Turkish Competition Authority (TCA) recently published its investigation decision 1 on the ro-ro shipping lines that have been carrying wheeled and mobile cargo between Ambarli - Topcular and Ambarli – Bandirma. These ro-ro lines in the main industrial zone of Turkey are getting more traffic, especially after the opening of the third bridge in the Bosphorus in 2016. The TCA examined the price-fixing agreement allegations among the ro-ro shipping lines that have operations in this crucial route for transporters. Furthermore, one of the investigated parties applied for leniency during the investigation and benefitted from a 50% reduction in fines.
Background Information on the TCA's Investigation
The TCA initiated an investigation based on the allegations about a price fixing agreement among three ro-ro companies (namely Tramola, İstanbullines, and Kale) in Ambarli – Bandirma line, and also a price fixing agreement between two undertakings (namely IDO and IDN) in ro-ro lines between Ambarli and Topcular. The duration of agreement on shipping tariffs lasted for more than eight years in the first line while it continued for four months in the second line. During the investigation period, the TCA conducted dawn-raids on the premises of all investigated parties and had significant correspondences that revealed the cooperation on shipping tariffs. Moreover, the TCA strengthened its findings with the market figures that indicated the collaboration among the parties for a long time in the logistically significant ro-ro lines of the Marmara region. Nevertheless, most importantly, the TCA benefitted from the correspondences and explanations provided in a leniency application of Kale, which is one of the investigated parties and has operations in Ambarli – Bandirma line since 2006. In this regard, initially, it would be beneficial to explain the leniency procedure in Turkey briefly.
Leniency Procedure in Turkey
The Regulation on Active Cooperation for Detecting Cartels (Leniency Regulation) came into force on February 15th, 2009, and specifies the rules about the leniency mechanism 2. Accordingly, immunity may only be granted to the first applicant, which informs the TCA of a cartel and provides evidence that enables the TCA to conduct an inspection or prove the cartel infringement. To obtain immunity, the application must be submitted before the notification of the investigation report.
Applicants who do not qualify for immunity may benefit from a reduction of fines if they provide evidence. A higher reduction will be granted to the first and second leniency applicants.
When determining whether an applicant qualifies for immunity or a reduction in fines, factors such as the quality, efficiency, and timing of the applicant's cooperation, as well as explicit demonstration of evidence of a violation, are taken into consideration. Accordingly, such determination is at the discretion of the TCA.
The TCA has sole discretion when assessing whether or not the information submitted with the leniency application is "essential" to the investigation. Accordingly, if the information provided is not deemed to have been "essential" to the investigation or has already been obtained by the TCA, an applicant will at most benefit from a reduction in fines.
When considering the leniency practice in Turkey to date, we have seen that the TCA examined around 24 leniency applications, and approximately 25% of the applicants benefitted from immunity in different markets, including banking, airlines, and yeast 3.
Implementation of Leniency in Ambarlı Ro-ro Investigation
In Ambarlı Ro-Ro Case, we have witnessed a conflictual leniency procedure between the applicant, Kale, and the TCA, mainly based on the assessment of the evidence in an essentiality perspective. Initially, Kale made a leniency application after the notification of the investigation in December 2017. However, in February 2018, the Competition Board decided that the leniency application did not fulfil the requirements of Leniency Regulation and hence, did not qualify immunity and fine reduction for Kale. As a next step, Kale made a "new" leniency application to the TCA after a week later than the Competition Board's decision. While evaluating that application of Kale, the TCA asked for further information, the whole procedure was completed in May 2018, and Competition Board accepted Kale's leniency application.
In its application and during the meeting with the case handlers of the investigation, Kale provided valuable information on the cartel agreement and organization among Tramola, İstanbullines, and Kale that have ro-ro line operations between Ambarli and Bandirma. The leniency application did not provide any information on the second ro – ro line between Ambarli and Topcular. The main arguments of the leniency application can be summarized as below:
- Kale provided e-mail correspondences for the period between 28.11.2005 and 20.12.2017.
- According to Kale, beyond e-mails, the parties also came together in meetings to discuss the market landscape in general and price strategies.
- Information sharing on price lists usually covered future prices. In general, İstanbullines and Tramola discussed the new pricing strategy, and later on, Tramola informed Kale on the new prices.
- Since there occurred an adaption to the new price lists, generally, there was no need for any monitoring and warning mechanism among the parties. However, once Kale implemented a discounted price, Tramola warned Kale and Kale removed the discounts.
- Tramola had a leading role in the cooperation since different from the other parties, Tramola has operations only in the field of ro – ro lines.
- It is difficult to have new entrants in the market due to a lack of infrastructure.
- The demand for Ambarli – Bandirma ro – ro lines and accordingly, the importance of those lines were increased after the opening of the third bridge in Bosphorus due to high costs for transporters.
Since Kale informed the TCA on the duration of the cartel, essential dates, and locations related to the cartel organization with pertinent information and documents, the TCA defined them as critical or essential for the scope of the investigation and gave a 50% reduction to Kale.
As a result of the investigation, the TCA stated that Tramola, İstanbullines, and Kale agreed on the transportation tariffs in Ambarli – Bandirma ro ro lines for around eight years. Kale as a leniency applicant benefitted from a reduction, and the TCA imposed an administrative fine of 0.8% of the turnover of Kale. In contrast, the Competition Board imposed 4% fine to the other investigated parties, Tramola and İstanbullines. On the other hand, since the duration of price fixing agreement was shorter (around four months) in Ambarli – Topcular ro-ro line, the TCA imposed a 0.8% fine for IDO and IDN.
1 TCA's decision dated 18.04.2019 and numbered 19-16/229-101.
2 Additionally, the TCA published the Guidelines on the Explanation of the Regulation on Active Cooperation for Detecting Cartels on 17 April 2013.
3 For further information, the TCA's Annual Reports for 2018 and 2019, Harun Gündüz (2018) – "Rekabet İhlallerine İlişkin Soruşturmalar ve Para Cezaları: Rekabet Kurulu'nun 20 Yılının Bilançosu".
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