This country-specific Q&A provides an overview to Competition Litigation laws and regulations that may occur in Turkey.
What types of conduct and causes of action can be relied upon as the basis of a competition damages claim?
Turkish competition law mainly prohibits (i) anti-competitive agreements, (ii) abuse of dominance, and (iii) mergers and acquisitions which lead to a dominant position and restrict competition. Since mergers are subject to an ex ante authorization regime in Turkey, as a practical matter, they are unlikely to be a cause of action in a competition damages claim.
As per Article 4 of The Act on the Protection of Competition No. 4054 (“Competition Act”), agreements and concerted practices between undertakings, and the decisions and practices of trade associations that have as their object, effect or likely effect the distortion, restriction or elimination of competition directly or indirectly in a particular market for goods or services, are illegal and prohibited. Both horizontal agreements between competitors (such as directly or indirectly fixing purchase or sales prices or any other trading conditions, region/customer allocation, control of supply, exchange of strategic information, bid-rigging or collective boycotts) and vertical agreements between a supplier and its customers (such as resale price maintenance, region and customer restrictions and unreasonable non-compete clauses) fall within the scope of Article 4.
As per Article 6 of Competition Act, any abuse by one or more undertakings of a dominant position within Turkey or in a substantial part of Turkey is prohibited.
Article 2 of the Competition Act provides that the scope of the Competition Act is limited to the borders of the Republic of Turkey. With that said, all infringements directly affecting the Turkish market are subject to Turkish law; even if infringements originate in a third country, claims can be brought against undertakings from other jurisdictions under Turkish law and in Turkish courts, provided the infringement directly affects Turkey.
What is required (e.g. in terms of procedural formalities and standard of pleading) in order to commence a competition damages claim?
The claimant should submit a petition and pay the calculated legal fees for the case at hand to commence a competition damages case.
What remedies are available to claimants in competition damages claims?
The Competition Act provides that the difference between the price that the claimants were to pay if competition were not restricted and the price they paid due to the anti-competitive conduct can be requested as losses. Moreover, as per the Competition Act, competitors affected by the restriction of competition could request all the damages they incurred from the infringing undertaking(s). The Competition Act also introduces the rule of treble damages: the relevant court could decide for treble damages if the claimant requests and if damage results from an agreement or decision, or an act of gross negligence by the infringing undertakings. In this scenario, the court could determine a remedy for the compensation equal to three-fold the material damage incurred or the profits gained or likely to be gained by those who caused the damage.
What is the measure of damages? To what extent is joint and several liability recognised in competition damages claims? Are there any exceptions (e.g. for leniency applicants)?
The Competition Act states that the difference between what the claimants were to pay if competition were not restricted and the price they paid can be requested as damages. Under certain conditions, the claimant could be awarded three times the material damages incurred or the profit gained or to be gained by the undertaking(s) that caused the damages. The wording of the Competition Act indicates that competitors affected by the restriction of competition could request all of the damages they incurred from the infringing undertaking(s). The Competition Act provides that all of the anticipated profits of the undertakings that incurred damages and their past financial statements could also be taken into consideration for the calculation of the damages.
Under the Competition Act, undertakings that jointly caused a particular damage will be jointly and severally liable to claimants for that damage. Leniency applicants are not protected from competition damages claims.
What are the relevant limitation periods for competition damages claims? How can they be suspended or interrupted?
The limitation periods for competition damages claims are subject to the statute of limitations applicable to tort claims regulated under the Turkish Code of Obligations No. 6098 (“Code of Obligations”).
Pursuant to Article 72 the Code of Obligations, the claimant in a tort claim must bring an action within two years of them becoming aware of the tortious act, and at any rate within ten years of the tortious act’s occurrence. The claimant can also suspend or interrupt the limitation periods if the claimant files a lawsuit or invokes the debt as an exception during trial proceedings.
