, Turkish Competition Law practice and the decisions of the Board will become uniform and possible violations will be prevented.
For more details on Turkish competition law and how it could affect your business, contact your CMS client partner or local CMS experts: Dr. Döne Yalçın or Arcan Kemahlı.