A Brief History

Turkey has had a long association with the project of European integration beginning from 1963 (with the Ankara Association Agreement for the progressive establishment of a customs union), and it is a candidate country for the European Union (“EU”) membership (see the history).

Within the scope of the completion of envisaged customs union between Turkey and the EU, Turkey has undertaken to adopt a law which shall prohibit behaviors of undertakings under the conditions laid down in Articles 85 and 86 of the EC Treaty and establish a competition authority which shall apply these rules and principles effectively before the entry into force of the Customs Union. As of being a candidate country for the EU in 1999, Turkey is required to harmonize its competition law and regulations with the Acquis Communautaire, since “competition” is one of the titles in the chapters for the negotiations.

It is important to note that in its Progress Reports, the EU determines that Turkey has made progress particularly “on antitrust and mergers policy where the legislation is largely aligned and the competition authority continues to fulfil its tasks effectively.” In other words, Turkish Competition Law is widely in parallel with the EU Competition rules.

Legal Framework

Under Article 167/(1) of the Turkish Constitution, it is provided that “The State shall take measures to ensure and promote the sound and orderly functioning of the markets for money, credit, capital, goods and services; and shall prevent the formation of monopolies and cartels in the markets, emerged in practice or by agreement.”

The Turkish National Assemble enacted the Act Numbered 4054 on the Protection of Competition (“Act No. 4054”) in 1994 before the entry into force of the Customs Union. The Turkish Competition Authority has been operationally active since 1997 for the application of the Act no 4054.

The Competition Board (decision-making body of the Competition Authority) has adopted various by-laws (including the regulations, communiqués, guidelines) to ensure better harmonization with the EU competition rules and ensure local and effective application of the competition rules.

Please contact us for detailed explanations on the legal framework, especially relating to sector specific rules.

Main Infringements

1- Anticompetitive agreements, concerted practices and decision of association of undertakings (Article 4)

Article 4 of the Act no 4054 is modeled after Article 101 of the Treaty on European Union (“TFEU”) and provides that any agreements, concerted practices, or decisions of association of undertakings impeding competition in Turkish markets are prohibited. The Board fines any undertaking violating Article 4 of the Act No. 4054 up to 10% of its annual turnover of the year preceding the decision.

2- Abuse of dominant position (Article 6)

Article 6 of the Act no 4054 is modeled after Article 102 of the TFEU and provides that an undertaking being dominant position in a relevant product and geographic market cannot any abuse this dominant position to impede competition. The Board fines any undertaking violating Article 6 of the Act No. 4054 up to 10% of its annual turnover of the year preceding the decision.

Merger Control in Turkey (Article 7)

Article 7 of the Act no 4054 is mainly modeled after the Commission’s approach on mergers and acquisitions and provides that any merger or acquisition creating or strengthening a dominant position of an undertaking is prohibited. The article also provides that it is the Board to determine the scope of the merger control regime to monitor and control M&As. To this end, the Board has issued a communiqué on merger control (Communiqué no 2010/4 Concerning the Mergers and Acquisitions Calling for the Authorization of the Competition Board; “Communiqué).

Under the Communiqué, any merger or acquisition triggering a change of control and one of the turnover thresholds determined by the Board shall be notified to the Board and get its prior approval before closing (i.e. implementation). Otherwise, the Board fines the parties to the transaction 0.01% of their annual turnover of the preceding year considering the date of the decision for closing a transaction before Board approval (note there are certain exceptions for sellers according to nature of transactions). Furthermore, the Board examines such a transaction under Article 7 of the Act No 4054. In this case, it can either (i) approve the transaction considering that it does not give rise to creating or strengthening a dominant position, (ii) consider that the transaction is creating or strengthening a dominant position and therefore it is not in line with the Article 7 of the Act No 4054. In the latter case, the Board may fine the parties to such transaction up to 10% of their annual gross turnover and order the parties to take the necessary steps to reinstate the existing competitive structure before the transaction.

Briefly, it is of utmost importance to examine each transaction from the competition law perspective before its closing in order to avoid negative outcomes due to the Turkish merger control rules. In this regard, we are ready to provide our support.

Do you need to file in the Turkish jurisdiction?

Note that the scope of the Act No. 4054 is Turkey. In other words, it is possible to determine that any concentration having no effect in the Turkish markets is not subject to the Turkish competition rules. In practice, if one of the turnover thresholds determined by the Board is exceeded, the Board continues to examine substance of cases. In other words, the mere fact that meeting one of the turnover thresholds appears sufficient to determine effect in the Turkish markets without going into further discussions.

Turkish Competition Authority Has a Very Effective Practice!

Turkish Competition Authority is one of the most effective competition watchdogs in the world. Only in 2015, the Board has held 158 cases on mergers and acquisition notifications, 89 cases on competition violations (initiated either by itself (ex officio) or upon third party claims), and 35 cases on negative clearance and individual exemption. Since there is no de minimis rule in Turkey, the Board is bound to examine any claim on a potential competitive violation an initiate an administrative procedure. It is possible to determine that even though the number of final decisions held by the Board seems quite high, this number is in decrease in the last years (total number of decisions in the last five years: 590 (2011); 656 (2012); 462 (2013); 437 (2014); 282 (2015)). This tendency is due to several factors. From our point of view, the most important ones are (i) sector priorities and therefore optimization of the Authority’s resources and (ii) effect of the overall economic situation over the competition policy. These factors put forward that even though there is no de minimis rule in Turkey, the Board would like to focus on the most important sectors (meaning that on the sectors having the most powerful effect on the overall economy and ultimately on end users) such as the banking and finance, insurance, automotive, energy, pharmaceutical, FMCG, telecommunications sectors. Furthermore, the Board also takes into account the economic climate of Turkey. However, this tendency does not mean that the Board remains silent on any violation during economic downturn. To the contrary, the Board may follow up the sectors that it is not active for a while in the near future. For instance, the fines applied relating to the automotive and finance sector by the Board were on the anti-competitive acts carried out during economic crises era, later on investigated.

Please see below the examples of the prominent cases that the Board has handled so far:

Energy:
- In 2014: The Board fined Tüpraş, the refinery in dominant position in the petroleum sector, TRY 412 million for abuse of its dominant position.

Banking and Finance:
- In 2013: The Board fined 12 major banks active in Turkey TRY 1,116,957,468 in total due to anticompetitive agreements and information exchange.
- In 2011: The Board fined 7 major banks active in Turkey TRY 72.3 million in total due to the anticompetitive agreements.

Automotive:
- In 2011: The Board fined 15 automobile producers and distributors TRY 277.4 million due to the anticompetitive agreements and information exchange.

Telecommunications:
- In 2013: The Board fined TTNET, the incumbent internet provider, TRY 15.5 million just for unlawful prevention of a dawn raid performed by the Authority case handlers.
- In 2011: The Board fined Turkcell, the mobile operator in dominant position, TRY 91.1 million for abuse of its dominant position.

FMCG:
- In 2013: The Board fined MEY İçki, the rakı producer in dominant position, TRY 41.5 million for abuse of its dominant position.
- In 2011: The Board fined Anadolu Efes, the beer producer in dominant position, TRY 8 million for abuse of dominant position.