Competition ensures that the undertakings offer goods and services to the consumers on the most advantageous terms by encouraging efficiency and reducing prices. An effective competition policy is important as it requires undertakings to act independently in the market while managing the competitive pressure of their competitors. However, in some cases, instead of competing with each other, the undertakings rely on each other by forming a cartel to fix prices, to limit production or to share markets or customers between themselves, which is referred to as a ‘cartel”, a typical form of anticompetitive conduct1. Horizontal conducts like cartels or single firm conducts (i.e. abuse of dominant position2) result in a decrease of the undertakings' incentives to provide new or better products and services at competitive prices or conditions. Therefore, such conducts are prohibited by the competition authorities around the globe.
To that end, the competition authorities monitor the anticompetitive activities of the undertakings through the way of conducting investigations against the undertakings upon complaints (of parties such as competitors, vendors, customers) or ex officio. During an investigation, a competition authority carefully examines the relevant conduct and has extensive powers within the scope of its examination, including but not limited to conducting on-site inspections (unannounced visits), examining physical and electronic records and seizing documents, requesting information from the relevant undertakings or the third parties and taking oral and written defences of the investigated parties. The investigation procedure usually takes a significant amount of time (at least one year, in general) and resources both for the authorities and the undertakings. The settlement mechanism, on the other hand, provides the competition authorities and the investigated undertakings with the opportunity to avoid time-consuming, extensive and costly investigation procedures to a certain degree. If an on-going investigation is settled, it will be closed swiftly with the final settlement decision of the competition authority. Therefore, settlement is deemed beneficial both for the competition authorities and the investigated undertakings and has been widely applied in the world.
Turkey has adopted its competition law regime from the EU in 1994 in almost its entirety. However, although the EU introduced settlement in 2008, Turkey waited until 2020 for adopting settlement and for this particular reason, the Turkish Competition Authority (“Authority”) and the investigated undertakings were stuck in the usual defence timeframe of the investigation procedure for years, even in very clear-cut cases. Through the 2020 amendments to the Law No. 4054 on the Protection of Competition (the “Law No. 4054”), the settlement mechanism has been introduced to Turkish competition law. In this article, we attempt to provide a comparative analysis of the legislative background of settlement by first reviewing the essence of the EU regime and then examining the Turkish legislation by touching upon initial examples of the Authority's settlement cases.
II. Settlement Mechanism in the European Union
The settlement procedure was introduced in European Union (“EU”) competition law with the adoption of the Commission Notice on the conduct of settlement procedures in view of the adoption of Decisions pursuant to Article 7 and Article 23 of Council Regulation (EC) No 1/2003 in cartel cases (“Settlement Notice”) in 2008. Since then, the European Commission (“Commission”) has been applying the settlement mechanism to speed up the decision-making process for the cartel investigations. Among other benefits, the settlement procedure reduces the administrative costs, frees up resources and reduces the number of appeals.3 The investigated parties are more likely to disclose the infringement and accept liability when the Commission obtains evidence during the investigation to benefit from a reduction of the fine. The settlement mechanism has been a significant tool for the Commission's battle against the cartels.4
In order to grant a settlement decision, the Commission first needs to find the case suitable for settlement by taking into account the non-exhaustive list of criteria within the Settlement Notice.5 While estimating the possibility of reaching a common understanding, the Commission will consider a number of factors, including but not limited to the number of relevant parties, the number and proportion of leniency applicants, the degree of cooperation of the parties, the agreement on a fine, the possibility of setting a precedent, international cartel enforcement procedures and private enforcement claims. However, the Commission may still reach a settlement if one or some of the criteria is not met. In other words, the Commission does not strictly seek the existence of all factors, but generally does not engage in settlement if several factors are not ex-ante met.6 If the case is found suitable for settlement, the investigated parties have to acknowledge their participation in the relevant anticompetitive behaviour and then need to reach a "common understanding" with the Commission concerning the facts and the legal qualification of the parties' conduct. An undertaking may communicate its interest to enter into a settlement discussion to the Commission upon becoming aware of the existence of an investigation. Consequent to the written request of the parties, the Commission may decide to enter into discussions between the initiation of proceedings and the adoption of the statement of objections, provided that the Commission considers the case suitable for settlement. The settlement discussions, however, do not enable the undertakings to negotiate the existence of an infringement with the Commission but enables them to be heard effectively and to affect the Commission's objections through their explanations.
