New development
The Regulation on Fines to Apply in Cases of Agreements, Concerted Practices and Decisions Limiting Competition and Abuse of Dominant Position (“New Regulation on Fines”) was updated and entered into force on the same date with the Official Gazette dated December 27, 2024 and numbered 32765. [1] As such, the TCA removed the regulation with the same title (“Former Regulation on Fines”), published in the Official Gazette dated February 15, 2009 and numbered 27142. [2] With the announcement made on the website of the Competition Authority (“Authority”) on January 19, 2025, the Guideline on Administrative Fines to be imposed for Agreements, Concerted Practices and Decisions Restricting Competition and Abuse of Dominant Position (“Guidelines on Fines”) was published.[3]
Below are details of the Guidelines on Fines, which have been prepared to clarify the procedures and principles introduced by the New Regulation on Fines.
1. Principles on Determination of Administrative Monetary Fine
In the Guidelines on Fines, it is underlined that administrative fines will be imposed separately for each behavior that constitutes a violation. While the independence of infringements was addressed in terms of market, nature and chronological process in the Former Regulation on Fines, these factors are diversified in the Guidelines on Fines. Referring to the recent Competition Board (“Board”) [4] and administrative judicial decisions [5], the Guidelines on Fines state that the following factors will be taken into consideration: the relevant product markets, input and output markets and geographical markets where the conduct constituting the basis for the infringement takes place, the nature of the conduct, the temporal integrity between the conducts, whether the conducts are carried out in the execution of the same decision, whether the conducts are strategically integrated, whether the conduct is carried out by the unilateral actions of the undertaking, and the fundamental distinction in the nature and substance of the conduct.
In addition, according to the Guidelines on Fines, aggravating factors and mitigating factors, if any, will be evaluated separately for each violation when determining the base fine rate. Moreover, it is clarified that the upper limit of the administrative fine of 10%, which is stipulated under the Law No. 4054 on the Protection of Competition (“Law No. 4054”), will be applied separately for each infringement. In other words, in case of multiple violations, the total amount of fine imposed may exceed the upper limit of 10% in total.
It is explained that the reductions to be made within the scope of the Regulation on Active Cooperation for Detecting Cartels and the Regulation on the Settlement Procedure for Investigations on Anticompetitive Agreements, Concerted Practices, Decisions and Abuse of Dominant Position will be calculated over the final fine amount reached within the framework of the provisions of the New Regulation on Fines.
2. Determination of Base Fine Rate
According to the New Regulation on Fines, the base fine rate is determined by taking into account the nature of the violation (naked and/or hard core restriction or not), the damage it has caused or may cause, and its duration. The specific conditions of the undertaking to be fined are taken into account as aggravating and mitigating factors in determining the final fine rate.
a. Determination of Initial Fine Rate
The Guidelines on Fines indicates that the initial fine rate may be set close to the legal upper limit if the gravity of the harm caused or likely to be caused by the violation is high or if the nature of the violation is severe and/or clear.
The Guidelines on Fines provides explanations on the factors to be taken into account in determining the gravity of the harm caused or likely to be caused by the infringement. In this context, the harm may be to competition in general, and thus to the consumer, to trading partners such as buyers and suppliers, to third parties such as existing or potential competitors, or to the economy as a whole. Accordingly, harm may be assessed taking into account the actual or potential adverse effects on other interests protected by competition, not only on the level of competition in the relevant market.
Another factor taken into account in determining the initial fine rate is whether the violation is clear and/or severe, i.e., the nature of the violation. In line with the secondary legislation of the Authority, it is clarified that violations such as price fixing between competitors, customer or territory allocation, supply restriction, collusive bidding in tenders are classified as clear violations. The assessment to be made in this context may also take into account which competition parameter(s) the infringement relates to and whether the infringement is clandestine in nature and/or whether it is likely to be detected.
It is also stated that the infringement may be deemed to be severe where the infringing undertakings have market power and/or the negative impact of the infringement on consumer welfare is substantial.
b. Determination of the Duration of the Violation
The duration of the violation also plays a role in determining the base fine rate. For violations lasting at least one year, the increase in the initial fine rate in the New Regulation on Fines is staggered in annual intervals ranging from one year to five years.
