The Law Amending the Law on the Protection of Competition was published in the Official Gazette dated 24 June 2020 and numbered 31165 ("Amending Law") and entered into force on the same day. The preamble of the Amending Law provides that the amendments aim to harmonize the Law on the Protection of Competition numbered 4054 ("Law no. 4054") with the European Union laws and to establish a modern competition legislation. To that end the Amending Law sets out various amendments to the Law no. 4054.
"Self-Assessment" System in Exemptions
The Amending Law removes the uncertainty in the wording of article 5 under the Law no. 4054 and clarifies that the assessment regarding the exemption conditions will be carried out directly by the relevant undertaking. However, an undertaking's right to lodge a clearance application before the Competition Authority for determination of the presence of the exemption conditions is reserved as well.
"Significant Impediment to Effective Competition" Test in Mergers and Acquisitions
The Amending Law introduces a "significant impediment to effective competition" test in mergers and acquisitions in addition to the dominance test by amending article 7 under the Law no. 4054. Accordingly, mergers and acquisitions that may significantly impede competition are prohibited even when such transactions would not result in the creation of a dominant position for the relevant undertakings.
Competition Board's Authority to Issue Structural Remedies
The amended article 9 of the Law no. 4054 authorizes the Competition Board to issue structural remedies in addition to behavioral remedies. Accordingly, the Competition Board can now order structural remedies such as transferring certain activities, shares, or assets of the undertaking if it identifies a violation and the conditions below are present:
(i) The behavioral remedies issued earlier did not yield any results, and
(ii) The structural remedy to be implemented is proportionate with the violation and necessary for the effective termination of the violation.
A period of at least 6 months will be provided to the relevant undertakings or associations of undertakings for implementing the structural remedies.
More On-site Inspection Powers for Competition Authority Experts
The amended article 15 regarding on-site inspections expands the scope of the on-site inspection powers of the Competition Authority experts. Accordingly, the experts will be able to examine books, physical and electronic environments, data and documents kept in information systems, and obtain copies and samples of the same during on-site inspections.
"De Minimis" (Negligibility) Practice
In line with the "de minimis" principle that is also available under European Union law serving the purpose of procedural utility, the amended article 41 of the Law no. 4054 provides that the Competition Authority may refrain from initiating an investigation for agreements, concerted practices, and decisions of associations of undertakings which do not exceed the market share and turnover thresholds that will be determined by the Board under a communiqué. However, explicit and gross violations such as price-fixing, territory or customer allocation, and restriction of supply by competitors are exempted from the scope of this amendment, which means that such violations will still be investigated by the Board regardless of the relevant undertakings' market shares and turnover thresholds.
Commitment and Settlement Procedures
Amended article 43 introduces commitment and settlement procedures during the preliminary inquiry and investigation processes. The purpose of the commitment and settlement procedures is to terminate agreements, decisions, and practices that could require a detailed inquiry and investigation process in a shorter period.
Provision of Commitments
During ongoing preliminary inquiry and investigation procedures, undertakings or associations of undertakings will be able to provide commitments for the elimination of competition concerns arising from their practices in conflict with articles 4 or 6 under the Law No. 4054. In the event the Board is convinced that the competition concerns can be eliminated through such commitments, it will have the authority decide not to initiate an investigation or to terminate an on-going investigation by formalizing the commitments of the relevant undertakings or associations of undertakings. However, the Board will not accept commitments in case explicit and gross violations are present, including price-fixing, territory or customer allocation, and restriction of supply.
While the Board may decide not to initiate an investigation or to terminate an on-going investigation, it is authorized to re-open an investigation in case (i) there is a substantial change regarding the facts that establish the basis of the decision, (ii) the relevant undertakings or associations of undertakings violate their commitments, or (iii) the decision was based on incomplete, incorrect, or misleading information submitted by the undertakings.
The Board is now authorized to initiate settlement procedures after initiation of an investigation, pursuant to requests from undertakings' or ex-officio, taking into account the procedural benefits of prompt finalization of the investigation process and differences in opinions regarding the existence or scope of the violation. In this respect, the Board will provide a definitive term to the parties of the investigation for submission of the settlement terms regarding the acceptance of the existence and scope of the violation. The details of the settlement procedures will be determined under a regulation issued by the Board.
Under the settlement procedure, the administrative fines may be reduced by up to 25%. If a settlement is reached, the parties will not be able to initiate lawsuits regarding the administrative fine or the terms of the settlement.
Originally published 9 July 2020.
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