Turkey: Parental Liability For Competition Law Infringements Of Subsidiaries Under Turkish Competition Law

The following discussion compares the approach of the Turkish Competition Authority ("Authority") with that of the European Commission ("Commission") in the application of parental liability and the imposition of fines to parent companies. The current stand of the Authority with respect to the issue of liability of a parent company for the involvement of its subsidiary in anti-competitive behavior remains at odds with the Commission's approach on the subject.

Under the European Union competition law practice, it is an established principle that parent companies could be held responsible for the competition law infringements of their wholly owned, non-wholly owned subsidiaries as well as for their joint ventures. Although the principle is well-established, a number of issues relating to the parental liability still remain open under the European Union law. This is illustrated by several recent cases pending before the European courts. The first one involves the Commission's appeal in Commission v Stichting Administratiekantoor Portielje (Case C-440/11 P). The Attorney General Kokott's non-binding opinion comes against the General Court's decision in Stichting Administratiekantoor Portielje, arguing that the General Court erred in law in deciding that a parent undertaking that does not engage in an economic activity cannot be held responsible for the subsidiary's infringement. Attorney General Kokott accepted the Commission's argument in this case that Gosselin (the subsidiary) and Portielje (the family foundation which controls all of the shares in the capital of Gosselin) together form a single undertaking. Another pending case and an interesting issue involves the referral by a Dutch company to the European Court of Human Rights of the issue on whether the parental liability presumption infringes the right to be presumed innocent under Article 6 of the European Convention on Human Rights.

The Concept of an Undertaking and Applicable Fines under Turkish Competition Law

The concept of an undertaking is stipulated in the relevant legislation, particularly under Article 3 of the Act on the Protection of Competition (Law No. 4054), which provides that an undertaking is "Natural and legal persons who produce, market and sell goods or services in the market, and units which can decide independently and do constitute an economic whole." Hence, with the said article, the principle of economic unity is well-embedded in the legislation. The decisional practice of the Turkish Competition Board ("Board") establishes that family ties alone could be sufficient to deem economic unity (e.g. see, Construction Companies, 12-24/666-188, 03.05.2012; Privatizations of Electricity Companies, 10-78/1645-609, 16.12.2010).

The amounts of fines applicable in cases of infringement are stipulated under Law No. 4054. Article 16 provides that "(...) To those who commit behavior prohibited in Articles 4, 6 and 7 of this Act, an administrative fine shall be imposed up to ten percent of annual gross revenues of undertakings and associations of undertakings or members of such associations to be imposed a penalty, which generate by the end of the financial year preceding the decision (...)". Furthermore, Article 4/2 of the Regulation on Fines to Apply in Cases of Agreements, Concerted Practices and Decisions Limiting Competition, and Abuse of Dominant Position provides that "The amount of fine to be determined may not exceed ten percent of the annual gross revenue of the undertakings and associations of undertakings or the members of such associations to be fined, generated at the end of the fiscal year preceding the final decision (...)".

The relevant articles indicate that the base fine is calculated on the basis of annual gross revenue of the undertaking to be fined however, the Board has exceptional decisions where it only considers the revenue in the relevant market (Kastamonu Coaches, 06-11/143-33, 9.2.2006 ) or exclude the revenue obtained from exports (White Meat Cartel, 09-57/1393-362, 25.11.2009). Recently, the High State Court explicitly stated that it is against the regulation to calculate the administrative monetary fine on the basis of the revenue obtained in the relevant market (13th High State Court, 2012/965 K). Within this realm, the decisional practice of the Board in the calculation of the appropriate administrative monetary fines shows that the Board has not so far referenced to the aggregate global group turnover (i.e. global turnover of an international undertaking), but limited to the turnover of the legal entity that is the addressee of the decision.

Parental Liability Examined

In cases where the Authority finds that a certain engagement amounting to a restriction occurs among the entities that are within the same economic unit, the Board makes use of the principle of the "group privilege", in which the undertakings cannot be considered to have violated the relevant provisions of competition law concerning the prohibition of anti-competitive agreements, decisions and concerted actions (Article 4 of Law No. 4054). In another recent case concerning Turkish Halkbank (12-24/666-188, 03.05.2012), the Board stated that the alleged agreement between the Turkish Halkbank and the concerned insurance companies could not be evaluated under Article 4 of Law No. 4054 given that the relevant entities are part of the same economic unity. Similarly, in another recent case involving several construction companies (12-24/666-188, 03.05.2012) which were alleged to have engaged in a bid rigging, the Board established that the relevant entities were part of the same economic unit and therefore would not be caught by Article 4 of Law No. 4054. (See Also,12-17/496-139,06.04.2012; T.C. Ziraat Bankası, 10-66/1393-515, 21.10.2010; Oyakbank/TukaÅx, 04-66/952-230, 19.10.2004).