The settlement discussions focus on the alleged facts, their classification, the gravity and the duration of the infringement and the involvement in the cartel. If the parties are convinced of the case, the Commission may set a time-limit for them to introduce a formal request (i.e. settlement submission) to settle the case. The settlement submission should contain7, in main terms; a clear and unequivocal acknowledgement of the liability for the infringement, its possible implementation, main facts and legal qualification, the anticipated maximum amount of the fine, confirmation that they have been sufficiently informed of the objections and provided with sufficient opportunity to share their views, that they do not envisage requesting access to the file or an oral hearing. The rights of defence of the parties remain the same under the settlement mechanism, but they are simply exercised within the framework of written and oral discussions and the settlement submission. In any case, the right to access to file remains available for those who do not settle after the statement of objections.
To put it simply, by introducing a settlement submission, the parties commit to follow the settlement procedure, provided that the Commission's decision ultimately reflects the contents of the settlement submission and does not impose a fine higher than the maximum fine indicated in it. Otherwise, the acknowledgments provided by the relevant parties for the settlement are deemed to have been withdrawn and cannot be used against them. Furthermore, the parties may challenge the decision through the administrative proceedings.
After receipt of a settlement submission, the Commission will send the parties a statement of objections taking into account the views of the parties, and the parties will be expected to reply within a period of not less than two weeks, confirming that the statement of objections corresponds to their submissions and that they are committed to the settlement procedure. The Commission may decide not to accept the parties' settlement submissions, in which case it will issue a statement of objections in accordance with the standard investigation procedure.
If the relevant party and the Commission reaches a settlement, then the party receives a reduction of its fine amounting to 10 percent. It should be noted that settlements are not a negotiation as to the existence of the infringement or the level of the penalty, but a reward for cooperation.8 The final settlement decision of the Commission presents all the usual characteristics a prohibition decision.9 However, in case the settlement discussions fail, the Commission continues the standard investigation process and decide in accordance with the information obtained during the investigation. As another option, the Commission may close the investigation on some of the parties through settlement, but continues the investigation against the others who discontinue or do not resort to the settlement process.
Finally, a settlement decision is subject to appeal before the General Court by the relevant undertaking(s), just like a standard prohibition decision taken upon an investigation. While the settlement does not prohibit the parties from appealing the decision, the acknowledgments in the settlement submissions do limit the grounds of appeal.
Although introduced in 2008, the pace of the settlement mechanism has started to pick up speed between 2013 and 2014. In other words, starting from the Commission's first settlement decision in 201010, 16 cartel cases have been settled until 2015 and 6 of them were between 2013 and 2014. It can be said that the mechanism has met its efficiency goal among the years and allowed Directorate-General for Competition to allocate its resources to more cases. It is also seen that the Commission's settlement decisions tend to be considerably shorter and less detailed than the standard investigation decisions.
Furthermore, in majority of the Commission's settlement decisions to date, all parties under investigation settled11; and in minority of the decisions, the investigations have been concluded by hybrid settlements with some of the parties under investigation12. This is because the Commission does not prefer hybrid settlements as in such cases it needs to take two separate sets of decisions for the settling parties and the other parties under standard investigation process.
Although the settlement mechanism paves the way for a low risk of appeal against the Commission's decision, such decisions are still appealable limited to questions of procedure, rather than substance.13 In fact, the General Court passed its first judgment on the Commission's cartel settlement procedure on December 13, 2016 on an appeal brought by Printeos against the settlement decision concerning the Commission's envelopes cartel decision14. Printeos contested the Commission's decision on the ground that the decision did not clearly explain the Commission's application of different rates of reduction to the settling undertakings. The General Court reviewed the Commission's fine calculation and concluded that insufficient reasoning in the statement of objections and in the decision cannot be remedied by the Commission afterwards.
Even before the above decision, on May 20, 2015, the General Court decided on the appeal brought by the non-settling party in Timab Industries and CFPR v. Commission, Case T-456/10, which concerns the Commission's Animal Feed Phosphates investigation. The case was the Commission's second settlement and first hybrid settlement decision.