The Guidelines on Fines provides additional clarification on the calculation of this period. Accordingly, in the calculation of one full year, the one-year period will be deemed to have expired on the same day of the following year, whichever day of the year in question is the beginning of the period. For example, if it is determined that the violation started on 25.10.2022 and ended on 25.10.2023, the duration of the violation will be calculated as one year, and the increase rate will be calculated as one fifth.
3. Determination of the Final Fine Rate
After determining the base fine rate, aggravating factors and/or mitigating factors are evaluated and the final fine rate is determined.
a. Aggravating Factors
- Recidivism
The Guidelines on Fines explains that if there is a Board decision that determines that the undertaking in question has violated Article 4 or 6 of the Law No. 4054, retrospectively from the moment the violation subject to the administrative fine is committed, this decision will constitute the basis for recidivism. In addition, the Guidelines on Fines also provides some explanations on the limitation of the aggravating factor to be applied within the scope of recidivism. Accordingly, the Board decision or decisions constituting the basis for recidivism should not have been taken into consideration as an aggravating factor in determining the administrative fine under another Board decision. In other words, the base fine will be increased up to one time by taking into account one or more Board decisions that have not previously constituted the basis for the increase in the recidivism.
- Discretionary Aggravating Factors
The Guidelines on Fines also provides some clarifications on the concept of decisive influence in the New Regulation on Fines. Accordingly, the following exemplified as the indications of decisive influence: defining the strategic elements of the anti-competitive agreement, leading the meeting or organizing meetings for the implementation or maintenance of the agreement, playing a leading or encouraging role in the infringement, forcing other undertakings to commit the infringement, applying control, pressure, deterrence and sanction mechanisms on other undertakings through actions such as warnings, instructions, directions, and similar behaviors. In this context, it is explained that the role played by the undertakings in the occurrence and maintenance of the violation will be taken into consideration when determining the administrative fine to be imposed.
In the Former Regulation on Fines, the phrase ‘maintenance of the cartel’ was used after the investigation decision under this heading. This was changed to “maintenance of the infringement”, paving the way for an increase in the fine in case the infringement continues in non-cartel infringement types. In parallel with the New Regulation on Fines, the Guidelines on Fines has preferred the term “violation” instead of “cartel”.
- Application of More Than One Aggravating Factor at the Same Time
The Regulation on Fines has emphasized that if aggravating factors are present together, a single increase rate will be determined under this article.
b. Mitigating Factors
The Guidelines on Fines states that the mitigating factors provided in the New Regulation on Fines are not of a limited nature.
The Guidelines on Fines provides some clarifications regarding the mitigating factor to be applied for acting in cooperation with the Authority during the on-site inspections. In this context, it clarifies that the actions that the undertaking is obliged to take within the scope of its legal obligation under the Law No. 4054[6] will not be considered as assisting the on-site investigation.
In the New Regulation on Fines, the existence of coercion by other undertakings is stipulated as another mitigating factor. The Guidelines on Fines provides that the undertaking that commits the competition violation under force and violence, intimidation and threat may constitute a reason for a reduction in the penalty to be imposed.
The Guidelines on Fines provide that limited participation in the violation will be taken into account as a mitigating factor. It provides additional clarifications on the application of this provision. For example, it may be taken into consideration as a mitigating factor for the parties who immediately terminate the infringement after the Board’s intervention, participate in the meetings subject to the anti-competitive agreement in a limited manner, implement the infringement in a more limited scope than the agreed elements, and the parties who are parties to the conduct subject to the anti-competitive agreement but refrain from implementing the agreement or remain passive and/or adopt competitive behavior in this regard.
The mitigating factor of “very small share of the practices subject to the violation within annual gross revenues ” (emphasis ours) in the Former Regulation on Fines has been changed to “ small share of the practices subject to the violation within annual gross revenues ” in the New Regulation on Fines. In this context, the Guidelines on Fines states that the scope of application of the mitigating factor arising from the share of the infringing activities in annual gross revenues has been expanded.
The Guidelines on Fines also explains the new mitigating factors regulated under the New Regulation on Fines, namely “the presence of foreign sales revenues within the annual gross revenues which is the basis for the monetary fine.” In this context, the existence of export revenues is also important in terms of the impact of the activities of the undertaking on the Turkish market, and that factors such as the structure of the market where the infringement is carried out, whether the products subject to the infringement or the market or markets in which the undertaking operates are supported within the scope of export incentive policies, and the size of the ratio of foreign sales in annual gross revenues may be considered as a reason for reduction.