The Board has explicitly acknowledged economic entity principle in other cases, such as in abuse of dominant position cases; however, it did not impose liability on the ultimate parent. One case in particular where the Board established "limited" parent liability was in case of Doğan Yayın Holding ("DYH") (11-18/341-103, 30.03.2011), where the Board deemed the relevant undertakings (i.e. Hürriyet Gazetecilik ve Matbaacılık A.Ş., Doğan Gazetecilik A.Ş., Bağımsız Gazeteciler Yayıncılık A.Ş., Doğan Daily Nevs Gazetecilik ve Matbaacılık A.Ş.) to be within the same economic entity of DYH and that DYH would be responsible in the investigation. DYH, however, has activities outside of the named print entities, and its activities range from magazines, television and radio channels, digital media and other media activities. Doğan Şirketler Grubu Holding, which is the 75% shareholder of Doğan Yayın Holding, engages in business activities ranging from tourism to energy and telecommunication. The case involved the abuse of dominant position through rebate systems and discounts, in which the Board imposed monetary fines to DYH's individual above mentioned print media entities. Although the Board discussed economic entity principle and found that the above mentioned entities are all in the same economic unity, in the imposition of the fines, the Board did not calculate the fines based on DYH's turnover, but rather calculated based on the specific entities' turnover (i.e. Hürriyet Gazetecilik ve Matbaacılık A.Ş., Doğan Gazetecilik A.Ş., Bağımsız Gazeteciler Yayıncılık A.Ş., Doğan Daily Nevs Gazetecilik ve Matbaacılık A.Ş.).

In some of the cases, it is possible to find that the Board fined parent companies, such as in cases where parent companies have a joint venture; however, these cases show that the parent companies themselves also engaged in the anti-competitive behavior along with the joint venture itself. For instance, in Print Distribution Case (07-63/777-283, 02.08.2007), BBD, YAYSAT, both of which are media groups, and BIRYAY, a joint venture between BBD and YAYSAT, were fined for abuse of dominance through the prevention of another undertaking from entering into the area of commercial activity. The Board applied monetary fine to all three undertakings individually as they were all part of the infringement.

Differently but not conversely, in Siemens/Sintek (07-34/349-129, 24.04.2007), the Board condemned Siemens Turkey and Sintek, which was the distributor of Siemens, for, inter alia, their participation in an illegal restrictive joint venture, AMBER. AMBER was a newly-established company, yet to become operational. The Board did not fine the joint venture (AMBER). Similarly, in Cement Cartels, the Board fined parent companies (ÇimSA and Adana Çimento) of a joint venture (OYSA) restricting competition through a coordinative joint venture (OYSA) and for preventing competition in the market; however the Board did not fine the joint venture. Similar to the approach in the aforementioned cases, the Board, in BİMAŞ (02-64/803-325, 21.10.2002) fined the parent companies (DTV and Satel) of the joint venture (BİMAŞ) on the basis of their illegal collusion through the joint venture. The monetary fines were applied on the basis of each of the parents regardless of their shares in the joint venture. In the same decision, the Board applied administrative monetary fine to BİMAŞ as well, however, the fine was applied on the basis of a failure to notify a notifiable agreement.

Conclusion

As the above discussion shows, in some cases, the Authority acknowledges the economic unit aspect, and deems subsidiaries and their parent companies as acting "principals of a single undertaking." The consequence emanating from this is that the Authority does not find the relevant restriction (such as bid-rigging and price-fixing) among the undertakings within the same economic unit as violating competition law as the undertakings at issue cannot be considered as separate undertakings. There are also some cases where the Authority established a unique form of "limited" parental liability. However, unlike the Commission's approach, even in cases where the Authority finds some form of a "limited" parental liability, the Authority does not impute responsibility to the ultimate parent that holds decisive influence over the group.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions