Similar to other competition authorities around the world, the Turkish Competition Authority ("TCA") publishes annual reports for many years in order to outline its activities on a yearly basis. In this regard, the TCA has published its 20th annual report which we will summarize below.

1) Strategic Plan for 2019-2023

The TCA has issued a strategic plan, which is its second strategic plan, in which it sets five main objectives for 2019-2023. According to the plan, the TCA's main objectives for this period are as follows; (i) implementing the competition law efficiently, (ii) ensuring the consciousness about the TCA and competition law among individuals as well as companies and sector partners, (iii) determining the markets which constitute a high potential for competition breaches and/or have market imperfections and making competition policies for these markets, (iv) ensuring that the TCA would be an effective authority in the international area and (v) producing and publishing information regarding competition law and economics and ensuring that this information would derive benefits.

The TCA also summarizes its priorities for 2019-2023 in the report mainly as follows;

  • Making amendments in the Competition Law No. 4054 ("Law") in order to imply the Law more efficiently and making necessary amendments in secondary legislation in this regard,
  • Developing the evidence gathering mechanisms in order to combat against the competition breaches more efficiently,
  • Closely following the markets that are changing with digitalization in order to improve competition law policies and implementations related to these markets,
  • Having activities in order to raise the competition awareness among public bodies as well as the society,
  • Developing international relations regarding the competition policies,
  • Improving the institutional capacity and performance.

2) Legislative Changes

There were many changes in competition law in 2018 in terms of both structural and legislative. In particular, the TCA has made several amendments to several guidelines including the Guideline on Vertical Agreements.

a) Amendments to the Law

As Turkey has adopted a new constitutional system, the Turkish legislation has been revised in line with the new presidency system. Therefore, several articles of the Competition Law have been amended in a way that reflects the authority of the President of Turkey.

As per the amendments, the members of the Competition Board ("Board") shall be appointed by the President of Turkey whereas the Council of Ministers had the authority to appoint the Board members among the candidates being nominated by the Ministry of Commerce, the Ministry of Development, the Union of Chambers and Commodity Exchanges of Turkey and the Supreme Court of Appeals and the Council of State before the amendments.

It should be noted that the members of the Board had to be graduates of law, economics, engineering, management and finance after completing a four-year education and had to be experienced for at least ten years in relevant areas in addition to be able to meet the requirements for being a civil servant. However, according to the new system, anyone having a four-year education regardless of the department and meeting the requirements for being a civil servant may be appointed as a Board member at the sole discretion of the President of Turkey.

As per another amendment, the six-years maximum tenure period of the Board members has been abolished and there is no such maximum tenure period now under the Law.

b) Increasing the Lower Limit for Administrative Fines

As per the Communiqué No. 2019/1, the lower limit for administrative fines relating to competition law has increased by 23,73% and has been determined as TRY 26,027 until 31.12.2019.

c) Amendments to the Guideline on Vertical Agreements

The decision of the Board dated 28.03.2018 brought amendments to the Guideline on Vertical Agreements regarding online sales and most favoured customer (MFC) clauses.

As for the online sales, the amendments pointed out that the online sales are considered as passive sales and restrictions on the online sales shall be deemed as passive sales restrictions. The Guideline has been also enhanced with the examples of passive sales restrictions that result in excluding the relevant vertical agreements from the scope of the block exemption.

The amendments also included a section titled MFC clauses to the Guideline where the MFC clauses are examined in depth.

d) Other legislative changes

The TCA has also amended the Guideline on Cases Considered as a Merger or an Acquisition and the Concept of Control and the Guideline on Undertakings Concerned, Turnover and Ancillary Restrictions in Mergers and Acquisitions.

It is further stated in the report that there are ongoing legislation changes in progress relating to the Competition Law and secondary legislation, in particular the Communiqué on the Regulation of the Right of Access to the File and Protection of Trade Secrets.

3) 2018 in numbers

The Board ruled 355 decisions in 2018 being divided into three categories as 223 decisions related to mergers and acquisitions, 88 decisions related to competition law breaches and 44 decisions related to exemption & clearances. The Board finalized 23 investigations in 2018 which is higher than the investigation numbers in 2016 and 2017. The investigations finalized in 2018 are mainly related to information and communications technologies ("ICT"); transportation and vehicle services; energy; health and pharmaceuticals and petroleum markets. There is a significant increase in the total number of the cases handled in 2018 comparing to 2017 mainly because of the increase by 21% in M&A cases. In addition, the number of the cases related to competition breaches and exemptions & clearances also increased in 2018 by 10% and %37,5 respectively compared to 2017.

As a result of the investigations finalized in 2018, the Board imposed administrative fines in the amount of TRY 349,374,235.38.

It is stated in the report that the TCA has been carrying out studies regarding the "impact analysis" since 2017. The TCA had conducted an impact analysis for the years 2014-2016 for the first time and its approximate contribution to customer welfare has been determined as TRY 3.3 billion in average per year for the said period. The TCA has conducted its second impact analysis by including its 18 decisions to the scope of the study. According to the analysis, the TCA contributed approximately TRY 3.28 billion in average to customer welfare per year in 2017 and 2018.

a) Mergers and Acquisitions, Joint-Ventures, Privatisations (M&A cases)

The Board dealt with 223 cases on mergers and acquisitions in 2018 where it granted 201 unconditional permissions and 4 conditional permissions. As for the rest of the transactions, the Board concluded that the transactions were either out of the scope or not subjected to permission. The Board has initiated a phase II investigation on only one transaction and the investigation is still ongoing. According to the report, the final rulings were concluded within 15 days in average as of the last notification date.