The Code of Obligations also provides that if the action for damages is derived from a criminal offence for which criminal law envisages a longer limitation period, that longer period also applies to the civil tort claim. In recent rulings (see e.g., 11th Chamber of Court of Cassation’s decision dated March 30, 2015 and No. 2014/13296E, 2015/4424K and 11th Chamber of Court of Cassation’s decision dated October 27, 2015 and No. 2015/3450E. 2015/11139K.), the Court of Cassation applied this provision to competition law violations based on the ground that competition law violations constitute misdemeanours falling within the general ambit of Law No. 5326 on Misdemeanours. As such, the general statute of limitations for competition law offenses of eight years was applied as the statute of limitations period.
As per Article 72 of the Code of Obligations, the statute of limitation starts once the claimant becomes aware of the harm and the identity of those that caused the injury. Several recent decisions of the Court of Cassation on antitrust-related damages claims identified the beginning of the statute of limitation as the moment the claimant (also the complainant in the relevant Competition Board investigations) lodged its complaint with the Competition Authority. In cases where the claimant in the civil action is not the complainant with the Authority (e.g. a consumer in the case of a cartel decision), the date when the Board’s infringement decision is announced on its website would be more appropriate to pinpoint when the claimant becomes aware of harm and the identity of those that caused the injury.
Which local courts and/or tribunals deal with competition damages claims?
The civil, commercial or consumer courts will be the competent courts regarding litigations in this front depending on the parties’ legal status (e.g. whether both claimant and defendant are merchants or whether the claimant is a consumer) as per the relevant legislations.
How does the court determine whether it has jurisdiction over a competition damages claim?
As competition damages claims are essentially private tort claims, they are subject to the provisions set out in the Code of Obligations and to the provisions regulating claims regarding tortious acts. Therefore, whilst determining whether it has jurisdiction, the court will consider the Civil Procedure Law No. 6100. Based on the relevant law, Turkish courts have jurisdiction if (i) the act causing competition law infringement took place in Turkey; (ii) the damages were incurred or may be incurred in Turkey;(iii) the residency of the injured party is in Turkey; and (iv) the residency of the defendant is in Turkey.
How does the court determine what law will apply to the competition damages claim? What is the applicable standard of proof?
Under International Private Law, claims regarding the infringement of competition law are subject to the law of the state of the market directly affected by the infringement. Therefore, all infringements directly affecting the Turkish market are subject to Turkish law, even if infringements originate in a third country. Similarly, claims can be brought against undertakings from other jurisdictions under Turkish law and in Turkish courts, provided the infringement directly affects Turkey.
In regard to standard of proof, private damages actions based on competition law violations are subject to the general standard for private tort actions. In civil litigation, claimants bear the burden of proof for all of the relevant facts of the case. In particular, claimants must prove that all of the mandatory elements of a tortious act existed in a given case, i.e. (i) the defendant committed an unlawful action; (ii) intent or negligence on the part or the defendant; and (iii) harm and causation between the unlawful action and the harm to the plaintiff. The Competition Act further states that claimants can prove the existence of agreements, decisions and practices restricting competition with “all types of evidence”.
From a practical perspective, the competent court assessing a competition law claim would refer to Competition Board decisions on whether a competition law violation was established, and thus the element of “unlawful action” would be settled on this basis.
To what extent are local courts bound by the infringement decisions of (domestic or foreign) competition authorities?
Theoretically, the courts are not bound by the decisions of the Competition Board. However, these decisions influence courts and, from a practical perspective, courts can be expected to rely on the Competition Board findings while evaluating their case. The importance of the Competition Board’s decision for the courts is demonstrated by the fact that the Court of Cassation precedents treat the resolution and finalization of the Competition Board decision in a case as a “preliminary issue”, meaning that the courts do not allow the lawsuits to proceed before a finalized Competition Board decision.
There are no clear restrictions on using foreign competition authorities decisions to make claims, but it is highly likely that the courts will require the Turkish Competition Board’s decision regarding the relevant competition law restriction.
To what extent can a private damages action proceed while related public enforcement action is pending? Is there a procedure permitting enforcers to stay a private action while the public enforcement action is pending?