Within the scope of the Animal Feed Phosphates investigation, a monetary fine of EUR 175 million was imposed on several animal feed producers for price fixing and market sharing over 35 years. Although the Commission started settlement discussions with all investigated undertakings, Timab later decided to discontinue the settlement proceedings. The other investigated parties, on the other hand, proceeded the settlement process and initially settled with the Commission. Timab appealed the Commission's decision, arguing that its legitimate expectations concerning the monetary fine were violated, as the Commission decided to impose a monetary fine of approximately EUR 60 million, significantly higher than what was discussed during the settlement negotiations (i.e. EUR 41-44 million). However, the General Court rejected the appeal request of Timab, by holding that the difference between the monetary fine within the scope of the settlement process and the monetary fine to be imposed as a result of the standard investigation may be different due to the reductions to be applied for settlement, which the Commission is not required to apply as part of the investigation process.
III. Settlement Mechanism in Turkey
Among other significant amendments, the settlement mechanism has been introduced to Turkish competition law through the amendments made on the Law No. 4054 upon being published on the Official Gazette on June 24, 2020. Article 43 of the Law No. 4054 provides that the Board will set out the rules and procedures of the settlement process through a Regulation. Accordingly, the Regulation on Settlement Procedures for Investigations of Anti-competitive Agreements, Concerted Practices and Decisions, and Abuse of Dominance (“SettlementRegulation”) has been prepared by the Turkish Competition Authority and entered into force upon being published on the Official Gazette on July 15, 2021, one year after the implementation of the settlement mechanism. Therefore, the settlement mechanism and its examples are fairly new in Turkish competition law.
Article 43 of the Law No. 4054 is in parallel with the legislative provision within the EU regulation and provides that the Turkish Competition Board (“Board”, the decisive body of the Authority) may, upon request or ex officio, initiate settlement process during an investigation by taking into account the procedural benefits and the differences in opinions concerning the existence and scope of the infringement. However, contrary to the EU, the settlement mechanism may be applied to investigations concerning anti-competitive agreements, concerted practices and decisions, as well as investigations concerning abuse of dominant position. The Settlement Regulation also incorporates the Regulation on Active Cooperation for Detecting Cartels by providing that the parties applying for settlement may also benefit from an active cooperation/leniency reduction. When calculating the overall reduction of fine, the Board combines the active cooperation and settlement reduction rate. However, the timing is important, once the relevant party submits the settlement text to the Authority, it does not have the right to apply for a reduction of active cooperation.
The Settlement Regulation further sets forth certain criteria for the Board's consideration, including the number of parties, whether the significant part of the parties under investigation have applied for settlement or not, the scope of the infringement and the characteristics of the evidence, and whether it is possible to reach a mutual understanding with the parties under investigation regarding the existence or scope of the infringement. As a result of its consideration, the Board has the sole discretion on initiating a settlement procedure. If the Board decides to initiate the settlement, it will grant the undertaking a definite term to submit a settlement letter acknowledging the existence and scope of the relevant violation. Furthermore, the Board informs the parties on the contents of the allegations, the characteristic and scope of the alleged infringement, the main evidence, the potential percentage of the reduction and the scale of the administrative monetary fine, so long as the security of the investigation is preserved.
Subsequently, the settlement negotiations will commence upon the Board's acceptance of the settlement request or the investigated undertaking's acceptance of the Board's settlement invitation in due time. Upon the settlement negotiations, the Board will render an interim decision, which includes the nature and scope of the alleged violation, the upper limit of the administrative monetary fine, the reduction rate for settlement, the reduction rate for active cooperation, if any, and the upper limit of the fine rates and amounts.
On another note, the Settlement Regulation has a clear provision setting forth the fact that settlement meetings are initiated does not mean that the settlement parties have accepted the infringement attributed to themselves. To the contrary, they may withdraw from the settlement until the submission of the settlement text. However, a duly submitted settlement text cannot be withdrawn. If an undertaking accepts the matters notified in the settlement interim decision of the Board, it submits a settlement text which shall include an explicit statement acknowledging the existence and scope of the infringement, the percentage and amount of the maximum administrative monetary fine and the acceptance of imposition of the fine on such percentage and amount, that the relevant party was sufficiently informed of the allegations and was provided with sufficient opportunity to provide its opinions and explanations, and that the administrative monetary fine and the matters included in the settlement text shall not be used as the subject matter of a lawsuit. Accordingly, contrary to the EU law, if the process ends with settlement, the investigated undertakings may not initiate lawsuits against the administrative monetary fine or the matters included in the settlement text.
