SETTLEMENT PROCEDURE IN TURKISH COMPETITION LAW

 

SETTLEMENT PROCEDURE

IN TURKISH COMPETITION LAW

1. Settlement Mechanism

Pursuant to the amendments on Law on the Protection of Competition (“Law”) with the Law numbered 7246, a settlement mechanism has been introduced to Turkish Competition Law. Competition Board (“Board”) is authorized to specify the procedures and principles of settlement mechanism which is stipulated in Article 43 of the Law. Competition Authority has published the Draft Regulation on Settlement Procedure to be Applicable in Investigations Regarding Agreements Restricting Competition, Concerted Practice & Decisions and Abuse of Dominant Position (“Draft Regulation”) on 18.03.2021 for public opinion. Herein this article, the Draft Regulation will be examined by comparison through its application in EU Competition Law which is the source legislation.

With the settlement procedure, it is aimed that investigation process is resolved in a shorter time and decisively provided that undertakings accepted violation and sanctions to be applied.

2. Source EU Competition Law Practice

Settlement procedure has been regulated by EU Commission Regulation numbered 773/2004 (“Regulation”) amended EU Commission Regulation numbered 622/2008 in EU Competition Law which is the source legislation. Moreover, the EU Commission Notice (“Notice”) published on 02.07.2008 at EU Official Gazette sheds light on the issue.

The issues that we deem important about the Regulation, Notice, and press releases of the EU Commission hereof will be given below.

• Settlement procedure may only be applicable in cartel cases. Other antitrust violations such as abuse of dominant position have been excluded.
• In accordance with the Article 2 Paragraph 1 of the Regulation, Commission is authorized to commence settlement negotiations upon receipt of the demand for participate in settlement negotiations from relevant parties. Therefore, settlement appears as an institution left to Commission’s absolute discretion which aims at using public resources more effectively rather than a right granted to undertakings. The decision of application of settlement procedure may be given until declaration of Commission’s preliminary assessment at the latest
• Pursuant to Article 10a Paragraph 2 of Regulation, undertakings participated in the settlement negotiations are given confidential information vis-a-vis third parties by Commission regarding below mentioned issues:
• • The objections raised against the undertaking,
  • The evidence used to determine the envisaged objections,
  • Non confidential versions of any specified accessible documents for the purpose of enabling relevant undertaking to ascertain its position,
  • The range of potential fines
• Paragraph 11 of Notice regulates that declaration does not imply an admission by the relevant undertakings of having accepted the violation.
• Paragraph 20 of Notice reads that Settlement Submissions must include the below-mentioned issues:

1. • An acknowledgment in clear and unequivocal terms of undertaking’s liability for the infringement
   • An indication of the maximum amount of the fine the undertaking foresee to be imposed by Commission and which the undertaking would accept under settlement process
   • A confirmation of undertaking that it is sufficiently informed of the objections by Commission and that it is given sufficient opportunity to make its view.

• In accordance with Paragraph 23 of Notice, although the relevant undertakings have submitted the settlement submission Commission publishes the written statement of objections and sends it to them. It is emphasized that this issue is a mandatory preparatory step before adopting the final decision.
• Paragraph 26 of Notice regulates that if the statement of objections reflects the parties’ settlement submissions, the parties willing to continue the settlement procedure must confirm in unequivocal terms. Paragraph 27 of Notice however says that in the case where the statement of objections published does not reflect the settlement submissions of parties, the acknowledgments provided by parties in settlement submissions may not be used against parties.
• In accordance with Paragraph 29 of Notice, Commission is not bounded with the statement of objections upon which parties granted their confirmation and that Commission retains a right to adopt a final decision that departs from its preliminary position expressed in the statement of objections. However, lest there be a prejudice to the defense rights, Commission will prepare a new statement of objections by noticing relevant parties.
• In accordance with Paragraph 33 of Notice, the reduction of fine in respect of leniency applicant to be granted under settlement procedure will be added to its leniency reward.

• Paragraph 41 of Notice regulates that the final decision adopted by Commission under Regulation numbered 1/2003 will be subject to judicial review. Therefore, the right to defense has not been restricted by judicial review in respect of undertakings applied to settlement procedure. 
• In EU Competition Law practice, a reduction of fine to be applied as a result of settlement negotiations will be applied equally in respect of parties. Therefore, undertakings in the settlement procedure will not be rewarded with different reduction of fines.

