Amendment to the Law on the Protection of Competition

Amendment to the Law on the Protection of Competition

The Law Amending the Law on the Protection of Competition, which was prepared in order to establish a competition legislation in line with the European Union competition law legislation, was published in the Official Gazette on June 24, 2020. We would like to draw your attention to some of the important headings below regarding this amendment, which includes many regulations to be introduced to the Law on the Protection of Competition (“Law“) regarding the administrative functioning of the Competition Authority and the essence of Turkish Competition Law.

Self-Assessment Method for Exemption

The provision stating that the Competition Board (“Board“) may decide to exempt undertakings or associations of undertakings from anticompetitive agreements, concerted practices and decisions if the conditions specified in Article 5 of the Law titled “Exemption” are met, has been amended as “undertakings will benefit from the exemption if all of the conditions are met“.

This method, which is already applied in practice, is being introduced to the Law with this amendment, and undertakings wishing to benefit from the exemption will be able to make their own exemption assessments and apply to the Board on an optional basis.

Non-Investigation of Competition Violations under “De Minimis”

With the amendment made to Article 41 of the Law titled “Preliminary Investigation Process“, it is regulated that the Board may not investigate agreements, concerted practices and decisions and actions of associations of undertakings that do not significantly restrict competition in the market, except for clear and serious violations such as price fixing between competitors based on criteria such as market share and turnover, regional or customer allocation and restriction of the amount of supply. As a result of this amendment, the Board has been granted a kind of discretionary power in the investigation process and the principles regarding the implementation of this regulation are envisaged to be regulated by a Communiqué to be issued by the Board.

This discretionary power should reduce the number of investigations to be opened, but should allow the Board to focus on investigations with higher retention.

Undertaking and Settlement Mechanisms in Competition Investigations

The title of Article 43 of the Law, titled “Commencement of Investigation by the Board“, is amended as “Commencement of Investigation, Commitment and Settlement“, and it is aimed to introduce the undertaking and settlement institutions in the model European Union legislation into the Turkish Competition Law.

With the commitment mechanism introduced by this amendment, undertakings or associations of undertakings that are in the process of preliminary investigation or investigation may submit commitments to the Board, and if the Board is of the opinion that these commitments can eliminate the competition violations, these commitments may be made binding for the undertakings or associations of undertakings, and the Board may decide not to initiate an investigation or to terminate the already initiated investigation.

Again, with the settlement procedure introduced by the amendment, the Board and the undertakings or associations of undertakings, against which an investigation has been initiated and which acknowledge the existence and scope of the infringement, may settle until the notification of the investigation report, and a discount of up to 25% may be applied to the administrative fine to be imposed as a result of the settlement.

The Authorization of On-Site Inspection also covers Information Systems

In addition to the powers of the Board set forth in Article 15 of the Law titled “On-site Inspection”, such as requesting written or verbal explanations, conducting on-site inspections of all kinds of assets of undertakings, inspecting physical areas such as documents and papers and taking copies if necessary, the amendment introduced the authority to inspect all kinds of data in electronic media and information systems.

This amendment paves the way for the Board’s experts to access remote computer servers and conduct remote on-site examinations.

Structural Measures

Article 9 of the Law, titled “Termination of Infringement”, has been amended to provide that the Board may take structural measures in its final decisions. With the amendment, the Board will be able to notify the undertakings or associations of undertakings in its final decision the structural measures required for the establishment of competition in case of a violation of Article 4 titled “Agreements, Concerted Practices and Decisions Restricting Competition“, Article 6 titled “Abuse of Dominant Position” or Article 7 titled “Mergers and Acquisitions” of the Law. However, the amendment states that structural measures are an exceptional power to be applied in case the previous behavioral measures do not yield results.

Substantially Lessening Effective Competition Test Instead of Dominant Position Test

With the amendment made to Article 7 of the Law titled “Merger or Acquisition“, the “significant lessening of effective competition” test applied in the European Union Law has been introduced instead of the dominant position test in order to evaluate the unilateral effects and cooperation effects that may arise as a result of merger and acquisition transactions more accurately. The “substantial lessening of effective competition” test will allow the prohibition of transactions that may significantly lessen competition, as well as transactions that result in the creation of a dominant position or the strengthening of an existing dominant position.

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