Turkey: The Competition Law of Turkey

Last Updated: 11 September 2007
Article by Arif Esin

The Article 167 of Turkish Constitution attributed to the government the duty to take "for money, credit, capital, product and service markets, measures providing and improving healthy and regular procedures" to prevent "monopolization and cauterization created as result of activity or agreement in the markets". As a requirement of this Constitutional clause, in order to prevent agreements, decisions and practices which prevent, restrict or distort competition within the markets for goods and services in the territory of Republic of Turkey and the abuse of dominant position by those undertakings which are dominant in the market, the Law on The Protection of Competition No. 4054 was enacted in the Turkish Parliament on 07.12.1994 and published in the Official Gazette and became effective on 13.12.1994. The Competition Board, which is the decision body of the Competition Authority responsible to apply the Law, was established on 27.02.1997 with a delay of 27 months. By accomplishing his organization in a short period of 8 months, the Authority has announced this situation to the public with a decree published on 05.11.1997. After this date the Authority has started to evaluate quickly the applications. Thus, the process of realization of Turkish Competition Law, which was initiated in the beginning of the 1970’s and the institution that will carry out the Law, was completed.

The fundamental prohibitions and the exemption scheme

The Law No. 4054 is based on two fundamental prohibitions: the Article 4 which aims to prevent the distortion of the competition with the decisions of the associations of enterprises or agreements or concerted practices between enterprises in a certain market of goods and services and the Article 6 which aims to prevent the abuse of dominant position by enterprises which are in a dominant position. These two Articles have got parallelism successively with the articles 81(1) and 82 of the Treaty.

The Article 5 of the Law (which contains the same provisions as the Article 81(3) of the Treaty) is the main exemption clause. According to the provisions of Article 5, even in the presence of an agreement, concerted practice or decision which restrict the competition, in the existence of some conditions, the Board may declare the exemption of the application of the provisions of Article 4. The exemption regulation in question includes agreements, concerted practices and decisions which allow consumers to get a share from the resulting benefit, contribute to new developments and progress or technical or economic improvement in production or distribution of goods and in providing services, which does not eliminate competition in a substantial part of the relevant market and does not induce a restraint on competition that is more than essential.

Typical steps during the Investigation

The Competition Board may, upon an application or its own initiative, decide on a direct investigation, or a preliminary investigation for the purposes of determination of whether or not there appears a necessity for an initial proceeding for the application brought before it.

In cases where a preliminary investigation will be carried out, the Director of the Board appoints one or more experts amongst the staff as a reporter.

The reporter who is appointed to carry out the preliminary investigation notifies to the Board in writing, all the information and evidences together with his view on the matter concerned, within 30 days.

Within 10 days following the submission of the report on the preliminary investigation, the Board meets to conclude its decision on whether or not it is necessary to initiate preliminary investigation.

Where the Board, having received an application or a notification, considers, on the basis of the information in its possession, that there are serious and sufficient grounds, it informs the applicants in writing, of its decision and of the commencement of the proceedings.

Anyone who claims to have a direct or indirect interest may bring an action against the decision of the Board concerning an express or implied dismissal of the application.

The Board, upon the decision on initiating the investigation procedures, appoints the Board members together with a reporter or reporters authorized, to carry out the investigation. The investigation has to be completed within six months at most. The Board may extend this period for only once, to a further six months, where it is deemed necessary.

The Board, informs the parties concerned, of the investigations initiated within 15 days following the date of the decision by which the investigation proceeding is initiated and requests from the parties to submit their first arguments relevant to their defense in writing, within 30 days.

The decision of the Board on the initiation of investigation is final.

During the course of investigation the Investigation Committee may exercise the powers of requesting information and the powers of on the spot investigation. Within this period, the Committee may also request from the parties and other related authorities to submit all necessary documents and information. During the investigation stage of the Board, any person or persons who are alleged to have infringed the Law may 65 at any time, submit to the Board any information and evidence that may affect the decision.

The parties, who are informed that an investigation has started against them, may, from the date of initiation of the investigation up to the date of request for a hearing, request a copy of all documents issued in the Authority and if possible, all types of evidence obtained.

It is important to note that the Board cannot base its decision on any issue about which the parties are not informed or not given the right to defense.

The report prepared at the end of the investigation stage is notified to all the Board members and to the parties concerned.

Those who are decided to have infringed the Law are notified to submit their second defense in writing to the Board within 30 days. Upon the defense arguments, the experts authorized to carry out the investigation submit their additional views in writing within 15 days and this shall also be notified to all the Board members and to the parties concerned. The parties may reply to these views within 30 days. In cases where the parties have justified reasons, this time period may be extended for only once to another 30 days.

Reply of the parties not made within the specified time period is not taken into consideration.

A hearing is held if the parties concerned have requested so in their defense or reply petitions. On the other hand, the Board may also decide on a hearing on its own initiative. The hearing is held within at least thirty days and no longer than within sixty days following the end of the investigation stage. The invitations for the hearing are sent to the related parties within at least 30 days before the date of the hearing.

Hearings are held in public. However, the Board may, on the grounds of protection of public morality or of trade secrets, decide for closed sessions. Despite the possibility for closed sessions, the experiences showed that for the Board to decide for a closed session the parties have to submit strong arguments.

Hearings are presided by the Chairman and in his absence by the Deputy Chairman. A hearing can only be held with the attendance of the Chairman or the Deputy Chairman and at least seven members of the Board. Hearings are to be concluded within no longer than five consequent sessions (several meetings held on the same day shall be considered as one session).

The final decision of the Competition Board is made on the same date and if this is not possible, together with its reasoning within fifteen days following the hearing.

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.

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