EU & Competition

Turkey: Highlights of Proposed Amendments to the Turkish Competition Act

Amendments to the Law on Protection of Competition (CA) were submitted to the Turkish Parliament on 23 January 2014 (Draft Law). The purpose is to comply with the EU acquis and harmonise the secondary legislation enacted after the CA. At the time of drafting, the Draft Law is still under discussion. The authors highlight major amendments introduced by the Draft Law.

Amendments regarding prohibited activities

De-min­imis rule

Par­al­lel to EU prac­tice, the “de-min­imis” rule is adopt­ed in the Draft law to chan­nel Com­pe­ti­tion Author­i­ty resources to rel­a­tive­ly sig­nif­i­cant infringe­ments. Accord­ing­ly, if a cer­tain mar­ket share or turnover amounts are not exceed­ed, pro­hib­i­tive acts of under­tak­ings may be dis­re­gard­ed. As per the Draft Law, the cri­te­ria and pro­ce­dures will be clar­i­fied via sec­ondary leg­is­la­tion.

Sig­nif­i­cant imped­i­ment of effec­tive com­pe­ti­tion test (SIEC)

The Draft Law adopts the term “con­cen­tra­tion” for merg­ers, acqui­si­tions and full-func­tion joint ven­tures. The Draft Law replaces the mar­ket dom­i­nance test with the SIEC. Cur­rent­ly, merg­ers and acqui­si­tions that cre­ate or strength­en a dom­i­nant posi­tion and impede com­pe­ti­tion are pro­hib­it­ed. With the intro­duc­tion of the SIEC, not only cre­at­ing or strength­en­ing a dom­i­nant posi­tion but also less­en­ing com­pe­ti­tion sig­nif­i­cant­ly would be pro­hib­it­ed. This would har­monise the CA with the EU acquis1. So trans­ac­tions in oli­gop­oly mar­kets less­en­ing com­pe­ti­tion via uni­lat­er­al effects would be cov­ered.

Exemp­tion

Exemp­tion con­di­tions are pre­served in the Draft Law. How­ev­er, the Draft Law impos­es an addi­tion­al pro­vi­sion that, if agree­ments, con­cert­ed prac­tices and/or deci­sions of under­tak­ings have “inco­her­ent effects” on indi­vid­ual exemp­tion con­di­tions, they may be exclud­ed from block exemp­tions. “Inco­her­ent effects” is not yet defined in the Draft Law or sec­ondary leg­is­la­tion.

Amendments regarding duties and powers of the Competition Board (CB)

Neg­a­tive clear­ance

Neg­a­tive clear­ance is aban­doned in the Draft Law, but the rea­son for that is not stat­ed in the explana­to­ry notes or else­where. The fact that neg­a­tive clear­ance sys­tem does not exist in the EU acquis leads one to think that com­pli­ance with EU acquis and thus reduc­ing the work load of the CB might be the rea­sons.

Com­pe­ti­tion advo­ca­cy

The Draft law intro­duces “com­pe­ti­tion advo­ca­cy” in accor­dance with which the CB is autho­rised to opine on admin­is­tra­tive insti­tu­tions’ acts on whether such acts con­sti­tute (or have an effect sim­i­lar to) a vio­la­tion, and thus bring court actions.

Con­cil­i­a­tion
Anoth­er major amend­ment intro­duced by the Draft law is “con­cil­i­a­tion”. Accord­ing­ly, dur­ing an inves­ti­ga­tion, it would be pos­si­ble to set­tle with the CB. The con­cil­i­a­tion, unlike the EU prac­tice, includes car­tel cas­es, and appeal­ing a con­cil­i­a­tion deci­sion is not pos­si­ble.

Dawn raids

The pow­er of the CB is extend­ed for dawn raids. Under the Draft Law, to pre­vent the spoil­ing of evi­dence, in addi­tion to its cur­rent rights (copy­ing doc­u­ments, print­outs of elec­tron­ic data), the CB would be grant­ed the author­i­ty to seal all equip­ment con­tain­ing sen­si­tive infor­ma­tion for up to 24 hours.

Changes regarding penalties

With the Draft Law, some fixed fine ratios have been replaced by vari­able ratios. Cur­rent­ly, if a con­cen­tra­tion is realised with­out CB approval and/or mis­lead­ing, incor­rect or incom­plete information/document is pro­vid­ed to CB, (i) a fixed fine amount of 0.1% and (ii) pre­ven­tion of on-spot inspec­tion a fixed fine amount of 0.5% of the annu­al gross turnover can be imposed. How­ev­er the Draft Law impos­es vari­able fines for these breach­es up to 0.1% or up to 0.5% of the annu­al gross turnover. Adop­tion of vari­able fines would allow CB to impose fines in dif­fer­ent ratios by con­sid­er­ing the neg­li­gence of the par­ties and the impact and dura­tion of the vio­la­tion.

Miscellaneous changes

Cur­rent­ly, the CB must decide a clear­ance appli­ca­tion with­in 15 days. How­ev­er, if the CB is silent, the con­cen­tra­tion becomes valid after 30 days. The Draft Law abol­ish­es the ref­er­ence to 15 days and sets a 30 day Phase-I peri­od, there­by clar­i­fy­ing the vague­ness in the CA about the con­se­quences in case the CB decides after 15 and before 30 days. The phase-II peri­od is reduced from six to four months under the Draft Law with an exten­sion right of an addi­tion­al four months (the cur­rent exten­sion lim­it is six months). In the EU, such peri­od is 90 days with an exten­sion right of 15 days.

Last­ly, oth­er changes pro­posed to the inves­ti­ga­tion process are as fol­lows: the pre-inves­ti­ga­tion peri­od is extend­ed from 30 days to two months; the num­ber of defence sub­mis­sions is reduced from three to two.

Although the Draft Law does not cover all gaps between Turkish competition law and the EU acquis, the Draft Law (if enacted) is expected to increase the efficiency of the competition law in Turkey.

1
EU Coun­cil Reg­u­la­tion No. 1392004