In its former decisions, the Court of Cassation took the position that the finalization of the Competition Board decision was a formal requirement to be able to initiate an antitrust-based private damages action. However, in a recent decision, the Court of Cassation changed this position and reversed a first instance court’s decision dismissing the lawsuit on the ground that it was filed untimely (the Turkish Competition Board’s relevant decision was subject to annulment proceedings before the Council of State at that time).
Based on the recent precedent, the finalization of the decisions of the Competition Board is no longer regarded by the courts as a requirement to initiate the action but as a “preliminary issue” for the civil lawsuits. In other words, a claimant can initiate an action in the absence of a Competition Board decision finalized under judicial review; however, such an action would be stayed pending the resolution/finalization of the Competition Board’s enforcement decision.
What, if any, mechanisms are available to aggregate competition damages claims (e.g. class actions, assignment/claims vehicles, or consolidation)? What, if any, threshold criteria have to be met?
Turkish law has no provision that permits class actions. Some laws exceptionally entitle certain bodies to file actions on behalf of their members. For example, the Law on the Protection of Consumers No. 6502 allows consumers’ associations to file lawsuits for infringements regarding the consumer protection law. The Competition Act, however, has no provision that entitles a specific group of people (e.g. consumers’ associations) to file civil lawsuits regarding competition law infringements.
The Civil Procedure Law No. 6100 introduced a new provision that under certain circumstances and conditions allows third-party legal entities, such as associations, to file lawsuits on behalf of themselves to protect the interests of their members and associates. These lawsuits can be commenced only to remedy the illegality that is the subject matter of the lawsuit, or to prevent the imminent violation of rights. Therefore, associations or other legal entities cannot file this type of lawsuit to claim compensation for damages that their members or associates suffered.
In Turkish civil procedure law, it is possible to voluntarily bundle individual claims by way of assignment. In these cases, the different claimants’ claims will continue to exist as individual claims if these claims depend on common factual circumstances. If these individual claims are bundled, the claims can be litigated together. The courts can also request the mandatory bundling of individual claims if a specific right arising from substantive law is exercised by more than one claimant.
Are there any defences (e.g. pass on) which are unique to competition damages cases? Which party bears the burden of proof?
There are no specific regulations that set forth defences that are unique to competition damages cases. One could argue that defences such as passing-on might be raised before the courts, but the courts and the Court of Cassation’s precedents have not yet provided insight on this front.
In case of a passing on defense, where the plaintiff has already established the existence of an overcharge as a result of cartel conduct, the defendant would bear the burden of proving that the plaintiff passed on the overcharge to other parties and thereby mitigated its losses.
Is expert evidence permitted in competition litigation, and, if so, how is it used? Is the expert appointed by the court or the parties and what duties do they owe?
Expert evidence is permitted in competition damages claims. In the Turkish legal system, the court may appoint an expert/expert panel to the case. As per Civil Procedure Law No. 6100, parties may also obtain private technical opinions from third persons.
Expert reports obtained from court-appointed experts are considered discretionary evidence. In other words, judges are not bound by the expert report, and they will consider the report at their discretion. The private technical opinions obtained from persons chosen by the parties are considered as that party’s supporting statements.
Experts appointed by the court are obliged to fulfil their duty objectively and in a timely manner, as well as to keep every document provided to them confidential. Experts appointed by the court are not permitted to make any explanations, comments, or analyses on anything outside of the issues that require technical analysis.
Describe the trial process. Who is the decision-maker at trial? How is evidence dealt with? Is it written or oral, and what are the rules on cross-examination?
General civil litigation provisions under the Civil Procedure Law No. 6100 also apply to antitrust-based tort claims. The decision-maker is the judge, and the Turkish judicial framework does not involve juries. Depending on the value of the lawsuit and the special provisions set forth in the legislation, one judge or a panel of three judges may decide the case.
In Turkish civil litigation, the general rule is that parties must submit and present their evidence to the case file and the judges do not bear the responsibility of looking for further evidence on their own.
