Turkey: The New Communiqué On Commitments Is Now In Force

I. Introduction

On March 16, 2021, the Turkish Competition Authority ("Authority") issued the Communiqué No. 2021/2 on Commitments for Preliminary Investigations and Investigations on Anticompetitive Agreements, Concerted Practices, Decisions and Abuse of Dominant Position ("Communiqué"), which was published in the Official Gazette on the same day.¹

The legal basis of the Communiqué is Article 43 of the Law No. 4054 on the Protection of the Competition ("Law No. 4054"), which was amended by the Law No. 7246 Amending the Law on the Protection of Competition ("Law No. 7246") that entered into force on June 24, 2020. As per Article 43 of the Law No. 4054, relevant undertakings or associations of undertakings may offer commitments to eliminate the competition law concerns raised by the Authority, except in cases of explicit infringements and hard-core restrictions. The relevant article also provides that the rules and procedures of the commitment procedure will be established by a secondary legislation adopted by the Board. Before the Communiqué was published and the detailed legal framework was determined, the Board had already received its first requests to offer commitments and granted its decisions based on the amendment in the Law No. 4054.² However, the procedure to be followed in submitting the commitments had been unknown to the undertakings, which is now clarified by the Communiqué.

As per the authority vested by the aforementioned article, the Board had published a Draft Communiqué on Commitments Offered During Preliminary Investigations and Investigations on Restrictive Agreements, Concerted Practices, Decisions and Abuse of Dominance ("Draft Communiqué") on the official website of the Authority on November 27, 2020 for public consultation.³ As a result of the Authority's assessment of the opinions received within the scope of the public consultation, the Communiqué was published on March 16, 2021 by the Board with certain amendments.

Although the Communiqué is generally in parallel with the wording under the Draft Communiqué which was opened for public consultation, it essentially brings different provisions regarding (i) the definition and the scope of the explicit infringements and hard-core restrictions, (ii) the preliminary examination phase, (iii) substance of the commitment text and (iv) the procedure to be followed if the Authority requires the commitments be revised.

In this Article, we will briefly explain the procedural and substantial rules surrounding the commitment mechanism by also pointing out how the Communiqué presents differences vis-a-vis the Draft Communiqué.

II. Initiating the Commitment Discussions

Under Article 6/1 of the Draft Communiqué, it had been provided that the commitment negotiations will start immediately after the submission of the request to offer commitments to the Authority. Yet, the Communiqué sets forth a so-called preliminary examination phase, where the Board will decide whether to initiate commitment discussions, considering the type of the infringement and other issues it deems necessary.

In order for the Board to initiate the commitment discussions, (i) the investigated practices should not constitute an explicit infringement or breach a hard-core restriction, (the scope of which will be explained further below), and (ii) the submission must be made by the end of the investigation stage, the deadline of which seems somewhat unclear.

(i) Type of infringement

In line with Article 43 of the Law No. 4054, Article 2 of the Communiqué excludes the explicit infringements and breach of hard-core restrictions from the scope of the Communiqué and draws the framework of what is an explicit infringement or a hard-core restriction.

Article 4 of the Draft Communiqué had defined the explicit infringements and hard-core restrictions as "price fixing, allocation of territories and customer and controlling the amount of supply among the competitors."

The Communiqué expanded this definition, which now reads as follows: "Price fixing, allocation of customers, suppliers, territories and trade channels, restriction of supply and imposing quotas, bid rigging, sharing competitively sensitive information such as price, production or sales volumes planned for the future between competitors."

Also, the Communiqué now foresees that the resale price maintenance practices may not benefit from the Communiqué.

The types of excluded infringements given under the Communiqué are conclusive as Article 43/3 of the Law No. 4054 explicitly vests the Authority with the power to determine the rules and procedures concerning the commitment mechanisms, and the Board determines the scope of the application conclusively. As such, if the investigated practices are considered to fall within the scope of the explicit infringement and hard-core restrictions listed under Article 4 of the Communiqué, the Board can reject the request to offer commitments and discontinue the commitment procedure.

