The Turkish Competition Authority’s (“Authority”) Regulation on the Settlement Procedure to be Applied to Investigations on Anticompetitive Agreements, Concerted Practice, Decisions and Abuse of Dominant Position (“Regulation”) has been published in the Official Gazette dated 15 July 2021 numbered 31542. You can read the Regulation in the Official Gazette here. (Available in Turkish only).
Law No. 7246 Amending the Law on the Protection of Competition (“Law No. 7246”), which amends the Law on the Protection of Competition No. 4054 ("Law No. 4054"), entered into force on being published in the Official Gazette dated 24 June 2020 and numbered 31165. One of the significant mechanisms that has been brought into force through Law No. 7246 is the settlement procedure.
The Regulation is a practical arrangement introduced to bring functionality to the rules of the settlement mechanism regulated in Article 43 of Law No. 4054 and generally states the procedures and principles that should be applied during the settlement process.
1. Scope of the Settlement Mechanism
Undertakings or associations of undertakings under investigation for behavior prohibited in Articles 4 and 6 of Law No. 4054, and who admit the existence and scope of their violation, can apply for the settlement mechanism.
2. General Principles of Settlement
The Turkish Competition Board (“Board"), ex officio or upon the parties’ request, may initiate the settlement process at any time after an investigation is initiated, until the notification of the final investigation report. The parties involved in the investigation can submit a request for settlement; the Board may accept or reject the request, or they may decide to involve other parties in the settlement. The Board may also ex officio invite the parties to settlement negotiations. In such cases, according to Article 5(3) of the Regulation, the invited parties must notify the Authority as to whether they intend to participate in settlement negotiations in writing within 15 days of receipt of the invitation. Following the expiration of this period, any requests for settlement will not be accepted and the Board will proceed with the investigation against the parties.
When initiating the settlement procedure during an investigation, the Board considers the procedural benefits of concluding the investigation process expeditiously, and the existence and scope of the alleged violations, especially regarding:
i. the number of parties,
ii. whether the majority have applied for settlement,
iii. the scope of violation and the nature of the evidence,
iv. the likelihood of settling with the parties on the existence and scope of the violation.
It must be noted that initiating a settlement procedure does not mean that the process will conclude in a settlement. The Board may decide to terminate the settlement process if it considers:
a. the expected benefit is unlikely to be gained or settling with the parties is not possible, or,
b. there is a possibility of the spoliation of evidence, or
c. the parties breach their responsibility of confidentiality.
3. The Settlement Process
According to the Regulation, once a party’s request for settlement is accepted or the Board's invitation is duly accepted, the Authority will commence the settlement negotiations as soon as possible.
It must be noted that, Article 6 (2) of the Regulation states that a party’s participation in settlement negotiations does not indicate their admission of the existence of the alleged violations or their scope. Parties can waive negotiations for the settlement until the submission of the settlement letter.
During the negotiations, the Board informs the parties of:
a. the context of the alleged violations,
b. the nature and scope of the relevant alleged violations,
c. the evidence, which has been redacted, if necessary, that is the basis for the alleged violations
d. the potential reduction rate to be applied if a settlement is reached,
e. the range of the potential administrative monetary fine.
The settlement process and negotiations proceed separately for each of the parties in the investigation. This means that in investigations with multiple parties, the settlement procedure can only be initiated for those parties that choose to settle and to meet the necessary conditions. Therefore, it is not mandatory for all parties to apply for settlement, and the Board does not have to accept all settlement requests submitted by parties.
Following the settlement negotiations, the Board issues its interim decision regarding the conditions and consequences of the settlement. The interim decision includes:
(a) the nature and scope of the alleged violations,
(b) the maximum administrative monetary fine calculated pursuant to the Regulation on Fines to Apply in Cases of Agreements, Concerted Practices and Decisions Limiting Competition, and Abuse of Dominant Position published in the Official Gazette dated 15 February 2009 and numbered 27142,
(c) the reduction rate to be applied at the end of the settlement,
(d) the reduction rate pursuant to the Regulation on Active Cooperation for Detecting Cartels published in the Official Gazette dated 15 February 2009 and numbered 27142 (“Active Cooperation Regulation”), if applicable,
(e) the maximum administrative fine rate and the amount to be imposed,
(f) the time period for the submission of a settlement letter to the Authority, which should not exceed 15 days.
The interim decision also states that the Board will not be bound by its decision if parties fail to submit their settlement letter within the period determined by the Board.
If parties to the settlement accept the interim decision, they must submit a settlement letter signed by their authorized representative, which includes their explicit statement:
a. admitting the nature and scope of the violation,
b. accepting the administrative monetary fine and the reduction to be applied as a result of the settlement,
c. declaring that they were adequately informed about the alleged violations, and that they had been provided with the opportunity to respond to the allegations,
d. an assurance that they will not file a lawsuit regarding the administrative monetary fine or other issues agreed in the settlement letter.
As per Article 8 (4) of the Regulation, a duly submitted settlement letter cannot be withdrawn. In the event of missing information, the Board will grant the submitting party a period of seven days to address the issues. Failure to do so within the time period will result in the Board terminating the settlement process and proceeding with an investigation.
The Regulation also states that the parties applying for settlement can also apply for leniency in the scope of the Active Cooperation Regulation. When calculating the overall reduction to the administrative monetary fine, the reduction rates in the scope of the Active Cooperation Regulation and the settlement procedure are combined and applied together. However, as per Article 10 of the Regulation, the Board does not accept parties’ applications made in the scope of Active Cooperation Regulation once they have submitted the settlement letter.
Within 15 days of the Authority’s acceptance of the settlement letter, the investigation is concluded for the relevant party with a final settlement decision stating the violation and the administrative fine. The settlement decision includes:
a. the context of the alleged violations,
b. the nature and scope of the violations,
c. evidence that provides the basis for the violations,
d. reduction rate applied and the administrative monetary fine imposed as a result of the settlement,
e. and the parties’ admission of the existence of the violation and the administrative monetary fine.
Due to the fact that settlement proceeds separately for each party, if an investigation is still active against at least one party, then the final settlement decision will not be notified until the conclusion of the investigation.
4. Results of the Settlement
As per Article 4 (4) of the Regulation, as a result of a settlement, the Board may reduce an administrative monetary fine through determining a reduction rate between 10% and 25%.
If an investigation is terminated by reaching a settlement, the settling parties are not entitled to file a lawsuit for the administrative fines imposed or any other issues stipulated in the settlement letter.
The Regulation states that the parties to a settlement process must show due respect to the confidentiality of the settlement negotiations, and any information and document they obtain in the scope of the process until the end of the final settlement decision. If the parties of the settlement violate their liability of confidentiality, even if such a violation is revealed after the Board’s final settlement decision, the Board is entitled to withdraw its final settlement decision and initiate a new investigation.
The Regulation is of critical importance to undertakings as it enables them to understand the application of the settlement procedure. It is expected that undertakings will benefit from this mechanism through lower administrative fines and shorter investigations. The Regulation is also an important step in the alignment of Turkish competition regulations with EU competition law.
Kemal Altuğ Özgün