Just like the undertakings having the opportunity to discontinue the settlement process until the submission of the settlement text, the Board may cease the settlement process for some or all of the parties under certain conditions, namely; (i) if it has been understood that the expected procedural benefit will not be realised or it is not possible to reach a mutual understanding with the parties regarding the existence or scope of the infringement, (ii) there is a danger of spoliation of evidence, and (iii) the confidentiality obligation set forth in Article 12 of the Settlement Regulation is breached. As can be seen, the parties are obliged to keep the contents of the settlement meetings and the information and documents accessed through these meetings confidential until the Board's final decision concerning the other investigated parties, if any. In case the Board determines after the final settlement decision that the confidentiality obligation was breached, the Board may withdraw its final settlement decision and launch a new investigation on the relevant undertaking breaching its confidentiality obligation. Such breach may further be accepted as an aggravating factor in determination of the administrative monetary fine.
Furthermore, it is accepted that the settlement process has not ended with settlement for the relevant party in the event that (i) the settlement party does not send the settlement text in due time or does not remedy the deficiencies in the settlement text in due time, (ii) the Board decides to terminate the settlement process due to one of the three conditions as stated above, or (iii) the settlement party withdraws from the settlement process. In this case, the information and documents submitted by the settlement parties within the scope of settlement meetings are excluded from the scope of the file and will not be used as a basis of the final decision of the investigation. In its final decision, the Board is required to state its reasons to terminate the settlement process, or to reject the settlement request. On the other hand, if the process does not end with settlement or the Board's settlement invitation is not accepted or is not duly responded, the relevant party cannot request a settlement again.
The Board may decide to settle until the delivery of the investigation report and end the investigation for the relevant party within 15 days from the submission of the settlement text to the Authority, if the relevant party acknowledges the existence and scope of the infringement. In such case, a reduction of ten to twenty five percent may be applied to the administrative monetary fine. If the relevant party applies for both the leniency and settlement procedures, the fine reductions to be given based on settlement and leniency15 will be added up and applied together.
Along with the basic elements included in Article 52 of the Law No. 405416 (which are required in all Board decisions), the Board's final settlement decision should include the contents of the allegations, the characteristic and scope of the infringement, the evidence that were used as the basis of the infringement, the percentage of the fine reduction and the administrative monetary fine, the relevant party's acceptance of the existence of the infringement and the administrative monetary fine. The Settlement Regulation further provided that, in case of a hybrid17 settlement decision, i.e., if the investigation continues for at least one undertaking or a group of undertakings, the reasoned final settlement decision will not be delivered to the settlement party before the final decision for the investigation is rendered. However, this provision has been abolished through the amendments made on the Settlement Regulation.18 Accordingly, the settlement final decision may be delivered to the settlement party, even if the investigation still continues against other undertaking(s).
In light of the foregoing explanations, it can be said that the settlement mechanism is mostly in parallel with the EU regulation. The introduction of the settlement mechanism has been a significant development in Turkish competition law in terms of increasing the efficiency both for the Authority and the investigated undertakings.
However, the Settlement Regulation provides that it will only apply to cases in which the investigation report has not been delivered to the relevant parties at the date of the entry into force. Therefore, since the introduction of the settlement mechanism on June 24, 2020, the Board has issued only one settlement decision that has been published so far.19 Furthermore, from the published decisions of the Board, it is seen that an undertaking applied for the settlement process, but later withdrew its settlement application and the Board conducted the investigation regularly.
