Introduction
Draft law
Comment


Introduction

It appears that long-awaited amendments to the Law on the Protection of Competition (4054) may finally be on the agenda following a recent announcement by Parliament that a draft law containing the amendments has been officially added to its drafts and proposals list. The prime minister sent the draft law to the Presidency of Parliament on January 23 2014 and Parliament's Industry, Trade, Energy, Natural Sources and Information Technologies Commission is expected to discuss it during the first half of February.

The draft law has been designed to be more compatible with the way in which the existing law is being applied. It also aims to comply further with the EU competition law legislation on which it is closely modelled. It adds several new dimensions and changes that promise a more efficient procedure in terms of time and resource allocation.

Draft law

One of the most important new additions introduced by the draft law is the de minimis rule, which will allow the Competition Board to disregard agreements, concerted practices and decisions that do not exceed a certain market share and/or turnover threshold. Crucially, this draft provision does not exclude cartel cases. This addition aims to enable the board to concentrate on serious infringements and avoid trivial cases such as recent investigations into local bakeries and driving schools.

The draft law also proposes several significant changes to concentration provisions:

  • The substantive test for concentrations will change. The EU test on significant impediments to effective competition will replace the current dominance test.
  • In accordance with EU competition law, the draft law adopts the term 'concentration' as an umbrella term for mergers and acquisitions.
  • The draft law eliminates the exemption of acquisition by inheritance.
  • The draft law abandons the Phase II procedure, which was similar to the investigation procedure, and instead provides a four-month extension for cases requiring in-depth assessment. During such in-depth assessment, parties can deliver written opinions to the board, which will be akin to written defences.
  • The draft law will extend the appraisal period for concentrations from 30 calendar days to 30 working days, which equates to approximately 40 calendar days in total.

The draft law also introduces three tools to end investigations without completion of the entire procedure. These measures are known in many other jurisdictions, but are new to Turkish competition law. First, by introducing a settlement procedure, the board will be able to settle with those parties subject to investigation that admit their infringements before the investigation report has been served. Second, the board has introduced a commitment procedure, which paves the way for it to accept reasonable commitments submitted by the parties during (preliminary) investigations and decide not to launch an investigation or to end an ongoing one. The board will provide the details of these new procedures through secondary legislation. Third, the board may decide to end an investigation, wholly or partially, before the investigation report has been served on the parties if it is convinced by the case handlers' recommendations that the parties did not violate the law.

The draft law also proposes significant changes in the investigation procedures for competition law violations:

  • The six-month investigation period will be reduced to four months. This period may be extended by up to four months (the existing extension limit is six months).
  • The first written defence mechanism (ie, the defensive response to the investigation notice) will be removed – parties will now have two written defence rights instead of three.
  • The deadlines for defence submissions and case handlers' additional opinions will be extended.
  • A one-month deadline will be set for the board's final decision announcement following an oral hearing meeting or the end of the written defence rights period.
  • A reasoned decision must now be served within two months of the final decision.

Furthermore, under the draft law, the fixed rates for certain procedural violations – including failing to notify the board of a concentration and hindering on-site inspections – will be abandoned and upper limits for monetary fines for these violations will be set. This new arrangement gives the board discretion to set monetary fines by conducting case-by-case assessments. The other provisions of the Competition Act on monetary fines have been left untouched.

Comment

All of these proposals will enter into force if Parliament approves the draft law. As the draft law was submitted on January 23 2014, the parliamentary commission is expected to discuss it within the first half of February 2014. Therefore, even though the specific effective date remains unknown, it seems fair to expect it in the not-so-distant future.

For further information on this topic please contact Gönenç? Gürkaynak at ELIG by telephone (+90 212 327 17 24), fax (+90 212 327 17 25) or email (gonenc.gurkaynak@elig.com). The ELIG website can be accessed at www.eliglegal.com.