Definition of Cartel
Cartel is the common concept which refers to anti-competitive agreements and/or concerted practices among competitors including (i) price fixing, (ii) market allocation, (iii) collective refusal to supply/deal (group boycotts), (iv) imposing quotas or (v) collusive bidding in tenders. Such agreements and concerted practices have consistently been deemed to be per se illegal. Cartels are accepted as the most severe competition restriction. They are the result of competitors striving to increase their profits by controlling different market related variables including, especially, price and output.
Article 4 of The Law on the Protection of Competition No. 4054 (the "Competition Law") prohibits any form of agreements which has the "potential" to prevent, restrict or distort competition. Lack of effect does not preclude the application of the cartel prohibition. Article 4 does not refer to "appreciable effect" or "substantial part of a market" and thereby excludes any de minimis exception yet. Generally speaking, the rules and principles applicable under the EU competition law on cartel definition would also apply in Turkey.
The Turkish Competition Authority treats cartels differently than other practices restricting competition and punishes them in the most severe manner, due to the severe damage cartels do to economy. The Turkish Competition Authority mostly imposes administrative monetary fines on cartelists. Cartel activity may also result in administrative monetary fines on employees/executives with decisive roles in the formation of cartels. Bid rigging cartels may also be subject to criminal sanctions. Last but not least, loaded punitive damages are available for the injured parties under private law.
One of the most effective methods competition authorities, including the Turkish Competition Authority, utilize in their fights against cartels is the "leniency programs". The leniency program facilitates the Turkish Competition Authority's work on detecting cartels, which by nature operate in secret. The program provides cartelists the opportunity to be immune from competition law sanctions if they disclose the cartel to the Turkish Competition Authority as the first comer and meet the additional conditions listed in the relevant leniency regulation. For further detail, please see the sections (i) Leniency Program, (ii) Conditions for Full immunity and Reduction of Fines and (iii) Deadlines for Application.
Recent Cartel Cases
Please see the following Turkish Competition Board (the "Board") decisions for further insight into the Board's handling of cartel cases.
A noteworthy decision on cartels concerns an investigation against 13 financial institutions – including local and international banks – active in corporate and commercial banking in Turkey. The investigation started with Bank of Tokyo-Mitsubishi UFJ Turkey A.Þ.'s leniency application on an alleged cartel executed through exchange of competitively sensitive information on loan conditions. The Board however ultimately found no cartel while concluding that some undertakings indeed exchanged competitively sensitive information. Contrary to its decisional practice and the explicit rule in the Leniency Regulation that the leniency regime only applies to cartel cases, the Board provided full immunity to BTMU. BTMU was granted full immunity from fines and the other ten investigated undertakings were not fined.
The Competition Board initiated an investigation against 16 freelance mechanical engineers operating to determine whether they violated Article 4 of Competition Law by a profit-sharing cartel. One of the investigated undertakings applied for leniency during the course of the preliminary investigation. The Competition Board concluded that 14 of the freelance mechanical engineers were engaged in a profit-sharing cartel. The leniency applicant received full immunity from fines, while also relieving one of the freelance mechanical engineers from an administrative monetary fine.
The Board launched an investigation against four fresh yeast producers to determine whether they violated Article 4 of the Competition Law through colluding to set prices for fresh bread yeast. At the end of the investigation, the Board imposed a total fine of approximately TRY 14 million (EUR 5 Million) on three undertakings. Mauri Maya was granted full immunity upon its leniency application submitted, and following it dawn raids were conducted at the premises of the undertakings.
This decision is a landmark decision as the Board did not have any precedents of such case where the Board granted full immunity to the applications made following the initiation of the preliminary investigation and the dawn raids conducted. For the first time, the Board put the Leniency Guidelines into practice through granting full immunity to a leniency applicant, Mauri Maya, who submitted its application after the preliminary investigation was initiated, and following it dawn raids were conducted, as considering the added value and sufficient content of Mauri Maya's leniency application.