Through the Board's decision dated 26.04.2021 with number 21-23/271-M, an investigation was launched against certain producer/suppliers operating in the market for fast-moving consumer goods (“FMCG”). When the investigation process was ongoing, on 10.06.2021, Beypazarı Karakoca Doğal Maden Suyu A.Ş.'nin (“Beypazarı”) applied for the commitment mechanism and also for the settlement mechanism, in case the commitment application is rejected. The Board evaluated the commitment and settlement applications on its meeting dated 01.07.2021; and decided to reject the request for commitment as per Article 6 of the Communiqué No. 2021/2 On the Commitments to Be Offered In Preliminary Inquiries and Investigations Concerning Agreements, Concerted Practices and Decisions Restricting Competition, and Abuse Of Dominant Position and decided to accept the settlement application as per Article 5 of the Settlement Regulation. Thereafter, the Board initiated the settlement negotiations with Beypazarı.
The interim decision after the completion of the settlement negotiations was notified to Beypazarı, which was followed by Beypazarı's letter dated 05.08.2021 to discontinue the settlement process. However, the examination carried out while the settlement process was ongoing revealed that the commercial activities of Beypazarı are very limited, and the commercial activities such as sales, distribution and marketing of Beypazarı branded mineral water products, which are the subject of the investigation, are carried out by Beypazarı İçecek Pazarlama Dağ. Amb. Tur. Pet. İnş. San. ve Tic. A.Ş. Therefore, the Board decided to exclude Beypazarı from the scope of the investigation.20
On August 9, 2021, the Authority announced a settlement decision on its website as the first example of the settlement process in Turkish competition law and highlighted the importance of the decision.21 Within the scope of the investigation initiated pursuant to the Board's decision dated 07.01.2021 with number 21-01/9-M to determine whether Türk Philips Ticaret A.Ş. (“Philips”), Dünya Dış Ticaret Ltd. Şti. (“Dünya”), Melisa Elektrikli ve Elektronik Ev Eşyaları Bilg. Don. İnş. San. Tic. A.Ş. (“Melisa”), Nit-Set Ev Aletleri Paz. San. ve Tic. Ltd. Şti. (“Nit-Set”) and GİPA Dayanıklı Tüketim Mamülleri Tic. A.Ş. (“GİPA”) violated Article 4 of the Law No. 4054, the Board accepted the undertakings' settlement texts and concluded the investigation with settlement. The announcement further notes that the Board may start the settlement procedure on the request of the parties concerned or on its own initiative taking into account the procedural benefits that may arise from a rapid resolution of the investigation process and the differences in opinion concerning the existence and scope of the infringement, and decide to conclude the investigation.
The reasoned decision of the announced Board decision has recently been published on the Authority's website on March 28, 2022, and it sheds light on the Board's evaluations. As understood from the decision, the Board decided to launch an investigation against Philips, Dünya, Melisa, Nit-Set and GİPA upon the complaint claiming that the undertakings violated Article 4 of the Law No. 4054 by restricting their retailers and other resellers from determining the resale prices and internet sales, and within this scope, the undertakings submitted their first written defences to the Authority. While the investigation process was continuing, Philips applied for settlement, Melisa applied for commitment and settlement, and Dünya, GİPA and Nit-Set applied for commitment process. The Board decided to reject the commitment requests of Nit-Set, Dünya, GİPA and Melisa and to accept the settlement applications of Philips and Melisa and to start the settlement negotiations. Thereupon, Nit-Set, Dünya and GİPA submitted settlement as well, and the Board started the settlement negotiations for these undertakings by accepting the settlement applications.
Within this scope, online settlement negotiations were held separately for each of the undertakings. The undertakings were informed during these negotiations about the content of the allegations, the nature, scope and duration of the alleged violation, the main documents that form the basis for the alleged violation concerning the settlement party, the reduction rate that can be applied in case the process results in settlement, and the range of administrative fines that can be imposed on the settlement party. Pursuant to the undertakings' statements to continue the settlement process as a result of the settlement negotiations, the information notes prepared for each settlement party were discussed and interim resolutions for settlement were taken by the Board. The settlement texts prepared by the undertakings based on the interim settlement decisions were submitted to the Authority's records. Upon these developments, the rapporteurs prepared the information note, which was discussed and decided by the Board.
As evaluated in the Board's decision, the small home appliances distributed by Philips are delivered to the final consumers through four different channels, namely the traditional channel22, the carpet channel23, the modern channel24 and the online channel25. Among the foregoing distribution channels, it is considered that the business is conducted through distributors in the traditional channel, and therefore this channel plays an important role in accessing retailers.
