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. 139/2004