On 25 April 2022, Turkish Competition Authority ("TCA") published its 2021 Annual Report ("Report") on its official website. By virtue of this report, TCA provides an overview of its work during 2021 in antitrust, cartel investigations, merger control and legislative reform.
The legal reforms bringing fundamental changes in the Turkish competition laws, the increasing number of the investigations and the amount of administrative fines were the highlights of the last year.
In this article, we will briefly provide an overview of the last year while taking a closer look at the key developments and upcoming policy discussions.
2. Curbing the Infringements
When we look at the decisions of the Turkish Competition Board ("Board") briefly, 405 files were concluded totally. The breakdown of the files according to their subjects is as follows:
- 74 competition violation files,
- 22 exemption/negative clearance applications,
- 309 merger/acquisition/joint venture/privatization files.
Compared to 2019, the number of competition violations has risen from 65 to 74, on the other hand, the number of negative clearance/exemption files decreased from 34 to 22. In addition, the number of merger/acquisition/joint venture/privatization files rose from 220 to 309. The most investigated sectors in 2021 have been food industry; machinery industry; IT and platform services; logistics, storage and mail, health care services; chemistry and mining; construction; culture and arts; automotive; agriculture and agricultural products. A total of TRY 4,3 billion of administrative monetary fines were imposed to undertakings due to the competition infringements. Out of those fines, TRY 3 billion were imposed due to the anti-competitive agreements and TRY 296 million were imposed due to the findings of abuse of dominance and TRY 480 million were due to both violations. Moreover, in 2021, TRY 121 million administrative fines were imposed due to hindrance of on-site inspections.
When we scrutinize the breakdown of the administrative fines imposed in 2021 according to sectors, the prominent sectors and the administrative fines imposed therein are as follows:
- TRY 3,2 billion in food industry,
- TRY 296 million in IT and platform services,
- TRY 285 million in health industry.
3. Secondary Legislation for Lightening the Path
Following the amendments to the Law No. 4054 on the Protection of the Competition ("Act") on June 24th, 2020, secondary legislation was at the core of the TCA's agenda for 2021. The year ended with three important legislation which provides guidance on the application of the tools (de minimis rule, settlement procedure, commitment mechanism). These mechanisms are considered as a step for harmonizing the Turkish competition law regime with the European Union ("EU").
3.1. Communiqué on the Commitments
The most well-known secondary legislation of the passing year is the Communiqué on the Commitments to Be Offered in Preliminary Inquiries and Investigations Concerning Agreements, Concerted Practices and Decisions Restricting Competition, and Abuse of Dominant Position No. 2021/2 ("Commitment Communiqué"), which has entered into force in March 20211.
Even before the publication of the Commitment Communique, certain undertakings applied for commitments and initiated the relevant processes. As a matter of fact, the Board issued its first commitment decision, THY Decision2 (investigation against undertakings that provide customs temporary storage services) on November 5, 2020, without even waiting for the secondary legislation to be enacted. Similarly, Arslan Nakliyat3 decision gave an overview of the commitment process which was subject to discussions for a long time.
Upon the publication of the Commitment Communiqué, the scope and the procedural rules has been set by the TCA. Accordingly, "hardcore restrictions" (price fixing; allocation of customers, suppliers, regions, or trade channels; restriction of supply or setting quotas; bid-rigging; exchange of competitively sensitive information; resale price maintenance) which are listed under the Commitment Communiqué, are excluded from the scope of the commitment application.
The Commitment Communiqué does not differentiate the behavioral and structural commitments; however, it states that instead of general declarations on compliance, the commitments should be focused on the specific allegations that raise competition law concerns.
In this context, the examples of the commitment procedures are also found their place in the digital market. The Board's landmark decisions in the cases of (i) Yemek Sepeti Elektronik İletişim Perakende Gıda Lojistik Anonim Şirketi4 and (ii) Çiçek Sepeti İnternet Hizmetleri5, were sealed by the commitments.
3.2. TCA Adopted De Minimis Rules
"De minimis rule", which allows the authorities to refrain from investigating agreements that do not significantly restrict competition, has been introduced in the Turkish competition law regime with the amendments in 2020. The Act stipulates the rules and procedures of the de minimis rule shall be established with a communiqué issued by the Board. Accordingly, Communiqué on Agreements, Concerted Practices, and Association of Undertakings' Decisions that Do Not Significantly Restrict Competition ("De Minimis Communiqué") was enacted on March 16, 2021 and entered into force upon publication in the Official Gazette.
According to the De Minimis Communiqué, the following agreements, with the exception of clear and hard-core infringements are not deemed significant restrictions and thus, may benefit from the de minimis rule6:
- Agreements between competitors where the combined market share of the parties does not exceed 10% in any of the markets affected by the agreement; and
- Agreements between non-competitors where the market share of each undertaking does not exceed 15% in any of the markets affected by the agreement
On the other hand, the De Minimis Communiqué states that "the Board might not initiate an investigation" against the agreements, practices, and decisions, where the parties do not exceed the respective thresholds. In other words, the Board retains the ability to initiate an investigation, even if the parties fulfill the conditions for de minimis.