Furthermore, within the scope of the information sent by Philips, no statement has been made that Philips applies a selective distribution system26 within the framework of the Block Exemption Communiqué on Vertical Agreements No. 2002/2 (“Communiqué No. 2002/2”). Additionally, when the condition forms sent by Philips to the undertakings in the distribution system are examined, it is seen that the forms do not contain any provisions for establishing a selective distribution system, nor do they contain any direct or indirect terms or conditions for the determination of the resale price and the restriction of the sales made online.
Article 4 of the Law No. 4054 prohibits the agreements and concerted practices between undertakings, and decisions and practices of associations of undertakings which have as their object or effect or likely effect the prevention, distortion or restriction of competition directly or indirectly in a particular market for goods or services. Subparagraph (a) of paragraph 2 of this Article lists fixing the purchase or sale price of goods or services, elements such as cost and profit which form the price, and any condition of purchase or sale as prohibited actions. In this respect, determination of the resale price within the framework of the supplier's relationship with the buyer can be considered as an agreement restricting the competition within the scope of Article 4 of the Law No. 4054. Furthermore, determination of the resale price may also be considered within the scope of Article 6 entitled “Abuse of Dominant Position”, if the undertaking conducting this action is in a dominant position in the relevant market. However, since no determination has been made regarding the dominant position of Philips, the alleged practices of Philips are considered within the framework of Article 4 of the Law No. 4054. On the other hand, Article 4 of the Communiqué No. 2002/2 entitled “Limitations Rendering Agreements Not Caught By Block Exemption” sets out the conditions exempting the anticompetitive vertical agreements from the application of the provisions of Article 4 of Law No. 4054. However, according to this exemption, it is only possible for the supplier to determine the buyer's maximum selling price or to recommend a selling price if it does not transform into a fixed or minimum selling price.
The Board evaluated that Philips and its distributors Dünya, GİPA, Melisa and Nit-Set violated Article 4 of the Law No. 4054 by determining the prices of the resellers who supply products from Philips or from its distributors and resell these products on physical or online platforms through their following actions:
- These interventions are generally aimed at the prices published by the retailers on the internet, but in some cases they may also be related to the termination of the campaigns they carry out in their physical stores.
- Within the scope of intervention to the online prices, the undertakings requested price increases or removing the products from sale.
- Online sales of the retailers are restricted in order to prevent them from selling below the determined prices.
- In case the resellers who sell online at lower prices cannot be determined, the relevant seller is determined from the invoice information by purchasing the product by Philips or its distributors,
- The sales support premiums are deducted from resellers who are determined to be selling online at lower prices,
- These deductions on the sales support premiums became a sanction mechanism to ensure determination of the resale price,
- Within the scope of interventions made in the resale price of the retailers, the sales prices published online were increased.
The Board further determined that the supplier's determination of the buyer's resale price in a vertical relationship excludes the agreement from the scope of block exemption within the framework of Article 4 of the Communiqué No. 2002/2. On the other hand, the Board stated that it does not seem possible for such practice, which constitutes a violation of competition in terms of its purpose, to be granted with an individual exemption within the scope of Article 5 of the Law No. 4054. It should be noted that whereas the Board had adopted a rule of reason approach against resale price maintenance, its current approach since 2016 (Aral Oyun Decision, 16-37/628-279; 07.11.2016; whereby Philips was one of the investigated undertakings) is for regarding RPM as a per se infringement, which leaves no room of discussion for the potential pro-competitive aspects of that practice.
In light of the foregoing evaluations, the Board considered the aggravating and mitigating circumstances. Paragraph 25 of the Guidelines on Vertical Agreements states that “The restriction, by a supplier, of distributors/dealers/buyers from making sales on their own websites is a type of passive sales restriction." Considering the limited market power of Dünya, GİPA, Nit-Set and Melisa and the documents taken into account in determining the weight of the potential damage, it has been evaluated by the Board that the damage inflicted on the market as a result of the undertakings' actions is limited. The Board noted that when the documents obtained within the scope of the file are examined as a whole, it has been understood that Philips has a significant power in the sales of its own branded products compared to its distributors, and therefore, is decisive in determining the policies for resellers. In the light of these evaluations, the Board considered the fact that the distributors to play a more passive and limited role due to the fact that they follow Philips's guidance within the scope of planning and implementing anti-competitive actions as a mitigating factor within the scope of Article 7 of the Regulation on Fines to Apply in Cases of Agreements, Concerted Practices and Decisions Limiting Competition, and Abuse of Dominant Position (“Fine Regulation”), and decided to apply a 25% reduction (i.e. the maximum reduction rate) in the administrative fines to be applied on the distributors; Dünya, GİPA, Melisa and Nit-Set.
