Many competition law specialists in Turkey were expecting some crucial aspects of the Turkish Competition Law to be revised for more than a year, but few of these lawyers thought that this would be inevitable due to recent decisions of the High State Council (the highest administrative court in Turkey) canceling certain decisions of the Turkish Competition Board on very fundamental procedural grounds. The new amendments on the Turkish Competition Law do not only relate to this issue; but that is certainly the most interesting one.

There was a serious debate on the legality of the procedure of assigning the head of the investigation committee in any given investigation from among the members of the Turkish Competition Board (the competent organ of the Turkish Competition Authority to render final decisions on all issues concerning an investigation). Many attorneys thought that the head of the investigation committee is by definition a party to the controversy, and therefore cannot impartially cast a vote during the final decision meetings of the Board on matters relating to the investigation it leads.

The head of the investigation committee, also called the "prosecutor-Board member" in practice, formed its own opinion concerning the substance of the investigation much before the matter gets before the Board, since the head of the investigation committee, much like a Head of Unit in the EC Commission, was expected to lead the whole investigation. For example, he signed all the documents including the investigation report (akin to the Statement of Objections in the EC) and the additional opinion which explicitly recommends to the Board imposing an administrative fine to the subject undertakings. Then when the day came, he sat with the other Board members to hear the defense of the subject undertaking in an oral hearing, and voted to determine the ultimate administrative decision concerning the investigation. To quote a frequently used expression in referring to this anomaly; he acted both as the prosecutor and the judge in investigations where many millions of euros worth of administrative fines are awarded.

All of this has changed very recently. In the past years, together with a considerable increase in the number and significance of the competition law investigations in Turkey, the final decisions of the Competition Authority got more and more challenged before the High State Council on various grounds. A consistently appearing appeal argument was the "lack of impartiality" point. Upon the appeal by a Turkish pharmaceutical company of a decision of the High State Council affirming the procedure adopted by the Turkish Competition Authority, in its two decisions in February 2005, the General Assembly of Administrative Chambers of the High State Council (the highest plenary decision level) held that "... as the investigator Board member has participated in the issuance of the investigation report and the additional opinion which is issued upon the revision of the defenses submitted in response to the investigation report and by signing these documents has formed and declared his opinion beforehand, it would be against the impartiality principle for this member to participate and vote in the meeting where the final decision is rendered and where the investigation report and all defenses should be discussed and evaluated objectively.".

While the relevant chamber of the High State Council insisted on its affirming decision in yet another case, the General Assembly of Administrative Chambers of the High State Council reached the same conclusion in later cases in May 2005. Then, in June 2005, an amendment proposal on this particular article of the Turkish Competition law with a specific reference to the above cited decisions of the High State Council was filed with the Turkish Grand National Assembly Group Presidency of the Justice and Development Party by their Ankara Deputy, and this proposal was accepted by the relevant commission of the TGNA. The proposal was then promulgated as a law on July 2, 2005, and entered into force on July 13, 2005 by getting published in the Official Gazette.

Some of the other changes that are introduced with this new law are as follows:

It is now established that agreements that fall within the scope of a block exemption need not be notified. The Turkish competition law regime contains many block exemptions. The previous wording of the law was leaving room for doubt as to whether agreements covered by block exemptions still need to be notified. The issue is now resolved.

Individual exemptions in the Turkish Competition Law regime will no longer be subject to an upper durational limit of five years but may continue indefinitely while the same market conditions prevail. The Competition Board may now require certain conditions or commitments for an agreement to be granted an individual exemption.

In addition to this, the law has reduced the number of members of the Competition Board from 11 to 7. It is no longer necessary for half the members of the board to be competition specialists working for the authority.

Furthermore, as for merger notifications and other filings concerning concentrations above the thresholds of the Turkish merger control regime, there is now a separate administrative monetary fine for closing a transaction without obtaining the approval of the Turkish Competition Board.

Finally, as discussed above, the change means that members of the Competition Board cannot be assigned as heads of case teams. With this landmark amendment, the provision which allowed the appointment of a Board member to investigation committees no longer exists. The recent legislation change and the decisions of the High State Council, the most recent of which is obtained this week as a preliminary injunction decision of the 13th Chamber of the High State Council respecting the previous decisions of the General Assembly of Administrative Chambers of the High State Council, seems to have the potential to lead to the cancellation of all the appropriately appealed decisions of the Turkish Competition Authority so far rendered with the participation and vote of the prosecutor-Board member. It cannot be excluded that the Turkish Competition Authority, facing such a horrendous retroactive effect, may attempt to cure the procedural defect by passing new Board decisions on the same investigations only with the attendance of the appropriate Board members. No doubt, such attempt may lead to further heated legal debates in the future.

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.