The Regulation on Active Cooperation for Discovery of Cartels(the “Leniency Regulation” or the “Regulation”) was published in the Official Gazette dated 15.02.2009 and numbered 27142 and thus entered into force. The Guideline Regarding the Regulation on Active Cooperation for the Purpose of Discovery of Cartels (“Leniency Guideline” or the “Guideline”) is prepared in order to provide certainty in interpretations, to reduce uncertainty in practice and to provide guidance for the undertakings in order for them to benefit from the leniency program more efficiently as a requirement of transparency principle. The Leniency Guideline was published on April 19, 2013.
The Leniency Guideline contains comments and explanations concerning the Leniency Regulation. The main titles and their explanations are provided below:
I. The Scope of the Leniency Regulation
As cartels are secret by their nature compared to other competition law violations, for the purpose of revealing and investigating cartels, it would be beneficial to grant immunity from monetary fines or provide reduction on monetary fines to the active cooperators that apply to the Competition Authority (“Authority”). In this regard, pursuant to paragraph 7 of the Leniency Guideline, the general principle is to reach a conclusion that is in favor of those who are in cooperation with the Authority in cases which are not clearly regulated by the Leniency Regulation (in Article 7 of the Regulation), or at least which require an interpretation.
In this respect, the executives/employees of the applicant undertakings (executives/employees which are actively cooperating and disclosing the undertaking’s violation in relation to the reductions on the fines) can also benefit from the exemption or reduction governed by the Regulation even if the applications are made by the undertakings. Therefore, paragraph 8 of the Leniency Guideline provides that former or present executives/employees, who may be subject to the fines due to their determining effect on the violation, may choose to apply independently based on justifications, such as not being able to persuade the undertaking for a leniency application. Paragraph 12 of the Leniency Guideline highlights that the Leniency Regulation has started a triple race between the undertakings, between the executives/employees and between the undertakings and the executives/employees in order to be the first to apply and benefit from the Regulation.
II. NON-IMPOSITION OR REDUCTION OF FINES
Regarding the immunity from fines, paragraph 14 and the following paragraphs of the Guideline provide that Article 4 (relates to immunity from fines granted to undertakings and their executives/employees) and Article 7 (relates to executive/employee’s independent application from their undertaking), set forth four alternative conditions with respect to which the existence of one such condition rules out the others.
Paragraph 20 and the following paragraphs of the Guideline provide that the probability of receiving immunity from finesis higher for applications made prior to the preliminary investigation’s initiation. The application’s acceptance after the initiation of the preliminary investigation depends on whether the Board has any evidence indicating that Article 4 of the Law on Protection of Competition No.4054 (“Law”) is violated or not. In other words, as opposed to the applications made before the initiation of the preliminary investigation, the Authority has discretion as to whether it will accept applications made at this stage. If the Authority already possesses evidence justifying the conclusion that Article 4 of the Law has been violated, the application will be handled as request for reduction of the fine.
Paragraph 26 of the Leniency Guideline provides that within the scope of Article 6 and 9 the wording of “the documents and information containing products affected by the cartel, duration of the cartel, parties to the cartel, dates, locations, attendees of meetings in connection to the cartel” does not imply an obligation to submit evidence which adds significant value to the case compared to those which is already at the Authority’s hand. In other words, once the conditions of Articles 6 and 9 are met, the reduction of fines is automatically granted.
Paragraph 33 of the Leniency Guidelines stipulates that the undertakings cannot benefit from the Leniency Regulation in case they apply collectively. This is because when the cartel members realize that the cartel is going to disperse, they could apply to the leniency program together. As a result, this would allow them to receive the benefit from the cartelistic behavior and also to be immune from fines or to receive very low fines. This would create the risk ofmaking the formation and maintenance of cartels easier.
Paragraph 33 of the Leniency Guidelines provides examples of documents that can be used as evidence. Paragraph 34 provides that the expression “possessed” also covers the newly possessed documents and information required during the investigation. However, it is stated that no obligation which cannot be easily fulfilled would be imposed on the undertakings.
Paragraph 36 of the Leniency Regulation provides that there is a burden of not keeping the information and documents confidential and not destroying them. Paragraph 39 emphasizes that this condition obliges the undertaking to provide related documents in their possession and all documents to be possessed in the future to the Authority, and that destroying these documents will violate Article 6 and Article 9 of the Leniency Regulation. In case such documents are destroyed by the employees or executives of the undertaking, the Authority will assess whether such behavior is one-off. The facts of whether the respective undertaking informed the Authority right after it became aware of the behavior and whether it took necessary precautions in order to prevent such behavior or not would be significant for determining whether this behavior would be attributed to the undertaking or not.