On the other hand, the amount of fine determined according to Article 5 of the Fine Regulation will be increased by half for violations lasting between one and five years, and by one fold for violations lasting more than five years. In the present case, since the dates of the first and latest documents demonstrating the infringement by Philips and GİPA are three years apart, the Board decided to increase the amount of the fine to be determined for these undertakings by half.
Furthermore, according to Article 6 of the Fine Regulation, the base fine should be increased from half to one fold for each repetition of infringement. With the Board's Aral Oyun decision of 2016, an administrative monetary fine was imposed on Philips for interfering with the resale price of the retailers that sell small household appliances. Within this framework, the Board decided to increase the base fine determined for Philips due to repetition, however the percentage of the increase was redacted as confidential in the reasoned decision.
The Board emphasized that, in order to reach a settlement, the existence of the violation must be acknowledged by the undertaking, and in case of settlement, the reduction rate that can be applied to the administrative monetary fine is limited to twenty-five percent. The settlement texts submitted by Philips, Dünya, GİPA, Nit-Set and Melisa included their acceptance of the existence and scope of the infringement, their acceptance of the maximum amount and rate of the administrative monetary fine, their confirmation of being sufficiently informed of the allegations and being able to provide their opinions and explanations, and finally, their declaration that they will not initiate a lawsuit against the administrative monetary fine and the issues stated in the settlement text. Therefore, the undertakings requested from the Board to take a final settlement decision. The settlement texts of the relevant undertakings were examined and considered to be in compliance with Article 8 of the Settlement Regulation. Through the Board's interim settlement decisions dated 14.07.2021 it was concluded that, within the scope of the settlement texts submitted by Philips, Dünya, GİPA, Nit-Set and Melisa, the administrative monetary fines calculated for each undertaking to be reduced by 25% within the scope of the Fine Regulation, and to conclude the investigation for the relevant undertakings. Since, as a result of the settlement, an agreement has been reached with all parties of the investigation, the Board's final decision applied a 25% (i.e., the maximum rate that can be applied in case of settlement) reduction in the administrative fine for the said undertakings.
In light of the foregoing explanations, it is seen that the Board considers the settlement as a mitigating factor when determining the administrative monetary fine and calculates it together with other mitigating and/or aggravating factors. As more time passes, the examples of the Board's settlement decisions are expected to increase as it provides the undertakings with a significant amount of reduction in the administrative monetary fines to be applied and benefits the Board by concluding the investigations speedily. Nevertheless, the Settlement Regulation is an important step for the Turkish competition law to be harmonized with the EU law.
1 Article 101(1) Treaty on the Functioning of the European Union and Article 4 of the Law No. 4054 on Protection of Competition prohibit agreements between two or more undertakings which have as their object or effect the prevention, restriction or distortion of competition in the European Union, by price fixing, market or customer allocation, restrictive vertical agreements between suppliers and customers, etc.
2 Article 102 Treaty on the Functioning of the European Union and Article 6 of the Law No. 4054 on Protection of Competition prohibit abuse by a company in a dominant position within the European Union or a substantial part of it, by excessive or discriminatory pricing, refusing to supply, bundling or loyalty rebates, etc.
3 Barry E. Hawk, Antitrust and Competition Laws, 2020, p. 233.
4 The efficiency of this tool also encouraged the Commission to apply a settlement-like process to non-cartel cases. Through its decision on 20 September 2016, the Commission reduced the fine to be imposed on Altstoff Recycling Austria by 30% (to EUR 6 million) in exchange for its cooperation. The Commission also issued a note on the reduction of fines for cooperation in antitrust cases other than cartels, in which it stated that the cooperation by parties in antitrust prohibition decisions other than cartels can be rewarded within the framework of the Commission's 2006 Fining Guidelines: https://ec.europa.eu/competition/antitrust/ara_factsheet_en.pdf
5 Settlement Notice, para 5.
6 Flavio Laina and Aleko Bogdanov, The EU Cartel Settlement Procedure: Latest Developments, Journal of European Competition Law & Practice, 2014, Vol. 5, No. 10, p. 718-720.
