The latest amendment to the Law on Protection of Competition No. 4054 (“Law No. 4054”) has introduced a brand-new commitment mechanism designed to eliminate competition law violations arising from the abuse of dominance and restrictive agreements without the need to complete ongoing pre-investigation and investigation procedures. Accordingly, during a pre-investigation or investigation, parties can offer commitments voluntarily to the Turkish Competition Board (“the Board”) in regard to particular violations. If the Board finds these commitments sufficient to eliminate its competition concerns, it can choose not to launch an investigation, or to end an ongoing investigation before its completion without issuing an administrative fine. The mechanism aims to save time, reduce costs and prevent anti-competitive damages from increasing.
In order to regulate the commitment mechanism in detail, the Turkish Competition Authority issued a communique named the “Communique on commitments offered during pre-investigation and investigation on restrictive agreements, concerted practices, decisions, and abuse of dominance” ("the Communique"), which was published in the Official Gazette numbered 31425 on 16 March 2021 (Available in Turkish only).
What Does the Communique Regulate?
The Communique stipulates the complete commitment mechanism procedure, providing rules on the submission, evaluation, nature, termination, tracking, and fulfillment of commitments in detail. More importantly, the Communique sets the scope of violations for which undertakings can apply to the commitment mechanism.
The Scope of the Commitment Mechanism
Law No. 4054 stipulates a general rule that the commitment mechanism does not apply in cases of clear and severe competition law violations. However, it does not define the violations but does provides examples such as price-fixing, allocation of customers, or territory. That said, the Communique provides a definition for “evident and severe violations” and determines the scope of violations that are subject to the commitment mechanisms definitively.
According to the Communique, evident and severe violations are as follows:
a. Horizontal agreements, concerted practices, and decisions of undertakings’ associations in relation to (i) price-fixing, (ii) allocation of customers, output, territory or trade channels, (iii) output limitations or quotas, (iv) collusive tendering.
b. The exchange of competitively sensitive information such as information on future pricing, output, or sales quantities among competitors.
c. Resale price maintenance agreements, concerted practices, and decisions of undertakings’ associations that impose fixed or minimum prices on distributors.
Undertakings found to have engaged in any such violations cannot benefit from the commitment mechanism.
The Procedure for the Commitment Mechanism
Submission of commitment requests: The commitment procedure begins with a written request from undertakings. To apply to the commitment mechanism during the investigation stage, undertakings must submit their requests within three months of receiving an investigation notice.
- The Board’s initiative for commencing the commitment procedure: Following the submission of a request, the Board will evaluate whether a severe and evident violation exists. In cases where no such violations are found, the Board commences the meeting process with the undertakings concerned. That said, the communique grants the Board the authority to postpone the meeting process if more research is required in order to determine competition concerns in a clear and detailed manner.
- Nature of the commitments: At the end of the meeting process, undertakings submit their commitments. Commitments must be submitted in writing and clear. Undertakings are not allowed to submit alternative commitments. Depending on the nature of the competition concerns, both structural (i.e., commitments that result in a change in the market structure such as transfer of shares and assets) and behavioral commitments (commitments that modify an undertaking’s actions and activities without leading to a change in the market structure) can be submitted.
- Evaluation of commitments: The Board will evaluate whether the commitments eliminate the competition concerns. At the end of its evaluation, if the Board finds the commitments sufficient and effective, it will either decide to make them binding and end any ongoing investigation or pre-investigation, or decide to take the opinions of third parties. If the Board finds the commitments insufficient and ineffective, it will either decide to allow undertakings to make amendments to their commitments (once only) or decide to end the commitment procedure and carry on an investigation.
- Third-party opinions: According to the Communique, the Board can decide to receive and evaluate opinions from third parties regarding commitments. In this case, the Board must send or publish online the commitment together with its competition concerns within 10 days of its decision. Third parties must send their opinions in writing within the period determined by the Board.
Please contact Ali Ilıcak for more information.