October 2020 – After initiating several on-going investigations and two sector inquiries (on digital markets and on e-commerce), it can be said that September was quite an active month for the Turkish Competition Authority (TCA).
In September there were 13 merger control cases, slightly less than the same period in 2019, but generally in line with the trend of increasing case numbers following the gradual wearing off of the Covid-19 effect. It can also be stated that the number of merger control cases in 2020 thus far are roughly comparable to the previous year.
A 2007 TCA decision goes all the way to the Constitutional Court!
For the first time in the history of Turkish competition law, the Constitutional Court annulled a court decision that upheld a decision of the TCA on the grounds that the decision violated the principle of legality in crime and punishment.
The story started with a complaint from the Ministry of Labour and Social Security, which initiated a TCA investigation against Onmed (a medical company). The TCA concluded that there was a violation of competition and in March 2007 imposed an administrative fine. Onmed applied to the 13th Chamber of the Council of State for an annulment of the administrative fine, which was rejected; subsequently, the company filed an appeal request, which was rejected by the Grand Chamber of the Council of State, and thus the decision was upheld.
While the proceeding was on-going, the second paragraph of Article 16 of Law No.4054 on the Protection of Competition ("Turkish Competition Law"), which constitutes the legal basis of the administrative fine, was amended, and subsequently the criteria to be applied in determining the penalty amount for administrative fines had changed. Based on this amendment, in April 2016 Onmed filed an individual application to the Constitutional Court. The essence of their complaint was that the appeal courts did not consider as legal the new version of the law, which is more favourable for Onmed.
At the end of this long story, the Constitutional Court concluded that the principle of legality in crime and punishment (nulla poena, sine lege) also guarantees the retroactivity of legislative changes that are favourable to the applicant company's activities or its sanctions. The case will therefore be sent to the Council of State for a retrial in order to eliminate the consequences of the violation.
The curious case of fuel companies
On 21 September 2020, the TCA issued a decision that imposed a total fine of TRY 1.5 billion (approximately EUR 165 million or USD 198 million) on four major fuel companies—the highest administrative monetary fine that the TCA has imposed in one investigation in its twenty-three-year history. As a result of the investigation, the TCA unanimously decided that BP, OPET, Petrol Ofisi and Shell had violated Article 4 of Turkish Competition Law and therefore imposed on each company an administrative monetary fine of 1% of their annual gross earnings. A fifth company, Güzel Enerji (previously Total), was also investigated by the TCA but was found not to have breached competition rules.
The allegations within the scope of the decision include that BP, OPET, Petrol Ofisi, and Shell interfered with the pump sales prices of their dealers, forcing them to sell fuel at the maximum price legally possible, and further, that they prevented the dealers from displaying amounts below the maximum price on their stations' price boards. The TCA based its assessment on information obtained from the distribution companies within the scope of the investigation, the daily recommendation (maximum) with regard to the sales prices reported by the distribution companies to their dealers for each product, and a comparison of the minimum pump sales prices applied by the dealers for each day.
At the same time, the TCA found several e-mail correspondences from BP, Petrol Ofisi, and Shell, which it interprets as maintaining pump prices via the exchange of pump sales price information and by equalising the maximum price and controlling the discount rates of their dealers. Although no e-mail correspondence from OPET was found, as a result of its economic analysis the TCA acknowledged that the number of cases in which the minimum pump sales price applied by OPET's dealers was equal to or higher than the recommended sales price is similar to market behaviour where competition is restricted. In this regard, the high compliance rate of OPET dealers with the recommended maximum sales price is considered as evidence that OPET was also involved in resale price maintenance.
The TCA approved the following merger control filings in September at the Phase I stage:
- Acquisition of sole control of Innerworkings, Inc by HH Global Group Limited.
- Merger of Nippon Steel Stainless Trading Corporation and Nippon Steel Trading Corporation, which is the sole control of Nippon Steel Corporation with NS-Stainless Corporation jointly controlled by Nippon Steel Stainless Steel Corporation.
- Acquisition of sole control of Petgaz A.Ş. by BDY Group Yatırım A.Ş.
- Acquisition of the chemical business of BP p.l.c by INEOS Limited via INEOS Styrolution Financing Limited and INEOS 256 GB Limited.
- Merger of Alacer Gold Corp. with SSR Mining Inc.
- Acquisition of sole control of Doğanay Gıda Tarım ve Hayvancılık San. ve Tic. A.Ş. by Purple Beverages S.A.R.L.
- Establishment of a joint venture between Saudi Aramco Development Company and Baker Hughes Company via GE Oil & Gas UK Ltd. to establish and operate production facilities for the development of non-metallic / composite products for use in oil / gas applications.
- Establishment of a joint venture between Saudi Aramco Development Company and Korea Shipbuilding & Offshore Engineering Co. to engage in stationary engines, marine engines and cargo pumps.
- Acquisition of sole control of the ceramic tile coating business of Ferro Corporation by Pigments Spain S.L.
- Establishment of a joint venture between Raytheon Saudi Arabia and Saudi Aramco Development Company.
- Establishment of a joint venture between Sumitomo Corporation and AAR Corp.
- Acquisition of sole control of Nexans Metallurgie Deutschland GmbH by Mutares SE & Co. KG aA via Mutares Holding-36 GmbH.
- Indirect acquisition of the professional and retail hair products and nail care businesses of Coty Inc. by KKR & Co. Inc.
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