7 Settlement Notice, para. 20.
8 Richard Whish & David Bailey, Competition Law, Seventh Edition, p. 262.
9 Flavio Laina and Aleko Bogdanov, The EU Cartel Settlement Procedure: Latest Developments, Journal of European Competition Law & Practice, 2014, Vol. 5, No. 10, p. 717.
10 The Commission's DRAMs decision dated 19.05.2010 with number COMP/38.511
11 E.g., Ibid., The Commission's Consumer Detergents decision dated 13.04.2011 with number COMP/39.579, The Commission's CRT Glass decision dated 19.10.2011 with number COMP/39.605, The Commission's Refrigeration Compressors decision dated 07.12.2011 with number COMP/39.600, The Commission's Water Management Products decision dated 27.06.2012 with number COMP/39.611, The Commission's Automotive Wire Harnesses decision dated 10.07.2013 with number COMP/39.748, The Commission's Polyurethane Foam decision dated 29.01.2014 with number COMP/39.801, The Commission's Power Exchanges decision dated 05.03.2014 with number COMP/39.952, The Commission's Bearings decision dated 19.03.2014 with number COMP/39.922.
12 E.g., The Commission's Animal feed Phosphates decision dated 20.07.2010 with number COMP/38.866, The Commission's YIRD decision dated 04.12.2013 with number COMP/39.861, The Commission's EIRD decision dated 04.12.2013 with number COMP/39.914, The Commission's Steel abrasives decision dated 04.04.2014 with number COMP/39.792, The Commission's Mushrooms decision dated 25.06.2014 with number COMP/39.965.
13 E.g., The General Court's Icap v. Commission decision in case T-180/15 with number ECLI:EU:T:2017:795.
14 The Commission's Envelopes decision dated 10.12.2014 with number AT.39780
15 Article of the Guidelines on the Explanation of the Regulation on Active Cooperation for Detecting Cartels
16 Decisions must include the following: a) Names and surnames of the members of the Board who made the decision, b) Names and surnames of those who carried out the examination and inquiry, c) Names, titles, residences and distinguishing characteristics of the parties, d) Summary of the claims of the parties, e) Summary of the examination and of the economic and legal issues discussed, f) Opinion of the rapporteur, g) Evaluation of all evidences and pleas submitted, h) Grounds, and the legal basis of the decision, ı) Conclusion, k) If any, writings about the dissenting votes.
17 In cases where there are multiple parties to an investigation, a settlement procedure may only be initiated for the parties that choose to settle. Therefore, it is not mandatory for all of the parties to apply for settlement.
18 The Regulation Amending the Regulation on Settlement Procedures for Investigations of Anti-competitive Agreements, Concerted Practices and Decisions, and Abuse of Dominance
19 The Board's Philips/Dünya/Melisa/Nit-Set/GİPA decision dated 05.08.2021 with number 21-37/524-258
20 The Board's Beypazarı decision dated 19.08.2021 with number 21-39/557-270
21 The English version of the announcement may be accessed through the following link: https://www.rekabet.gov.tr/en/Guncel/the-first-example-of-the-settlement-proc-20056f201af9eb118140005056b1ce21 (last access date: May 29, 2922)
22 The traditional channel refers to the sales made through distributers.
23 The carpet channel is explained by the Board as a multi-story store which has a wide product portfolio that will meet almost all the needs of a household, and generally makes sales through promissory notes.
24 The modern channel refers to the sales made with stores that sell various products as a separate economic unity.
25 The online channel refers to the business partners with whom business is conducted directly and that provide online shopping opportunity.
26 Selective distribution system refers to a distribution system whereby the provider undertakes to sell directly or indirectly, the goods or services which are the subject of the agreement, only to distributors selected by it, based on designated criteria, and whereby such distributors undertake not to sell the goods or services in question to unauthorized distributors.
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