What are the key components of Türkiye’s competition law framework, and how does it compare to EU competition regulations?
Türkiye’s competition law framework, primarily governed by Law No. 4054 on the protection of competition, focuses on prohibiting anti-competitive agreements; preventing the abuse of a dominant position; and regulating mergers and acquisitions. In addition to the primary law, several communiqués and guidelines provide detailed rules and procedures, ensuring that competition policies are transparent and predictable.
Türkiye’s competition rules are largely aligned with the EU norms. This alignment is driven by Türkiye’s long-standing aspiration of facilitating economic integration with the EU. Despite sharing fundamental common objectives, certain variations exist in the two jurisdictions in the procedural aspects and the scope of certain exemptions. This is due to the distinct nature of the EU as a sui generis organisation with supranational institutions, like the European Commission (EC), and national competition authorities working in concert. In contrast, Türkiye operates as an independent state with the Turkish Competition Authority (TCA) as its sole competition authority. Even though there are differences, the core principles and objectives remain consistent between Türkiye and the EU, fostering a competitive market environment that benefits consumers and businesses alike.
What are the main enforcement bodies for competition law in Türkiye?
The main enforcement body for competition law in Türkiye is the TCA, an independent administrative authority responsible for investigating anti-competitive practices, reviewing mergers and acquisitions, and imposing sanctions for violations of Law No. 4054. Within the TCA, the Competition Board serves as the decision-making body, conducting investigations and making rulings on competition law issues. Decisions of the TCA can be appealed to Turkish administrative courts, which provide judicial review to safeguard and ensure the legality and validity of the TCA’s rulings.
What steps should companies take to ensure compliance and avoid penalties?
To ensure competition law compliance and avoid penalties in Türkiye, companies should implement a robust competition compliance programme that includes ‘tone from the top’ and regular trainings for all employees on the principles of Law No. 4054. They should establish internal controls and procedures to monitor and review business practices, including regular audits and risk assessments.
Companies also need advice for agreements resulting into change of control (such as M&As) to ensure that these transactions are properly evaluated and, if needed, approved by the TCA before closing.
Additionally, companies should encourage a culture of compliance by promoting ethical behaviour and providing clear channels for reporting potential violations.
What are the thresholds for mandatory merger notifications in Türkiye, and what is the process for obtaining clearance from the Turkish Competition Authority?
A mandatory ex ante merger notification in Türkiye is required where:
- aggregate turnover of the transaction parties in Türkiye exceeds TRY 750m (approx EUR €29.2m), and the turnover of at least two of the transaction parties each in Türkiye exceeds TRY 250m (approx EUR €9.73 m); or
- either the turnover in Türkiye of (i) the acquired assets or businesses in acquisitions, or (ii) any of the transaction parties in mergers, exceeds TRY 250m (approx EUR €9.73m), and the worldwide turnover of at least one of the other parties to the transaction exceeds TRY 3bn (approx EUR €116.8m).
The Türkiye-related turnover threshold of TRY 250m (approx EUR €9.73m) is irrelevant for concentrations with technology undertakings as their target.
The process typically involves two stages: Phase I and Phase II. In Phase I, the TCA within 30 calendar days assesses whether the concentration may significantly impede effective competition. If no significant concerns are identified, the TCA grants clearance, also if the TCA does not respond within this period, the transaction is considered tacitly approved. That said, information requests sent by the TCA within the 30 days cut the review period, which then starts anew once the responses are submitted to the TCA.
If there are potential competition issues, the process moves to Phase II, involving an in-depth investigation, which may take up to 12-16 months. During this phase, companies may need to provide additional information and respond to further inquiries and submit commitments to mitigate the competitive concerns. Upon completion of Phase II, the TCA decides whether to (conditionally or unconditionally) approve the transaction or prohibit it to prevent harm to competition. Companies can seek judicial review of the TCA’s decisions within 60 days of the notification of the decision.
As per legislation, the above financial thresholds in EUR are calculated at the average buying rate of exchange of the Central Bank of Türkiye for the 2023 financial year.
What types of behaviour or agreements are considered anti-competitive under Turkish competition law, and what are the potential consequences for companies found engaging in such practices?
Under Turkish competition law, anti-competitive behaviours and agreements include practices such as price-fixing, market allocation, output limitation, and bid-rigging, etc. Other anti-competitive practices include the abuse of a dominant position, such as predatory pricing, exclusivity, tying/bundling, and unfairly limiting production or market access. Companies found engaging in these practices can face significant consequences, including administrative fines, nullification of agreements, and orders to cease anti-competitive conduct. The TCA may impose fines up to 10% of a company’s annual gross revenue, periodic penalties for ongoing violations, and additional penalties in case of obstructing investigations. Furthermore, companies may be subject to private damages claims from affected parties, and such violations can significantly damage a company’s reputation, leading to a loss of consumer trust and market position.
How do leniency programmes work in Türkiye, and what are the benefits and risks for companies considering self-reporting anti-competitive conduct to the Turkish Competition Authority?
In Türkiye, the leniency programme, governed by the Regulation on Active Cooperation for Detecting Cartels, allows companies and individuals to self-report their involvement in anti-competitive conduct, particularly cartels, to the TCA in exchange for immunity or reduced fines. To benefit from leniency, the applicant must provide significant evidence that facilitates the detection and investigation of the cartel. The programme is designed to encourage companies to come forward with information before the TCA initiates an investigation or before the TCA has sufficient evidence of the violation. The first applicant to report and fully cooperate with the TCA may receive full immunity from fines, while subsequent applicants may receive a reduction in fines depending on the timing and value of the information provided.
The benefits of participating in the leniency programme include the potential for full immunity from administrative fines, reduced penalties, and a more favourable treatment during the investigation. However, companies may face several risks beyond potential civil liability and reputational damage. These include the disclosure of sensitive internal information, negative impacts on employee morale and internal relations, uncertainty regarding the extent of leniency benefits, and potential harm to business relationships with partners, suppliers, and customers. Companies must carefully weigh these risks against the benefits of potential immunity or reduced fines when deciding to participate in the leniency programme.