The Turkish Competition Authority ("Authority") published its Annual Report for 2022 ("Report") on August 23rd. According to the Report, there has been a notable increase in competition law regulations, practices, and decisions by relevant authorities, all aimed at fostering fair competition environments and preventing unlawful practices across global markets and economic relations in 2022.
The rapid development of technology has given rise to new forms of conducting business. This, in turn, has led to a proliferation of atypical violations alongside traditional regulatory infractions. Adapting to these developments, which expand and deepen the scope of competition law application, and taking proactive measures while adhering to regulations have become increasingly crucial for all market participants. Consequently, there has been an increase in the intensity and impact of activities by both global and local authorities, with particular emphasis on the Competition Authority in Turkey.
Increase in Violations by Sector
In 2022, the Turkish Competition Board ("Board") concluded a total of 342 cases, encompassing 245 cases related to mergers, acquisitions, joint ventures, and privatizations, 78 cases connected to competition violations, and 19 cases associated with exemption or negative clearance applications. According to these statistics, both the number and scale of competition violations have noticeably increased compared to the previous year. Approximately 79% of the cases concluded due to investigations conducted pursuant to the competition violation provisions of Law No. 4054 on the Protection of Competition was related to the food industry, information technologies, and platform services, agriculture, and agricultural products sectors. In terms of subject matter, the majority of these cases revolved around the abuse of dominant positions in the sector, anti-competitive agreements, concerted practices among companies, and their decisions.
The investigations conducted by the Board in 2022 resulted in significant administrative fines totaling TRY 1.7 billion. The food industry sector stood out as the sector where the most significant portion of the fine was imposed, with TRY 1.06 billion. It was followed by the information technologies and platform services sector with TRY 307 million and the agriculture and agricultural products sector with TRY 186.7 million. Consequently, it is evident that almost 92% of the administrative fines resulting from the investigations conducted in 2022 were imposed on these three industries. The administrative fines amounting to TRY 115,268,235 decided by the Board in 2022 due to the obstruction of on-site investigations serve as a reminder of the cooperative stance enterprises must adopt during the on-site investigation process.
Given that the Board initiates ex officio investigations in more than one-fifth of the relevant competition violation cases, the Board does not necessarily require any notification while conducting market inspections. Therefore, the proper functioning of compliance mechanisms is vital to prepare for possible investigations.
Additionally, based on estimations derived from the Organization for Economic Co-operation and Development (OECD) methodologies within the scope of the Authority's Impact Analysis Report, it is stated that the benefits provided to consumers as a result of the operations carried out in 2021-2022 are 208 times the budget expenditures of the Authority.
The Board's Approach and Preventive Measures
As per the Report, within the scope of the Board's competition advocacy activities, the sectors related to ongoing investigations as of the end of 2022 include fuel oil, online advertising, pharmaceuticals, regular container transportation and container port services market, fast-moving consumer goods retailing, and automotive markets. These investigations aid the Board in identifying competition issues in these sectors and determining necessary preventive legal measures to ensure competitive functioning.
The Authority also conducts competition advocacy activities through the opinions it provides to various public institutions and organizations. These opinions emphasize that "legislation to come into force or a practice to be implemented by relevant authorities or institutions shall be examined from a competitive perspective, and the competitive perspective shall be incorporated into legislative provisions or practices to the fullest extent possible."
The reasons behind initiating these sector reviews that the Authority aims to complete by the end of 2023 are also noteworthy:
- The examination of the fuel oil sector aims to analyze the nature and functioning of the sector, identify existing or potential competition problems, and develop solutions for the establishment of effective competition.
- Given the rapid growth of the online advertising sector due to technological advancements in recent years and the widespread use of the internet, the goal is to identify behavioral and/or structural competition problems in the sector in light of current national and international developments and to develop policies to prevent such issues.
- Through an analysis of the structure and functioning of the pharmaceutical sector, the aim is to identify the factors that influence competition at each stage of the supply chain and understand how these factors contribute to competition-related issues. Following this analysis, the Authority intends to implement measures to ensure fair competition, if deemed necessary, and to maintain its ongoing monitoring practices.
- Within the examination initiated in the automotive sector, the aim is to develop solutions for factors affecting the competitive market structure and possible legal problems in the sector by addressing supply issues, tax and pricing policies for vehicles, distribution channels and after-sales services, digitalization, and electric vehicles in the context of technological advancements.
Irrespective of the sector, all enterprises are required to continue their core activities while simultaneously adapting to evolving legal regulations, adhering to the practices of regulatory and supervisory authorities such as the Turkish Competition Authority, and keeping sustainability and reputation management on their agenda.
Hence, it is of utmost importance that companies are managed with an approach that provides preventive measures to ensure compliance with relevant regulations and to avoid potential sanctions and reputational damage. This approach facilitates the early identification of potential legal risks and ensures that companies are prepared for any legal disputes or investigations. It also fosters a business culture where ethical values are internalized within the company. Furthermore, robust compliance mechanisms are essential for achieving elements such as maintaining investors' trust with effective governance, ensuring customer and employee stability, and building sustainable reputational value. Such compliance mechanisms simplify risk management and enable the company to respond more effectively to critical situations by ensuring the accountability of the company's activities. Importantly, they also help mitigate the impact of risks arising from third parties or sanctions imposed in public investigations.
For example, the Board's recent decision to impose a total fine of TRY 151 million on 16 enterprises on the grounds that employee mobility and labor-related wages were affected due to agreements between enterprises illustrates that companies may be subject to sanctions not only in the area of fair competition from an economic perspective but also in many other aspects by different supervisory or judicial authorities.
You can access our previous article on the Board's related decision here.
Due to the proactive stance of the Turkish Competition Authority in recent years, companies of all sizes, particularly those in the sectors mentioned above, should comply with sector-specific regulations, identify and address potential violations proactively, and fortify their internal compliance mechanisms.
As the findings of the Report indicate, companies should structure their compliance programs to include mechanisms that prevent potential competition violations, all while upholding their corporate responsibility for the economic impact of their activities. This approach can reduce the risk of facing substantial administrative fines in the event of an investigation and contribute to a fair competition environment across the sector. It's worth noting that a company's approach to compliance and the measures it takes in response to suspected violations, or more importantly, as a proactive measure before the detection of any violation, can significantly impact the sanctions imposed as a result of an investigation and the company's reputation within the sector.
You can access the full text of the Authority's Annual Report for 2022 here (Available only in Turkish).
 Turkish Competition Authority 2022 Annual Report, p. 104
Zeynep İnceer Üçgül
Head of Business Development