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Turkey: Competition Authority
President of the Competition Authority
The Turkish Competition Authority (TCA) is of the opinion that global competition law will only develop through the exchange of knowledge and experience within the international competition circle. As such, the TCA makes communicating with all stakeholders a priority. Below we provide a brief overview of the activities of the TCA, and a projected focus of the agency for 2014–2015.
Overview of the activities of the TCA
Act No. 4054 on the Protection of Competition (the Competition Act) was adopted in 1994, and started to be enforced by the TCA in 1997. The decision-making body of the TCA is the Turkish Competition Board, which is composed of seven members. The main pillars of the Turkish Competition Act include:
- the prohibition of anti-competitive agreements;
- abuse of dominant position; and
- merger control.
The TCA has so far completed 216 investigations. Over its 17-year enforcement period, the main sectors of the economy in which most investigations were conducted by the TCA included:
- food, agriculture and refreshments;
- construction materials; and
- medicine and health services and products.
Fines totalled more than 2.4 billion Turkish lira in that time period.
In 2013, the Turkish Competition Board initiated 21 investigations in the following sectors:
- information and communications technology;
- food and agriculture;
- culture, art and entertainment;
- professional activities;
- petrol and petroleum products; and
In the same time period, 21 investigations were concluded. All but one of those investigations were carried over from the previous year.
In its investigation against Frito Lay, the global chips manufacturer was fined 2.25 per cent of its turnover by the Turkish Competition Board on the grounds that it used its market power to deal exclusively with retail stores, hampering its rivals’ ability to compete. Another important investigation finalised by the Turkish Competition Board in 2013 concerned the deposit, credit interest and credit card markets. The investigation was carried out against a total of 12 public and private banks. This decision is especially worth mentioning because of the significance of the markets involved and the size of the fine imposed by the Competition Board on the public and private banks in question, which exceeded the total amount of all the fines during the 17-year enforcement of the TCA. Meanwhile, the case became a subject of high interest for public opinion and consumer organisations. Investigations concerning the cement sector in different geographical regions of Turkey and concerning jewellery associations were other noteworthy examples of 2013.
There were 21 ongoing investigations in 2013, one of which investigated whether the incumbent undertaking, Tüpraş, had abused its dominant position in the petroleum and petroleum products market through practices such as excessive prices, refusal to deal and tying. Eventually in January 2014, it was decided that Tüpraş abused its dominant position in violation of article 6 of the Competition Act by means of its practices regarding pricing and agreements, as a result of which the said undertaking was imposed fine.
There are currently 16 ongoing investigations at the TCA.
Competition enforcement in Turkey is in line with the EU acquis due to the Customs Union between Turkey and the EU. According to article 39 of the Customs Union:
Turkey shall ensure that its legislation in the field of competition rules is made compatible with that of the European Community and is applied effectively.
In this regard, the work for further alignment has always been high on the agenda of the TCA since its inception. Consequently, in 2013, the TCA adopted several new guidelines, including ones on horizontal cooperation agreements, leniency applications, the assessment of horizontal and non-horizontal mergers and the control for concentrations. The TCA also adopted a block exemption communiqué concerning specialisation agreements while updating its communiqué on privatisation transactions in the same interval.
Competition advocacy activities are considered very important tools to enhance better enforcement by the TCA. Thus, the TCA has been using various tools and ways in relation to establishing and fostering a competitive environment and raising public awareness on the benefits of competition. Competition Letters, Competition Reports, meetings and sector inquiries are among those tools, in addition to various other initiatives of the TCA such as the publication of a competition concepts dictionary, and handbooks. Meetings with the relevant Chambers of Commerce in different cities of Turkey as well as meetings concerning contemporary developments in competition law held hand in hand with academia are also good examples of the agency’s initiative in this area.
The TCA has been publishing and disseminating Competition Letters on various subjects relevant to competition law enforcement since 2009, proving the sustainability of this initiative.
The TCA prepared its fifth Letter on the relationship between competition policy and the protection of consumers in 2013. This topic was chosen especially because the TCA would like to advocate for an effective competition policy, which would ensure that markets attain a more competitive structure while forcing undertakings to produce higher quality and safer products, and encouraging an increase in activities aimed at informing consumers. Raising consumer awareness would ensure that consumers can engage in comparisons and make choices to award successful undertakings, while the unsuccessful undertakings would be ignored due to better functioning markets and robust competition. When appropriately implemented, competition policy and consumer policy would foster and reinforce each other.
The 2013 Competition Letter also included certain decisions of the Competition Board that have a direct effect on consumer welfare with an aim to raise awareness in non-governmental organisations, including consumer organisations, concerning the relationship between the competition regime and protection of consumers.