3. What Does Draft Regulation Introduce?

Settlement procedure has been introduced to the Turkish Competition Law by Law numbered 7246 which inserted 5-9 Paragraphs to the Article 43 of Law on the Protection of Competition. The Law says that the draft regulation regarding the procedures and principles is to be issued by Competition Board.

Among others, the following have drawn our attention.

• Article 1 of the Draft Regulation titled Purpose and Scope regulates that settlement procedure is applicable for violations stated in both Article 4 and Article 6. Therefore, settlement procedure may be applied in violations of agreements restricting competition, concerted practice & decisions and in violations of abuse of dominant position as well.
• Article 4 Paragraph 3 of Draft Regulation regulates that settlement with the undertaking which accepted to having participated in the violation may be realized until notification of investigation report.
• Article 4 Paragraph 4 foresees that amount of fine to be applied following settlement procedure may be reduced up to 25%
• Article 4 Paragraph 5of the Draft Regulation regulates that should the procedure is ended by a settlement, the parties may not apply for judicial remedy against the administrative fine and the issues stated in settlement submission.
• Article 5 of the Draft Regulation specifies that should undertakings demand settlement Board is able to accept or reject the demand. When evaluating the Draft Regulation and Article 43 Paragraph 5 of Law together, settlement procedure does not appear as a right entitled to undertakings and Board has absolute discretion whether settlement procedure will be applicable or not.
• Article 6 Paragraph 2 of Draft Regulation states that commence of the settlement negotiations does not imply that undertakings accepted the violations raised against them. The following part of the paragraph regulates that parties to the settlement may withdraw from settlement procedure until settlement submissions are given,
• In accordance with Article 6 Paragraph 5-6 of the Draft Regulation, the relevant undertaking is informed about the issues below and the undertaking presents its opinions in a way that does not jeopardize the security of the investigation.

1. • The content of the claims raised against the undertaking,
   • The specifications, scope, and duration of the violation accused,
   • The main evidence that constitutes the basis for the allegation of infringement on the party, provided that it is limited to inform the nature and scope of the alleged violation and is free of trade secrets and confidential information.
   • The reduction of fine to be applicable if the process is ended by settlement
   • The range of administrative fine to be imposed on the relevant party

• Pursuant to Article 7 Paragraph 2, if the maximum administrative fine exceeds 10% of the gross revenue of the relevant undertaking or association of undertaking, the exceeding administrative fines will be reduced to 10% of the gross revenue and reduction of fine as a result of the settlement will be applied.
• Article 7 Paragraph 3 of Draft Regulation, in the case where leniency application takes place with settlement procedure, the reduction of fines under Leniency Communiqué and the reduction of fines under settlement procedure will be applied jointly.
• In accordance with Article 8 Paragraph 1 of the Draft Regulation, should the party to the settlement accepts the issues stated in the interim decision of settlement, the undertaking will submit the settlement submission to the Authority which includes a clear statement that it accepts the existence, scope, duration, consequences of the violation and the liability arising from the violation
• Article 10 of the Draft Regulation states that undertakings party to the settlement may apply for the relevant applications under Leniency Communiqué as well. However, after submission of settlement submission to the Authority, the application under Leniency Communiqué will not be possible. 

4. Evaluation

Article 4 Paragraph 5 of Draft Regulation foresees that should the process is ended by settlement, administrative fine and the issues stated in settlement submission may not be subject to judicial review. On the other hand, in EU Competition Law practice, an undertaking against which an investigation commenced may apply for a judicial remedy against the final decision of settlement granted by the Commission even if the undertaking has settled with the Commission. The aforementioned provision of Drat Regulation contradicts Article 125 of the Constitution which states that recourse to judicial review is available against all of the acts and actions of the administration. Further recourse to judicial review for undertaking which declared to having participated in the antitrust violation has no point. Since it should not hard to foresee that courts would be more probably not willing to accept such claim of non-participation. We are of the opinion that this provision which restricts the right to defense by preventing filing a lawsuit in administrative jurisdiction and contrary to the Constitution and does not have any equivalent in EU Competition Law should be excluded from the Regulation to be issued.