The hottest markets in terms of M&A notifications in 2018 were agriculture and food; transportation and vehicle services; chemical products; energy and ICT markets. Acquisitions and joint venture establishments constituted approximately 68% and 25% of the M&A cases in 2018 respectively.

The Board conducted and finalized phase II investigations in four M&A cases of which two of those related to the food, agriculture, forestry, fishery and livestock market. Other two phase II investigations were related to the transportation and vehicle services and health, pharmaceuticals markets. As a result of these investigations, the Board granted four conditional permissions of which 2 of those were subjected to structural remedies and 2 of those were subjected to behavioural remedies.

It should be noted that the Board unconditionally authorized 98% of the M&A transactions subjected to the permission of the Board within the past five years where it did not authorize only two transactions during this period.

b) Competition Breaches

The Board concluded 88 decisions related to competition breaches in 2018 of which 65 of those were given after the preliminary investigations and 23 of those were given after the investigations. According to the report, the investigations related to competition breaches included a wide range of markets.

As a result of the investigations, the Board imposed administrative fines in the total amount of TRY 349,374,235 on companies in 11 cases, especially the cases related to energy and ICT markets in which the administrative fines significantly constituted approximately 94% of these fines.

c) Exemptions & Clearances

The Board finalized 35 cases for exemptions and 9 cases for clearances in 2018. Finance, transportation and vehicle services, ICT, health and pharmaceuticals and insurance markets made up 75% of the markets in which exemptions & clearances examinations carried out. It is worth to note that individual exemption cases constituted more than half of the exemptions & clearances cases.

4) Quick glance at the past five years

According to the report, the numbers of the cases handled by the Board were fluctuant in the past five years apart from the significant decrease by 47% in 2015. The reasons behind of such fluctuation were the yearly changes in the numbers of M&A cases.

Unlike the fluctuation in the total numbers of the cases, the cases handled within the scope of the Articles 4 (Agreements, concerted practices and decisions limiting competition) and 6 (Abuse of dominant position) of the Law consistently decreased within the past five years apart from last year. Whereas the Board finalized 163 cases related to competition law breaches, the number of the cases decreased by 45%, 7% and 3% in the following years and the Board finalized 80 cases relating to competition law breaches in 2017. However, we saw an increase by 10% in 2018 and the Board finalized 88 cases relating to competition law breaches last year. It should be noted that the cases handled within the scope of the Article 4 significantly outweighed the number of those that were handled within the scope of the Article 6 in the past five years. For instance, the Board finalized 46 cases within the scope of the Article 4 in 2018, whereas it was 23 for the cases handled within the scope of the Article 6.

In the past five years, the numbers of the horizontal agreements investigated by the Board were higher than those related to the vertical agreements apart from the year 2016. On the other hand, whereas the number of the cases related to horizontal agreements remained unchanged in 2018, we saw a remarkable increase by nearly 86% in the number of the investigated vertical agreements in 2018. The Board concluded one decision that fell under the scope of both articles last year, while there had been no such decision since 2015.

As stated above, the Board finalized 35 exemption cases in 2018 which is the highest number since 2015. However, unlike the past four years, the Board did not finalize any case within the scope of the block exemption in 2018. On the other hand, it finalized 3 cases within the scope of the conditional block exemption while there had been no such decision since 2014.

As for the M&A cases, the acquisitions made up the majority of the decisions granted in 2018 like the past four years. It should be noted that the number of the M&A cases significantly increased by 21% in 2018.

The Board launched 14 investigations ex officio last year. Since the number of the investigations launched ex officio remarkably showed an increase in the last two years, one may argue that the Board has taken a more preventative approach against competition law breaches since 2016. In common with the past four years, most of the investigations launched ex officio were related to the breach of the Article 4 of the Law.

5) Administrative Fines

As mentioned above, the Board imposed administrative fines in the amount of TRY 349,374,235 on companies in 2018 due to competition breaches. Administrative fines that were imposed in the cases handled within the scope of the Article 6 significantly constituted approximately 94% of the administrative fines imposed in 2018. It is also remarkable that the total amount of the administrative fines that were imposed in 2018 is much higher than those were imposed in 2016 and 2017 with an approximate increase by 80%.

After four years, the Board imposed administrative fines in the amount of TRY 320,376 due to submitting wrong or misleading information in M&A notifications. On the other hand, unlike the past four years, there was no administrative fine imposed on companies in 2018 due to submitting wrong or misleading information during on-site examinations.

If we compare the administrative fines that were imposed related to vertical and horizontal agreements, we see that the amount of the fines imposed under vertical and horizontal agreements showed a similarity in the past two years.

Lastly, the TCA included a table to the report showing the imposed administrative fines between 1999 and 2018 on a market basis. According to the report, ICT, energy, petroleum, finance and transportation and vehicle services markets are the markets that were subjected to the highest administrative fines in the past twenty years.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.