On the other hand, it is stated that it is possible that the financial power obtained by an undertaking through its export activities may have negative effects such as increasing the market power of the undertaking, making the anti-competitive conduct sustainable or systematic, and whether a discount will be granted to the undertaking due to its export activities and the rate of the possible discount will be determined by taking these issues into consideration.
The Guidelines on Fines clarifies that the mitigating factors in the New Regulation on Fines are not exhaustive and that the Board may also consider reasons other than these as mitigating factors. In this context, the circumstances listed as mitigating factors in the Former Regulation on Fines may also be accepted as grounds for reduction.[7]
According to the Guidelines on Fines, if one or more of the mitigating factors are present at the same time, a single reduction rate will be determined for these mitigating factors and applied to the base or aggravated fine rate.[8]
The Guidelines on Fines also underlines that there is no lower or upper rate in terms of reduction and that it is up to the discretion of the Board to decide whether to apply mitigating factors and, if so, at what rate, according to the requirements of the case at hand.
4. Implementation of the Provisions of the Active Cooperation Regulation and Settlement Regulation
The Guidelines on Fines clarifies that the fine reductions to be made within the scope of the leniency application or settlement application will be made over the administrative fine amount obtained by applying the provisions of the New Regulation on Fines. If leniency application and settlement application are submitted together, the discount rates determined for these applications will be added together and applied to the administrative fine amount determined in accordance with the provisions of the New Regulation on Fines.
5. Administrative Fines on Managers and Employees
In parallel with the Former Regulation on Fines, the New Regulation on Fines regulates the rate of the penalty to be imposed on the managers or employees of the undertaking whose decisive influence is found in the infringement. The Guidelines on Fines makes reference to the definition of decisive influence and it is underlined that the relevant concept is defined as an indispensable function in the occurrence and/or continuation of the infringement. Accordingly, it is explained that a strict causal link can be established between the occurrence and/or continuation of the infringement and the actions of the relevant manager or employee, and that the existence of a decisive influence can be found in cases where it is understood that the infringement would not have been committed or continued without the relevant manager or employee.
Managers or employees who devise the strategy on how to carry out the anti-competitive strategy, lead the implementation of this strategy, or provide the physical or technical means to sustain the anti-competitive strategy may be deemed to have decisive influence.
Conclusion
It can be concluded that the introduction of explanations on the implementation of the New Regulation on Fines through the Guidelines on Fines is a positive development in order to provide predictability to undertakings until case law on the New Regulation on Fines is established.
[1] The Turkish version of the New Regulation on Fines can be accessed here. Our legal alert on the New Regulation on Fines can be accessed here.
[2] The Turkish version of the Former Regulation on Fines can be accessed here.
[3] The Turkish version of the Guidelines on Fines can be accessed here.
[4] Dorak Turizm, 25.03.2021, 21-17/208-86; Retail II, 15.12.2022, 22-55/863-357; Private Hospitals 24.02.2022, 22-10/152-62; Sahibinden, 17.08.2023, 23-39/754-263; Samsung, 23.11.2023, 23-54/1044-376; Yaş Maya, 17.08.2023, 23-39/755-264.
[5] 13th Chamber of the Council of State, decision dated 02.12.2020, and numbered 2020/1939 E., 2020/3507 K.
[6] The actions are listed as following in the relevant paragraph: “Ensuring that the books, all kinds of data and documents kept in physical and electronic media and information systems of the undertakings are examined by the case handlers conducting on-site inspections, that copies and physical samples of these are taken, responding to written or verbal explanations requested on certain issues, submitting copies of the requested information, documents, books and other means to the case handlers conducting on-site inspections, ensuring that on-site inspections are carried out regarding all kinds of assets of the undertakings.”
[7] The Guidelines on Fines lists the following as examples of mitigating factors: incentives of public authorities, the presence of buyer power in the market, the absence of an established case law on the conduct subject to administrative fines, and the existence of force majeure.
[8] The Guidelines on Fines provides an example in this context: If the aggravated fine rate is set at 4% and the reduction rate due to mitigating factors is set at one-fourth (1/4), the mitigated fine rate will be calculated as 3%.