3.3. Regulation on the Settlement Procedure
The implementation of the settlement procedure which has long been applied in the EU practice, was one of the significant amendments of the Act in 2020. As per the amendments in Article 43 of the Act, once the investigation is initiated, the Board may, on the request of the parties or on its own initiative, engage in the settlement procedure. However, the procedures and principles for the settlement procedure was left to the regulation to be issued by the Board.
Upon the amendments, the procedures and principles regarding the settlement procedure was introduced with the Regulation on Settlement Procedure to be Applied to Investigations Regarding Anti-Competitive Agreements, Concerted Practice and Decisions and Abuse of Dominant Position (the "Settlement Regulation"), on 15 July 20217.
Pursuant to the Settlement Regulation, undertakings that are subject to an ongoing investigation may apply to the Board for settlement. The Board may also send invitations to the parties on an ex officio basis and initiate the settlement negotiations.
The Board retains the discretion to assess the procedural economy benefits, the existence of the infringement, and the scope of the infringement upon the receipt of the application. Any kind of anti-competitive behavior may be subject to the settlement process, and the prospective administrative fine may be reduced by the Board up to twenty-five percent.
Phillips Decision8 was the first decision where the Board concluded the investigation with a settlement decision. In the same vein, Singer9 is among the first investigations which were concluded with the settlement.
4. Amendments to the Block Exemption Communiqué on Vertical Agreements
The year did not witness only the implementation of the new secondary legislation but also amendments to the Block Exemption Communiqué on Vertical Agreements ("Vertical Block Exemption Communiqué")10.
On November 5th, 2021, TCA decreased the market share threshold to benefit from the protective cloak of the block exemption from 40% to 30%.
The communiqué amending the Vertical Block Exemption Communiqué calls for the undertakings stayed outside of the Vertical Block Exemption's scope due to the amendment at hand to take necessary actions to comply with the criteria applied in the assessment of individual exemption stipulated under Article 5 of the Act. The amendments effectively entered into force by 5 November 2021 which was also the deadline for undertakings to re-examine their vertical agreements and take necessary measures.
5. Expanding the Power of On-site Inspections
As you recall, TCA clarified the procedures and principles with respect to the examination, processing and storage of data and documents held in the electronic media and information systems, during the on-site inspections to be conducted by publishing the Guidelines on Examination of Digital Data during on-site Inspections ("Guidelines") in 2021.
TCA echoed the principles and procedures set forth by the Guidelines in its recent decisions Çiçeksepeti11, Unmaş12, IGSAŞ13, Eti14. These decisions not only provide a snapshot of the Board's recent approach, but also reflect the previously established practices for the the inspection of the digital data. Accordingly, case handlers examined the personal devices or e-mail accounts within the scope of on-site inspections as they decided that these devices contain information pertaining to the business practices of the relevant undertaking. The investigation resulted with the imposition of administrative monetary fines due to hindering the inspection by deleting the WhatsApp and e-mail messages. The so-called decisions essentially concretise the Board's approach and explicitly reveals the scope of investigative powers of the TCA during the on-site inspections.
6. Highlights in 2021 TCA Decisions
6.1. FMCG Retail Decision
Following the fully-fledged investigation by the TCA against 29 undertakings, operating as suppliers or retailers in the fast-moving consumer goods ("FMCG") sector, TCA rendered its decision on 28 October 2021 where TCA finds that one of the suppliers has ensured the coordination of shelf prices (and further updates to those prices) between five retailers. Within this scope, it was stated that retailers exchanged competitively sensitive information, such as information on future pricing levels, with their competitors through the assistance of a common supplier15.
In what has become the first-ever finding of a hub-and-spoke type infringement, the TCA imposed monetary fines in excess of USD 200 million on the undertakings in question. Furthermore, the supplier was subjected to an additional administrative fine, as it was found to constrain the commercial autonomy of a number of its retailers via engaging in resale price maintenance16.
It is important to state that the decision was rendered in the light of the recently concluded sector inquiry into FMCG. We would like to also underline a final point, which may be viewed as increased awareness on part of the TCA as to the legality of acquiring services from consultancy firms involved in market research. In light of these considerations, we believe that the supply of market-related information from market research/consultancy firms will be scrutinized by TCA in the future.
6.2. Henkel Decision
Assessing the resale price maintenance ("RPM") was also one of the forefront debates in 2021 due to the decision of the Council of State ("CoS") in Henkel decision.
In a nutshell, the distinct side of the CoS decision is oriented on its changing attitude towards (i) standard of proof in competition law and the implications on (ii) judicial review of Board's decisions. Assessing the findings in the case with the preceding principles, the CoS concludes that Henkel's behaviors do not reach up to the point of intervention with the resale prices, and the comments to the retailers do not go beyond some sort of a "reprimand" by the supplier. Against this backdrop, the CoS provides that the TCA has not established that the supplier's actions constitute a clear case of RPM as defined in the Guidelines. In light of the preceding, the CoS determined that "the alleged violations could not be proven within the framework of clear and concrete data and assessments" and concluded that the TCA's decision was "not compatible with the law"17.