Another issue, we esteem that the provisions of Article 7 Paragraph 1 which states the reduction of fine & minimum and maximum administrative fines to be applied in accordance with the interim decision of settlement given by the Board and the Article 4 Paragraph 4 which states that the administrative fines may be reduced up to 25% are deprived of the element of legal certainty.  Because the fines to be calculated under the fine Regulation will not be calculated as a specific figure but rather a range of fines. At this point, an undertaking that applied for settlement does not foresee exactly the amount of fine to be imposed following the final settlement decision at the same time it may not recourse to judicial review against the settlement decision while accepting the violation. Said provisions pose contradictions to legal certainty. Further, whether all of the undertakings applied for settlement in a given investigation are granted with the same percentage of reduction or not constitutes an ambiguity. In EU Competition Law practice, reduction of fine to be applied as a result of settlement negotiations will be applied equally in respect of parties.

Therefore, for the purposes of transparency and uniformity with the EU legislation legal certainty may be provided by inserting a relevant provision.

Article 7 Paragraph 1 Subparagraph (e) of Draft Regulation regulates that Board will designate in its interim settlement decision a  peremptory time period no longer than 15 days for submission of settlement to Competition Authority following the completion of settlement negotiations. On the other hand in EU Competition Law practice pursuant to Article 10(a)2 of Regulation numbered 773/2004, this time period will be designated at a minimum of two weeks for undertakings to submit their demand for settlement and acceptance of violation. Although however in EU Competition Law practice there is not any time period foreseen for investigation, the time periods regarding settlement procedure may seem understandable in accordance with the legal provision in Turkish Competition Law stating that investigation must be concluded within 1 year at the latest, we believe that the relevant time period of 15 days is not sufficient for undertakings in respect of their decision process. Therefore, we are of the opinion that the time period for settlement submission is amended as 30 days.

Article 8 Paragraph 2 of Draft Regulation regulates that settlement submission may be given orally as well. In this case, it is foreseen that declaration given orally will be written down and will be confirmed by the authorized representative of the settlement party by the commissioner. However, ambiguity occurs as to whether this confirmation is granted in writing or any other procedure. Therefore, for the purpose of clarity, a provision which states that this confirmation will only be granted in written form may be inserted.

5. Conclusion

Undertakings’ incapacity to recourse to judicial review against the issues in settlement submissions appears as a provision that restricts the right to defense in the Draft Regulation. Secondly, the fact that the undertaking which applied for settlement could not foresee the amount of administrative fine to be imposed and that undertaking inability to recourse to judicial review against hereof constitute legal uncertainty. Another issue, Regulation does not specify that whether all of the undertakings in the settlement procedure will be rewarded with the same percentage of reduction.

In final words, for the reasons abovementioned, we are of the opinion that the Regulation to be issued be amended accordingly for the purposes of uniformity with the EU legislation and transparency.

Kind regards,

Av. Dr. Oğuzkan Güzel

Av. Burak Bayram

BIBLIOGRAPHY

• Law amending the Law on the Protection of the Competition (2020, 24 June). Official Gazette (Number: 31165). Link address: https://www.resmigazete.gov.tr/eskiler/2020/06/20200624-1.htm
• Draft Regulation on Settlement Procedure to be Applicable in Investigations Regarding Agreements Restricting Competition, Concerted Practice & Decisions and Abuse of Dominant Position (2021, 18 March). Link address: https://www.rekabet.gov.tr/Dosya/geneldosya/uzlasma-yonetmeligi-taslagi-pdf
• EU Commission Regulation numbered 773/2004 amended EU Commission Regulation numbered 622/2008 (2008, 30 June). Link address: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32008R0622&from=EN
• EU Commission Notice (2008, 2 July). Link address https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52008XC0702(01)&from=EN
• EU Commission Press Release (2008, 30 June). Link address https://ec.europa.eu/commission/presscorner/detail/en/IP_08_1056
• EU Commission Memorandum (2008, 30 June). Link address https://ec.europa.eu/commission/presscorner/detail/en/MEMO_08_458