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Introduction
The first steps towards introducing settlement as a practice in Turkish competition law were taken in June 2020 in line with the amendments to Law No. 4054 on the Protection of Competition (“Law No. 4054”).[1] This brings Turkish competition law into line with that of the European Union and many other countries.[2] The details of the procedures and the principles regarding how settlements will be applied were introduced in a new regulation approximately one year after the law was amended. This regulation, entitled the Regulation on the Settlement Procedure Applicable for Investigations on Anticompetitive Agreements, Concerted Practices, Decisions and Abuse of Dominant Position (“Regulation”), entered into force upon being published in the Official Gazette dated 15.07.2021 and numbered 31542. It is expected that this Regulation will establish the culture of settlement in Turkish competition law. In this article, the issues covered by the Regulation are briefly discussed.
Purpose and Scope of the Settlement Institution
The institution of settlement is applicable for those who accept the existence and scope of the violation among the undertakings or associations of undertakings against which an investigation has been initiated regarding the prohibited behaviors set in Article 4 (anticompetitive agreements, concerted practices and decisions) and Article 6 (abuse of dominant position) of Law No. 4054. The investigation into a violation is terminated, and a final decision is entered that reduces the administrative fine to be imposed on an undertaking, on the condition that they accept the existence and scope of the violation through the settlement procedure. The aim of using the settlement procedure is to shorten and accelerate the investigation process and to reduce the costs arising from the investigation.
The Competition Board (“Board”) considers the procedural benefits arising from the speedy completion of the investigation process, as well as differences of opinion regarding the existence or scope of the violation, in initiating the settlement process. Thus, while initiating the settlement procedure, the Board may consider factors such as the number of parties under investigation, whether a significant portion of the parties have resorted to settlement, the scope of the violation and the nature of the evidence, and whether it is possible to reach a consensus with the parties to the investigation regarding the existence and scope of the violation.
It should be emphasized that, as per Provisional Article 1 of the Regulation, the provisions of the Regulation are also applied retroactively to investigations that were opened prior to the entry into force of the Regulation (before 15.07.2021) and for which the investigation report has not been notified.
Procedures and Principles of Settlement
The Board may settle with the parties under investigation who accept the existence and scope of the violation up until the notification of the investigation report.
Initiation of the Settlement Process and Settlement Negotiations
The settlement procedure may be initiated by the Board ex officio or upon the request of the parties after the commencement of the investigation. In case a party requests the initiation of settlement negotiations, they must submit their requests in writing to the Competition Authority (“Authority”). The Board may accept or reject this request, or may decide to invite other parties to the investigation, if any, to settlement negotiations.
If the Board initiates the settlement process ex officio, it invites the parties to the settlement negotiations. The parties shall notify the Authority in writing whether they intend to start settlement negotiations within fifteen days from the notification of such invitation. Notifications made after this period shall not be considered.
Following the duly initiated settlement process, the Authority initiates settlement negotiations with the relevant parties as soon as possible. If settlement negotiations are to be conducted with more than one settlement party, the negotiations are held separately.
In settlement negotiations, it is necessary that the settlement party obtains information about the matters related to the investigation. These matters are as follows: a) the content of the allegations against the settlement party, b) the nature and extent of the alleged violation, c) the main evidence that forms the basis for the alleged violation against the settlement party, d) the discount rate that can be applied in case the process results in settlement, and e) the range of administrative fines that can be imposed on the settlement party. Also, during the settlement negotiations, it is essential not to jeopardize the security of the investigation.
The commencement of settlement negotiations does not imply that the settlement parties have accepted the alleged violation against them. The settlement parties may withdraw from the settlement process until the submission of the settlement letter.
Settlement Letter and Settlement Decision
Following the completion of the settlement negotiations, the Board makes its interim decision regarding the process and the issues included in the settlement. The interim decision cannot be challenged by the settlement parties. If a settlement party accepts the matters stated in the interim decision, it submits a letter. This letter should include a clear statement by the settlement party accepting the existence and scope of the violation, the maximum rate and amount of the administrative fine that the Board can impose on the party, and the party’s statements that they accept this fine rate and amount within the framework of the settlement procedure.
The Board makes its final decision within 15 days after the settlement letter enters the Authority’s records, and then the investigation is concluded for the parties involved. In cases where the investigation continues in terms of at least one undertaking or association of undertakings, the settlement party will not be notified of the reasoned final settlement decision before the final decision in the investigation is rendered.
In the event that a settlement is reached, the administrative fine and the issues in the settlement letter cannot be filed before the courts by the parties to the settlement.
Discount Rate Applied
Article 43 of the Law No. 4054 states that an administrative fine can be reduced by up to twenty five percent as a result of the settlement procedure. This article is limited by the Regulation to a lower limit of ten percent without referencing to any type of violation (e.g., naked and hardcore violation). Thus, the discount rate has become applicable from ten percent to twenty-five percent.
If an application for leniency is made along with the settlement process, the discount rate determined under the Leniency Regulation and the discount rate determined for settlement are added together and applied.
Cases of Non-settlement
In some cases, the settlement process does not result in settlement. If a party does not provide the settlement letter in due time, if the deficiencies in the settlement letter are not completed in due time, and if the settlement party withdraws from the settlement process, the ordinary investigation procedure is followed for that party. In addition, in case (i) it is understood that the expected procedural benefit cannot be achieved from the settlement process in progress, or it is not possible to reach a common opinion with the parties regarding the existence and scope of the violation, (ii) there is a danger of obscuring the evidence, or (iii) a party violates its confidentiality obligations regarding the settlement negotiations, the Board may decide to terminate the settlement process for all or some of the parties until the final settlement decision, and the ordinary investigation procedure is followed.
Conclusion
Even though it has come relatively late, the introduction of settlements into Turkish competition law – a feature of the legislation of the European Union and other countries for many years – is quite valuable. With the entry into force of the Settlement Regulation, which regulates the procedures and principles of the settlement process created by Law No. 4054, it is possible to expect that settlement culture will settle into Turkish competition law. An effectively and efficiently carried out settlement process will surely shorten and speed up the investigation process and save time and resources accordingly. We will all follow its implementation with interest.
(Authored by Ecem Susoy Uygun and first published by Erdem & Erdem on August 2021)
[1] Please see Law No. 7246 Amending the Law on the Protection of Competition that was published in the Official Gazette dated 04.06.2020 and numbered 31165.
[2] Please see the preamble of Law No. 7246, p. 11, https://www.tbmm.gov.tr/sirasayi/donem27/yil01/ss215.pdf (Access Date: 29.07.2021)