The default rule in Turkish civil litigation is the “free evidence” rule. This means that cases may be proved with any kind of evidence, as long as the evidence is obtained legally. However, for claims exceeding certain amounts regulated by law, the “legal evidence system” is adopted instead. This means that the law requires the claim to be proved utilizing certain specific kinds of evidence, i.e., legal oath, definitive judgement and deed. These three types of evidence are deemed to show the actual truth. If any of this evidence is present in the case, the judge will not have any discretion over it.
Article 59 of the Competition Act also provides specific guidance in this regard and expressly adopts the free evidence rule, stating that the infringement may be established with all kinds of evidence.
Although the Civil Procedure Law does not classify evidence, Turkish legal literature does and categorizes evidence into two types: (i) conclusive evidence and (ii) discretionary evidence.
i. Conclusive Evidence: Legal oath, definitive judgement and deed (as explained above).
ii. Discretionary Evidence: Witness, expert and on-site examination. Judge has discretion over the discretionary evidence. Parties are entitled to ask questions to the witnesses in the hearing; however, parties have to ask their questions through the judge, as they are not allowed to address their questions directly to the witness.
The judges may evaluate discretionary evidence at their discretion, whereas they must consider conclusive evidence as the actual truth and have no discretion over it.
In the Turkish legal system, the proceedings mostly proceed through written petitions. Parties are obliged to submit their evidence to the court by way of petitions and they may request the court to write writs to related institutions to gather certain evidence.
How long does it typically take from commencing proceedings to get to trial? Is there an appeal process? How many levels of appeal are possible?
In essence, private enforcements regarding competition law infringements in Turkish law qualify as tort litigations and have the same procedural rules. The preliminary hearing takes place approximately three months after the proceeding commences. However, if one of the parties resides abroad, thus requiring the lawsuit petition to be served abroad, the estimated period might be extended. Hence, the period from commencing proceedings to trial differ on a case-by-case basis.
The Turkish legal system has a two staged appeal process. Aside from certain exceptions and assuming that the amount of the compensation claim is within the appeal limit, the first instance civil court decisions may be appealed before the Regional Court of Appeals and then the Court of Cassation under the same provisions applicable for any other private damages claim filed for a tortious act.
Do leniency recipients receive any benefit in the damages litigation context?
Nothing in the Turkish competition law regime or the civil procedure law provides immunity to leniency applicants/recipients with regards to the potential private damages claims or provides advantages in regard to procedural matters such as the discovery process in litigation. As a general rule, Turkish courts can request documents/information from all public or private bodies including the Turkish Competition Authority. Given the lack of any immunity or special treatment for leniency documents, the Turkish Competition Authority would be bound by law to provide the requested evidence to the court where they fall within the scope of the discovery request.
How does the court approach the assessment of loss in competition damages cases? Are “umbrella effects” recognised? Is any particular economic methodology favoured by the court? How is interest calculated?
The Competition Act provides that the difference between the price that the claimants were to pay if the competition was not restricted and the price they paid due to the anti-competitive conduct can be requested as losses. With regard to the “umbrella effects”, the Competition Act does not include any specific provision and the precedents of the courts and the Court of Cassation do not provide insight on this subject. All in all, one could argue that claiming damages under “umbrella effects” would require the claimant to concretely prove the link between its losses and the prices applied by the undertakings that did not participate in the anti-competitive conduct. Even in that scenario, the courts could potentially reject the claim as they look to the Competition Board’s decision regarding the scope of the infringement, and the wording of the Competition Board’s decision would not indicate these potential defendant undertakings as ones that violated the Competition Act.
As antitrust-based damages actions are a relatively underdeveloped area of law in Turkey, there is no established economic methodology favoured by the courts.
As a general rule, the start date for the interest would be the date when the anti-competitive conduct began and the interest would be the legal interest rate calculated based on the relevant legislation.
Can a defendant seek contribution or indemnity from other defendants? On what basis is liability allocated between defendants?
When all defendants in the case share joint and several liability, each defendant is liable amongst themselves to the extent of their specific responsibility; however, all defendants are fully liable to claimant(s) for the totality of damages. Hence, the damaged party may file the competition damages lawsuit against any defendant regardless of their share of liability. A defendant may seek indemnity or contribution from the other defendant(s) in a separate lawsuit, namely through a recourse action.