In the last couple of years, we see that the TCA has adopted a strict enforcement trend concerning RPM practices18, and seemingly adopted a lower standard of proof in comparison to its European counterparts for establishing RPM violations19. Henkel Decision has challenged this status quo and it sets forth higher standards for this type of violation through its reasoning.
7. Sector Inquiries
Priorities of the TCA for the future was clearly rooted from the certain cases, studies and inquiries in 2021.
Last year, an important portion of the TCA's efforts was centered on monitoring the digital markets. Apart from the ground-breaking decisions20, TCA initiated three sector inquires that focuses on the digital markets: (i) E-Marketplace Platforms Sector Inquiry, (ii) Sector Inquiry on Online Advertising (iii) Analysis Report on the Financial Technologies in Payment Services.
On 7 May 2021, the TCA released an interim report on its sector inquiry on e-marketplace platforms. Recently, the report is finalized and published by the TCA. In brief, the results of the inquiry provide valuable insights into the state of the Turkish e-commerce market through a law and economics perspective, along with the identification of key players, business practices that rise competition law concerns (MFN Clause, exclusivity/non-compete obligations, practices reducing incentives for multi-homing, self-preferencing, unfair commercial practices, data related concerns) and policy recommendations. Similar to the Preliminary Report the policy recommendations of the TCA categorized in 3 headings as (i) revision to secondary legislation, (ii) implementing a sector-wide 'code of conduct' by the Turkish Ministry of Commerce, (iii) enforcing an ex-ante regulation to identify undertakings with significant market power and enumerates their undesirable behaviour.
Along with the sector inquiry on e-marketplace platforms, TCA launched a Sector Inquiry on Online Advertising in January 2021 where it aims to set forth the characteristics of the market and point out the competition law concerns.
Moreover, on 9 December 2021, TCA published its report on the "Analysis Report on the Financial Technologies ("FinTech") in Payment Services". TCA aims to provide an overview of the current ecosystem of FinTechs and the report endeavors to detect the potential implications of the financial technologies in competition law and envisage the best approach.
It is possible to conclude that Sector inquiries and the recent decisions of the last year ring the bells for the new policies. That said, TCA seems to continue to scrutinize the markets that have been changing with digitalization to ensure efficient competition and facilitate alignment with international developments.
1. Our Mondaq Article titled "How To Make Your Word A Deed In Competition Law? The Competition Authority's Commitment Communiqué Published In The Official Gazette" may be found here for further information.
2. TCA decision dated 24.07.2020 and numbered 20-35/460-M.
3. TCA decision dated 28.07.2020 and numbered 20-36/485-212.
4. TCA decision dated 28.01.2021 and numbered 21-05/64-28.
5. TCA decision 08.04.2021 and numbered 21-20/250-106.
6. Our Mondaq Article titled "New Communiqué On The De Minimis Rule" may be found here for further information.
7. Our Mondaq Article titled "Si Vis Pacem, Para Bellum: Assessment On The Draft Settlement Regulation Of The Turkish Competition Authority" may be found here for further information.
8. TCA decision dated 05.08.2021 numbered 21-37/524-258.
9. TCA decision dated 22.12.2021 numbered 21-46/672-336.
10. Our Mondaq Article titled "To Be Or Not To Be Exempt: The Turkish Competition Authority Lowered The Market Share Threshold For The Protective Cloak Of Block Exemption For Vertical Restraints" may be found here for further information.
11. TCA decision dated 27.05.2021 and numbered 21-27/354-173.
12. TCA decision dated 20.05.2021 and numbered 21-26/327-152.
13. TCA decision dated 12.08.2021 and numbered 21-38/544-265.
14. TCA decision dated 29.04.2021 and numbered 21-24/278-123.
15. TCA decision dated 28.10.2021 numbered 21-53/747-360.
16. Our Mondaq Article titled "Of Hubs And Spokes: Remarks On The Reasoned Infringement Decision Of The Turkish Competition Authority In The Fast-Moving Consumer Goods Sector" may be found here for further information.
17. Our Mondaq Article titled "Judicial Review Of Turkish Competition Authority Decisions: A Landmark Decision For RPM And Standard Of Proof" may be found here for further information.
18. Henkel Decision dated 19.09.2018 and numbered 18-33/556-274; Maysan Mando Decision dated 20.06.2019 and numbered 19-22/353-159; Sony Decision dated 22.11.2018 and numbered 18-44/703-345.
19. Case C-308/18 Generics (UK) Ltd and Others v Competition and Markets Authority EU: C:2020:52 and Case C228/18 Gazdasági Versenyhivatal v Budapest Bank and Others EU: Case C-308/18 Generics (UK) Ltd and Others v Competition and Markets Authority EU:C:2020:52 and Case C228/18 Gazdasági Versenyhivatal v Budapest Bank and Others EU: C:2019:678.
20. TCA imposed interim measures on Trendyol to halt any algorithmic behaviour and/or tinkering with the potential consequence of providing an advantage to its products (decision dated 30 September 2021); TCA issued its first data portability decision against Nadirkitap Bilişim ve Reklamcılık A.Ş.
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