In early 2014, the TCA made its sixth Letter public on the relationship between competition policy and the non-governmental organisations and associations of undertakings. The 2014 Competition Letter notes the vital role that has been and will continue to be played by associations of undertakings within the context of the efficient implementation and institutionalisation of competition law in Turkey, and calls upon the managers of all organisations in this category to emphasise the necessity of cooperation. All non-governmental organisations established on a mandatory or voluntary basis by natural and legal persons engaged in economic activities are characterised as associations of undertakings within the framework of the competition law. These organisations may become stakeholders who can make positive contributions to the development and adoption process of competition policy, or they can be the subjects of competition infringement claims. Therefore, it is one of the fundamental duties and responsibilities of the management of associations of undertakings to encourage its members to act in compliance with the rules that create the fair competition environment. The main goal of the 2014 Competition Letter is to reach the management or managers of all associations of undertakings established by natural and legal persons engaged in economic activity in Turkey, as well as those of all professional chambers, foundations, associations, unions and higher bodies thereof. In addition, the TCA deems it extremely important to share the Competition Letter with the public, not only because the subject matter affects all segments of the society, but because it is the requirement of a transparent competition policy.
Another significant advocacy initiative is the preparation of Competition Reports over the last years. These reports are also made public in accordance with the advocacy activities of the TCA. The 2013 Competition Report on public authority interventions was aimed at pointing the way towards giving greater importance to competition policies in the Turkish economy, while the 2014 Competition Report focuses on the relationship between the competition policy and small and medium enterprises.
Within the margins of its advocacy work, the TCA participated in the World Bank Competition Advocacy Contest with its 2013 Competition Report on Public Interventions from a Competition Policy Perspective, which discusses public interventions from a competition policy perspective taking into account the reasons, tools and risks of such interventions. The TCA received an honourable mention for its report based on the belief that the dissemination of Competition Reports prepared by the TCA on the role of government in markets has triggered several Turkish business associations to advocate for the removal of anti-competitive provisions in Turkish laws and regulations.
The use of sector inquiries is another important tool being employed in the competition advocacy work. In fact, the most recent sector inquiries into the motor vehicle sector and the distribution of pharmaceuticals are both welcomed by stakeholders with great enthusiasm by providing the public with the necessary ground for further discussions. As of now, the TCA has concluded nine sector inquires, six of which were in the last three years.
In May 2014, a sector inquiry into the cement sector started. Despite various investigations of anti-competitive conduct among cement producing undertakings and the administrative fines imposed so far, the number of complaints concerning this sector has failed to see a reduction; on the contrary, the number of such complaints has recently increased. The complaints mostly emphasise the significant price hikes observed following 2013. In addition, the claims include allegations of region and customer allocation, refusal of supply, and practices that may be characterised as predatory pricing. Thus, this inquiry was deemed necessary.
Projected focus of the TCA for 2014–2015
The TCA has been working hard over the years to further develop itself along with its specified mission and vision. The mission of the TCA is specified as the establishment, protection and development of a competitive environment, while its vision is to become one of the leading competition authorities in the world and one of Turkey’s exemplary public institutions. The TCA would like to continue its work in 2014 and onwards in light of these important targets. To do that, the TCA would continue its quest to have a comprehensive understanding of the competitive paradigm, the relation between law and economics, free markets, and the relevant concepts in competition law enforcement, and would also look for the establishment of an effective organisation and to acquire sufficient knowledge on the nature and dynamics of human behaviour in order to continue carrying out its duties more efficiently.
Therefore, enforcement and advocacy will continue to shape the daily work of the TCA, and efforts to strengthen the organisational structure of the TCA will continue. As part of its efforts to strengthen its organisational structure, the TCA completed the e-signature and electronic information management system on an institutional scale last year. However, the TCA is determined to continuously modify the system in terms of institutionalisation and efficiency. Moreover, the internal supervision system that is under construction would increase the quality of management while raising the standard of the agency’s work.
Another important challenge that lies ahead is the Draft Amendment Package to the Competition Act, which is before the consideration of the Grand National Assembly of Turkey. From the very beginning, the TCA’s intention and efforts to establish the effective implementation of the Competition Act, as well as the creation of an efficient and well-functioning agency, has never stopped. Naturally, the need for significant changes to the law emerges from time to time and some of these changes have been embedded into the current law, at least partially. The TCA is expecting and hoping to have this Amendment Package become law by 2015. The Amendment Package includes:
- the introduction of the de minimis principle;
- a significant impediment to effective competition (SIEC) test for merger control assessments;
- a settlement and concession mechanism; and
- the creation of a Competition Council to manage relations better with the relevant public bodies alongside other improvements.
The TCA will continue its relationship with the academia, business world and governmental bodies with an aim to enhance competition culture across the country, and continue to improve its relationship with other regulatory and supervisory authorities to ensure systematic integrity in the economy. The TCA intends to continue to work closely with its counterparts in the international arena either on a multilateral or bilateral basis. Its work at the OECD, ICN, UNCTAD and OIC continues to be important for the TCA; cooperation on a bilateral basis will only serve to strengthen the agency’s capacity.
Finally, the TCA will continue its work aimed at the creation, development and protection of a competitive environment while continuing to look for ways to be more efficient in order to do its job even better in the future, based on the experience gained over the past 17 years.
President of the Competition Authority
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