(ii) Deadline to submit the commitments

According to Article 5/1 of the Communiqué, undertakings can submit their requests to propose commitments within three months following their receipt of the investigation notice. The requests submitted after the term has expired will not be taken into account. On a separate note, Provisional Article 1 provides that regarding cases for which the decision to initiate an investigation was taken more than three months before the Communiqué has entered into force (i.e., before December 16, 2020), the time bar under Article 5/1 of the Communiqué will not be applicable. To clarify, the undertakings against which an investigation has started before December 16, 2020, will be able to offer commitments at any time during the investigation stage, i.e., until the investigation stage is over, as stipulated by Article 43/3 of the Law No. 4054.

Having said this, the Law No. 4054 is not very clear as to when the investigation stage is deemed to be over. Indeed, Article 45/1 of the Law No. 4054 states that "The report prepared at the end of the investigation stage is notified to all members of the Board and the parties concerned." implying that the investigation stage ends with the receipt of the investigation report by the parties concerned and the Board.

On the other hand, Article 46/2 of the Law No. 4054 states that "Hearing is held within at least 30 days and at most 60 days from the end of the investigation stage." and Article 48/2 sets forth that "In cases where a hearing is not requested by the parties, and the Board does not decide to hold a hearing on its own initiative, the final decision is made within 30 days following the end of the investigation stage, pursuant to the examination to be performed on the file." Since, in practice, the oral hearings are held after the third written defence is submitted to the Authority (i.e., long after the investigation report is served), these provisions imply that the investigation stage ends with the submission of the third written defence.

Those said, in Arslan Nakliyat,⁴ which was published in November 2020 as the Board's very first reasoned decision regarding the commitment mechanism, the Board clearly notes that "(...) the investigation stage is concluded with the third written defences before the hearing." In Arslan Nakliyat, the Board also refers to its two decisions, namely the Co-Re-Na decision⁵ and the Türk Philips decision,⁶ which express that the investigation ended on the date that the third written defence was entered into the records of the Board.

In light of the Board's precedents and the relevant provisions, it is understood that the commitments may be submitted until the submission of the third written defence, in cases where the decision to initiate an investigation was taken by the Board before December 16, 2020 as per Article 5/1 of the Communiqué.

III. Procedure for the Commitment Mechanism

Along with its March 16, 2021 announcement on the Communiqué`s entry into force, the Board also published a chart illustrating the commitment process.⁷

The process starts with the Parties' submission of the written request to offer commitments (Article 5). After the submission of the written request the Board will either decide to initiate commitment discussions or reject the request, by considering the excluded infringement types and other issues it deems necessary (Article 6/1). If the Board rejects the request, the commitment procedure will be concluded (Article 6/1).

After the commitment procedure is initiated, if the parties decide to submit commitments, they must send a copy of the commitment text along with the non-confidential version, and a summary thereof to the Authority (Article 7/1). The period for the submission of a commitment will be determined by the Authority during the commitment discussions, depending on the stage that the examination has progressed to, and the scope of the commitment (Article 7/2).

Following that, the Board will evaluate whether the commitment eliminates the competition problems and other issues deemed necessary, by assessing the commitment letter in substance (Article 10/1). In case the Board finds the commitment appropriate, it may either (i) render a commitment decision which would be binding for the party concerned or (ii) request the opinions of third parties (Article 10/2). Should the Board render a commitment decision binding, the Board will also decide not to initiate an investigation, or as the case may be, discontinue the ongoing investigation (Article 10/2).

However, if after the first round of the commitment discussions or after evaluating the opinions of the third parties, the Board does not find the commitment acceptable, then the Board may decide to allow the Parties to make amendments to the commitment text. The Parties can amend the commitment text only once (Article 10/3 and 11/3).

