June 2020 – Several long-awaited and comprehensive amendments to Law No. 4054 on the Protection of Competition ("Law No. 4054") were approved by the Turkish parliament on 16 June 2020.

In general two types of amendments have been made to Law No. 4054. The first codify and thus provide clarification to already implemented practices in Turkish competition law, which are mainly de facto adaptations of European competition law. The second type of amendments introduce new instruments that were absent from the Law No. 4054 but which are included in European competition law practice.

Below is our take on the five most significant changes brought by the amendments to Law No. 4054.

1. Significant impediment of effective competition test

An amendment to Article 7 of Law No. 4054 Law updates the fundamental test for the evaluation of merger controls to the 'Significant impediment of effective competition test', which is the test applied in the European Union. Until now, the main test that applied for concentrations in Turkey was the dominance test, which assesses whether the transaction will lead to the creation of a dominant position or the strengthening of an existing one.

Under the new rules, in addition to concentrations that may result in the creation or strengthening of a dominant position, concentrations that may significantly impede effective competition may also be prohibited.

2. Behavioural and structural remedies

Behavioural and structural remedies are regarded as new tools to the existing toolkit of the Turkish Competition Authority (TCA). The TCA may impose behavioural and structural remedies if it finds a competition law infringement. Structural remedies will be implemented if behavioural remedies are not sufficient to tackle the competition law concerns; in any case, the remedies that will be imposed on undertakings must be proportionate and indispensable for the elimination of the competition law violation.

3. De minimis principle

Similar to the EU's de minimis doctrine, the TCA may not initiate investigations regarding the agreements, concerted actions and undertaking associations that do not significantly restrict competition in the market based on criteria such as market share and turnover. As in EU practice, the Turkish de minimis exception excludes hard-core restrictions such as price-fixing or market sharing. Details regarding, e.g., market share and turnover thresholds will be included in a forthcoming TCA communiqué.

4. Commitment and settlement mechanisms

With the amendment, undertakings or associations of undertakings may now submit commitments to the TCA during a preliminary investigation or an investigative stage in order to eliminate concerns regarding competition law violations. If the commitments submitted by the undertaking are deemed to have sufficiently addressed the competition law concerns, the TCA may cease proceedings against the relevant undertaking. Similar to the de minimis exception, hard-core restrictions (e.g. price-fixing, market sharing) are excluded from the commitment mechanism. The commitments process is a long-awaited and welcomed enhancement to Turkish law. The previous rules were inefficient and resulted in wasted resources, as the TCA had to go through all necessary procedural steps (Turkish competition investigations include three written and one oral defence) and undertakings were encouraged to defend "lost cases" to the end.

The settlement method is another new mechanism introduced to Turkish competition law. After the initiation of an investigation at the request of either the TCA or by one or more of the parties, a settlement procedure may begin. A party wishing to invoke the settlement procedure must submit a settlement letter to the TCA indicating that it has been participating in a competition law infringement. The introduction of the settlement method is aimed at shortening the process and finalising it quickly once an investigation has been initiated, as well as to decrease the public expenditure that may arise due to procedural costs.

The administrative monetary fines to be imposed will be decreased by 25% for undertakings that settle with the TCA. It has been stated that this 25% discount will not revoke the implementation of the 25% early-payment discount applied under Law No. 5326 on Misdemeanours. Thus, an undertaking that prefers to use the settlement procedure may be able to obtain a 50% discount on the administrative fine to be imposed by the TCA.

5. Digital inspection powers

Article 15 of Law 4054 regulates the TCA's entitlement of examination. The first paragraph of this article has been amended to make it explicit that the TCA's entitlement extends to the digital assets of undertakings under investigation. Previously the law did not explicitly state that the TCA had the right to access digital assets. Although it was generally agreed that the TCA had this authority, the legislation lacked clarity. The amended wording now clearly states that, 'the Authority may examine the books, any data and documents kept in the physical and electronic media and information systems, [and] take copies and physical samples of them'.

This amendment strengthens the TCA's investigative powers and can be interpreted as a response against the numerous decisions on hindering of on-site inspections that have been taken recently by the TCA due to problems in accessing the information systems of undertakings under investigation.

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.