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The Regulation on Administrative Fines for Restrictive Agreements, Concerted Practices, Decisions, and Abuse of Dominance ("New Fines Regulation") introduces significant changes to the framework for determining administrative fines for competition infringements. This legal alert provides an overview of the key changes introduced and their potential implications:
1. Elimination of the Predetermined Base Fines
One of the key changes introduced by the New Fines Regulation is the removal of the old provision where the base fine rate was determined solely on the basis of the types of violations categorized as "cartel" and "other violations". Under the former regulation, fines were set within specific ranges of turnover of undertakings, i.e. between 2% and 4% for cartels and between 0.05% and 3% for other violations.
The New Fines Regulation abolished these predefined ranges and granted the Board discretion in determining the applicable base fines for each violation based on the severity of the violation and the nature of the harm caused. In this respect, the initial fine rate will be determined by the Board by taking into consideration, in particular, the gravity of the damage realized or likely to be realized due to the violation and whether the nature of the violation is explicit and/or severe (i.e. a hard core violation).
2. Calculation Method of the Base Fine
The New Fines Regulation introduces a more detailed and tiered approach in determination of the administrative fine based on duration. Accordingly, the base penalty rate will be increased in line with the length of the violation. The increases in fines depending on the length of the violation are as follows:
- 1–2 years: 20% increase
- 2–3 years: 40% increase
- 3–4 years: 60% increase
- 4–5 years: 80% increase
- Over 5 years: 100% increase
3. Changes in Aggravating and Mitigating Factors
It is noted that the aggravating factors have been revised and expanded under the New Fines Regulation. Accordingly, in general, aggravating factors include (i) repetition of violations under Articles 4 and/or 6 of the Act No. 4054 on the Protection of Competition, (ii) continuation of the violation after the notification of the investigation decision, (iii) existence of decisive influence in the violation, and (iv) violation of the confidentiality obligation under the relevant provisions of the Settlement Regulation. Additionally, if more than one aggravating factor is present, the resulting increase will be cumulative and applied to the base fine rate.
As in the old regulation, the New Fines Regulation lists mitigating factors in the form of examples. Accordingly, the penalty may be reduced if it is proven by the undertaking that (i) except for the fulfilment of its legal obligations, the undertaking assisted the on-site examination by providing physical and/or technical facilities, or by spontaneously providing additional information or documents relevant to the subject of the examination, enabling the investigation to be completed more quickly or effectively, (ii) the violation was coerced by other undertakings, (iii) there was limited participation by the undertaking in the violation, (iv) the share of the activities subject to the violation in the annual gross revenues is low, (v) foreign sales revenues are included in the annual gross revenues used to calculate the administrative fine.
4. Administrative Fines to be imposed on Managers and Employees
The New Fines Regulation defines decisive influence as having an indispensable function in the occurrence and/or perpetuation of the violation. Accordingly, in the event that an administrative fine is imposed on an undertaking under the New Fines Regulation, the managers or employees of the undertaking who had a decisive influence on the violation will be subject to an administrative fine up to five percent of the fine imposed on the undertaking. With the removal of the distinction between cartel and other violations, the fines to be imposed on managers and employees within the scope of decisive influence are now standardized.
The New Fines Regulation, published in the Official Gazette, can be accessed here.
Originally published 13 January 2025.
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