The Law on Protection of Competition No. 4054 (LPC), which entered into force on 13 December 1994, is designed to prevent agreements, decisions and practices that have as their purpose or effect the prevention, restriction or distortion of competition in the markets for goods or services within Turkey; the abuse of dominance by undertakings dominant in a relevant market; and concentrations creating or strengthening a dominant position and significantly lessening the competition in the whole territory of Turkey or a part thereof.

The Competition Board is the decision-making body of the Competition Authority.

In 2010, the Competition Board enacted the secondary statutory regulations on the right of access to case files and protection of trade secrets, and procedures for oral hearings before the Competition Board. Also published in 2010 was a new regulation on the applicable merger control rules. There is also a draft Competition Law, which is expected to bring about significant amendments of some of the fundamental competition rules. The Competition Board is expected to focus more on fighting abuses of dominant position and cartel cases in the near future.

The Competition Authority
The Competition Authority has public legal personality, as well as administrative and financial autonomy. The authority consists of the board, presidency and service units. A total of approximately 332 people are employed in the authority, including competition experts, assistant experts, lawyers, board members, reporters and technical personnel. Four divisions with sector-specific work distribution handle competition law enforcement work through approximately 120 case handlers. The annual budget of the authority for 2009 was around 38.7 million Turkish liras.

The Competition Board
The Competition Board is composed of seven members, including a chairman and a deputy chairman. The term of office of the chairman, deputy chairman and members of the board is six years. A member whose term has expired is eligible for re-election.
The duties and the powers of the Competition Board can be categorised into three main areas:

Preventing the violation of competition

Undertakings and associations of undertakings condemned by the board for violating articles 4 and 6 of the LPC may be given administrative fines of up to 10 per cent of their Turkish turnover generated in the financial year preceding the date of the fining decision (if this is not calculable, in the financial year nearest the date of the fining decision). Employees or members of the executive bodies of the undertakings or association of undertakings that had a determining effect on the creation of the violation would also be fined up to 5 per cent of the fine imposed on the undertaking or association of undertaking. The Competition Board may also order structural or behavioural remedies, or both, to protect competition and restore it to its state before the violation.

Merger control
A merger filing is required before the Competition Board where (i) the entire Turkish turnover of the parties to the transaction exceeds 100 million Turkish liras and their Turkish turnovers exceed 30 million Turkish liras, separately; or (ii) the entire worldwide turnover of one of the parties to the transaction exceeds 500 million Turkish liras and the Turkish turnover of at least one of the other parties to the transaction exceeds 5 million Turkish liras. Except for joint ventures, transactions that do not result in an affected market are not notifiable, even if the thresholds are exceeded.

The LPC provides for a suspension requirement. If the parties to a transaction that requires the approval of the Competition Board close the transaction without approval of the board, a fixed monetary fine of 0.1 per cent of the acquirer’s Turkish turnover generated in the financial year preceding the date of the fining decision (if this is not calculable, in the financial year nearest the date of the fining decision) applies. In the event of a merger, the fine applies to both merging parties. The minimum fine is 12,327 Turkish liras. If the board reaches the conclusion that the transaction closed before clearance creates or strengthens a dominant position and significantly lessens competition in any relevant product market, the undertakings concerned may also receive administrative monetary fines of up to 10 per cent of their Turkish turnover generated in the financial year specified above. In such a situation, employees or members of the executive bodies of the undertakings or association of undertakings that had a determining effect on the creation of the violation would also be fined up to 5 per cent of the fine imposed on the undertaking or association of undertaking. In any case, a notifiable merger or acquisition not notified to and approved by the Competition Board shall be deemed as legally invalid with all its legal consequences.

Exemptions and negative clearances
The Competition Board may decide to exempt agreements, decisions of associations of undertakings and concerted practices from the application of the provisions of LPC, article 4.

Exemption decisions may be granted for a certain period of time or for an indefinite period. They may also be conditional upon the satisfaction of particular conditions or obligations (or both) such as structural or behavioural remedies.

Certain categories of agreements and decisions are subject to a block exemption regime under block exemption communiqués (Communiqués No. 2002/2, 2003/2, 2005/4, 2008/2 and 2008/3).

Appeal
Final decisions of the Competition Board, including its decisions on interim measures and fines, can be submitted to judicial review before the High State Council by filing an appeal case within 60 days upon receipt by the parties of the justified decision of the board. Filing an administrative action does not automatically stay the execution of the board’s decision. However, upon request of the plaintiff, the court, on providing its justifications, may decide to stay the execution if the implementation of the decision is likely to cause irreparable damage; and if the decision is highly likely to be against the law.

Statistics

Matters concluded from 1999 to 2009 (2010 figures not yet available)

Article 4 and 6 files concluded from 1999 to 2009 (2010 figures not yet available)

ELIG, Attorneys-at-Law