In what circumstances, if any, can a competition damages claim be disposed of (in whole or in part) without a full trial?
As in the case of any other tort action, a competition damages claim may be disposed of without a full trial if the parties choose to settle. The parties can choose to settle a claim at any stage of the trial proceedings or have an out-of-court settlement before litigation starts to avoid a trial altogether.
What, if any, mechanism is available for the collective settlement of competition damages claims? Can such settlements include parties outside of the jurisdiction?
Neither the Turkish competition law regime nor the civil procedure legislation includes any mechanisms designed for collective settlement of competition damages (or other) claims.
Can litigation costs (e.g. legal, expert and court fees) be recovered from the other party? If so, how are costs calculated, and are there any circumstances in which costs recovery can be limited?
The defeated party must bear all costs arising from trial, including court costs and attorney fees. The Union of Turkish Bar Association sets an annual cap on attorney fees, and the defeated parties are not responsible for covering attorney fees above the cap.
According to the latest World Bank research, on average, court costs, attorney fees, and enforcement costs make up around 25-30% of the claims; court costs and attorney fees make up around 18% of the claims.
Are third parties permitted to fund competition litigation? If so, are there any restrictions on this, and can third party funders be made liable for the other party’s costs? Are lawyers permitted to act on a contingency or conditional fee basis?
In the Turkish legal system, there are no provisions regulating third party funding of claims; however, third-party funded actions are theoretically possible.
As per the Attorneys’ Act No. 1136, attorneys may work on a contingency fee basis; however, the attorney must be paid the minimum attorney fee determined in the minimum attorney fee tariff. If the person granting the power of attorney fails to make the minimum payment, then the attorney may apply to the Union of Turkish Bar Association. Moreover, even if the attorney’s fee is based on contingency, per Attorneys’ Act No. 1136, the amount that will be paid to the attorney cannot exceed 25% of the claim or the judgement.
Attorneys cannot work on a conditional fee basis because attorneys cannot work for free and must be paid the minimum attorney fee.
What, in your opinion, are the main obstacles to litigating competition damages claims?
Antitrust-based damages claims are a relatively underdeveloped area of law in Turkey, despite attractive features such as the possibility of receiving treble damages, a feature quite exceptional under Turkish law. We believe that the main reason is the Court of Cassation’s position that a finalized Competition Board decision (i.e. one that is no longer subject to judicial review) establishing the competition law violation is required for private damages actions to proceed. As discussed above, while the Court of Cassation no longer sees a finalized Competition Board decision as a necessary element to initiate the lawsuit, this is still seen as a preliminary issue that must be completed for the private action to proceed. Given that it takes several years to exhaust the different stages of the administrative court system within the judicial review process, this means that plaintiffs can only hope for an extremely delayed recovery that curbs their appetite to devote resources to pursue these claims.
What, in your opinion, are likely to be the most significant developments affecting competition litigation in the next five years?
The Turkish Competition Board’s 2013 banking cartel decision concerning 12 prominent banks (dated March 8, 2013 and numbered 13-13/198-100 “12 Banks Decision”) raised the awareness level of competition damages claims in Turkey. A large number of competition damage actions concern the Turkish Competition Board’s 12 Banks Decision, and at least one plaintiff was awarded damages in a consumer court as a result of a claim based on the relevant decision.
In the abovementioned case, the consumer court awarded damages based on the 12 Banks Decision after the Council of State upheld the relevant Board decision. The Council of State then reassessed its decision pursuant to a request of revision of decision, ruling that the Board misapplied the “single continuous infringement” concept to the case at hand and that the administrative courts should reassess the case.
The fact that the Council of State took a contrary approach to the Competition Board’s decision at such a late stage of judicial review and ended up negating the legal basis of an existing damages award may potentially have a chilling effect on future damages claims. This will also likely strengthen the current position of the Court of Cassation to wait for the finalization of the underlying decision before letting claims go through.