Unlike the Draft Communiqué, Article 12/1 of the Communiqué provides that the commitment discussions will continue if the parties want to make amendments to the commitment as per Articles 10 and 11 of the Communiqué. The Draft Communiqué had regulated that the Parties would submit the amended commitment and the Board would decide either to render the commitment binding for the party concerned and not to initiate an investigation or, to discontinue the commitment procedure without re-initiating the commitment discussion process.

Following the commitment discussions, if the Board finds the amended commitment text to be acceptable, it will end the procedure and grant its final decision (Article 12/3 and 13/3). Since the Article 13/3 of the Communiqué provides that the Board will render a reasoned and final decision regarding the conclusion of the commitment procedure, this decision can be subject to the judicial review as per the Article 55 of the Law No. 4054.

IV. The Substance of the Commitment Letter

Article 8 and 9 of the Communiqué provides details on the main points that must be incorporated within the commitment text. According to Article 8 of the Communiqué, the commitment text must include (i) the competition problems to be resolved by the commitment, (ii) what the commitment is (iii) the start date, duration and method of implementation of the commitment (iv) any time periods to be complied with during the implementation, (v) under what conditions such periods can be expanded, (vi) the effect of the commitment to the market, (vii) how the commitment will meet the competition concern, (viii) how their compliance with the commitment can be monitored and other issues deemed necessary.

Moreover Article 9 states that behavioural or structural commitments can be offered individually or jointly. The offered commitment must be (i) proportional with respect to the competition concerns, (ii) adequate to address them, (iii) executable in the short term, and (iv) conducive to efficient implementation.

On a separate note, the provision under Article 9/3 of the Draft Communiqué stating that "For the effective applicability, commitments which do not require monitoring are preferred." is entirely done away with in the Communiqué. We assess that the removal of the said provision from the Draft Communiqué is quite appropriate as it results in a legal uncertainty on whether the commitments that will need to be monitored will be accepted by the Board.

V. Conclusion

Although the Communiqué is quite similar to the Draft Communiqué in essence, it still diverges from the Draft Communiqué in certain aspects. As such, the Communiqué brings a conclusive list of excluded types of infringement. The Communiqué also sets forth a so-called preliminary examination stage upon the submission of the request to offer commitment, where the request will be assessed in terms of type of infringement and other necessary issues. The Communiqué also differs from the Draft Communiqué with respect to the process after the amendment of the commitment text, by stating that the commitment discussions will continue.

This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in June 2021. A link to the full Legal Insight Quarterly may be found here

Footnotes

1 The announcement can be accessed at the following link: https://www.rekabet.gov.tr/tr/Guncel/taahhut-tebligi-resmi-gazete-de-yayimlan-ef03df362c86eb118136005056b1ce21 (Last accessed: April 13, 2021)

2 See the Board's decision dated July 28, 2020, and numbered 20-36/485-212), the Board's decision dated November 5, 2020, and numbered 20-48/655-287), the Board's decision dated December 10, 2020 and numbered 20-53/746-334), the Board's decision dated December 10, 2020 and numbered 20-53/751-335)

3 See G. Gürkaynak, E. Duru, B. B. Çömlekçi, A. S. Çoruk, The Beginning of A New Age: The Commitment Mechanism Introduced In Turkish Competition Law Enforcement, Mondaq, January 16, 2021 for a more detailed assessment on the Draft Communiqué. (https://www.mondaq.com/turkey/cartels-monopolies/1029428/the-beginning-of-a-new-age-the-commitment-mechanism-introduced-in-turkish-competition-law-enforcement#) (Last accessed: April 13, 2021)

4 The Board's decision dated July 28, 2020 and numbered 20-36/485-212.

5 The Board's decision dated September 19, 2018 and numbered 18-33/557-275.

6 The Board's decision dated December 26, 2019 and numbered 19-46/790-344.

7 See https://www.rekabet.gov.tr/Dosya/geneldosya/taahhut-sureci-semasi-pdf (Last accessed on April 8, 2021)

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