Paragraphs 40 and 41 of the Leniency Guidelines, under the condition of ceasing to be a party to the cartel, provide that, the Authority might request from the leniency applicant to continue to remain in the cartel until the on-site inspections are completed. In this case, the applicant must inform the Cartel and On-Site Inspection Support Unit about all communications made with other cartel members.
Articles 6 and 9 of the Leniency Regulation provide that unless stated otherwise by the authorized division, the principle is to keep leniency applications confidential until the service of the investigation report. The Guideline explains the purpose of such provisions as avoiding the possibility of spoliation of evidence through disclosure to the members of cartel before the investigation is completed. Additionally, the Guideline provides the option for the undertakings to provide information to other competition authorities or institutions, organizations and auditors on the condition that the confidentiality of the investigation will not be harmed. Furthermore, as per paragraph 44 of the Guideline, if the confidentiality principle is not complied with, the Board will evaluate the situation on a case by case basis based on the criteria of whether the person at issue is a high level manager or the Board was notified promptly after the breach or not.
In the paragraph 46 of the Guideline, the sub-titles of the obligation under the Leniency Regulation for the undertakings to actively cooperate with the Board between the process of completion of the investigation and the conveyance of the final decision are governed. Pursuant to the relevant paragraph, in cases where the undertakings obtain new information and documents, as per the obligation to cooperate; they shall submit these, and they shall answer the requests of the Board regarding the explanation of such information/document, provide the opportunity of utilizing the testimony of former managers and employees and, if the participation in a cartel is denied at the beginning, shall avoid providing explanations that conflict with the information and documents submitted during the application.
The Leniency Regulation provides that, if the applicant coerced other undertakings that are party to the cartel to participate in the violation, the applicant will not benefit from the immunity, but may still receive reduction in monetary fines. Furthermore, paragraph 48 of the Guideline provides the cases that lead to coercion to violation. As per the relevant paragraph, if there is physical violence or serious economic pressure such as a mass boycott or if there is strong evidence proving such threats, it can be said that there is coercion. However, according to the Guideline having the largest market share in the market, leading the cartel alone or with other companies, threatening to enter into a price war if the other parties do not participate in the cartel, decreasing the prices in order to minimize the profit or punishing the undertakings that do not comply with the agreement are not interpreted as cases of coercion. .
Under the headline of Procedure, The Leniency Guideline covers, in parallel with the Leniency Regulation, the procedural aspects of applying to the Cartel and On-site Investigation Support Unit, the timelines, oral submission, learning the result of the application in a short time and the final decision to be given after the completion of the investigation, by separating each issue into a sub-section and providing in-depth guidance.
The Leniency Guideline under the title “4.2. Providing Time for the Applicants” explains the scope of the time period for the applicants to complete the necessary information and documents that are requested pursuant to Leniency Regulation.
Pursuant to paragraph 57, in principle every person that requests such time should be granted time; however, if such request is made at a very late stage of the investigation, then time may not be granted due to time constraints or a very short time may be granted. In the subsequent paragraphs, it is set forth that the time to be given will be evaluated on case by case basis but in any case the granted time cannot exceed one month. Finally, it is provided that if rightful reasons such as there being thousands of files to be viewed or too many employees to be interviewed exist, the anticipated time may be extended as per the requests of the relevant parties.
In relation to oral submission, the Guideline provides that in cases where the information regarding the cartel is provided orally, such information will be converted into a written copy by the authorized persons and upon receiving the confirmation of the information provider, such information will be recorded via electronic devices. As per paragraph 66 of the Guideline, after the information that is provided orally is converted into written format, kept as an inner correspondence of the Board and accepted as evidence by the authorized persons, the parties subject to investigation may view such correspondence within the Board after the service of the investigation report but cannot take a copy.
After the completion of the investigation and the defense stages, if the Board decides that there is cartel, the fines that will be implemented as per the Leniency Regulation will be calculated and applied. As per paragraph 73 of the Guideline, the Board may conclude in its final decision which will be given after the completion of the investigation that the acts that are subject to the investigation do not constitute a cartel. In this situation, if the Board decides that such acts infringe Article 4 of the Law No. 4054 and therefore imposes monetary fine, such monetary fine will be calculated within the scope of Article 16 of the Law titled “Administrative Monetary Fines”.
V. Additional Reduction
In paragraph 81 of the Guideline, it is provided that if one cannot benefit from the immunity in relation to a given market but makes the first leniency application in relation to a cartel in a different market, it is possible to receive immunity in relation to the second market and a reduction from the monetary fines in relation to the first market.
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.