January 2025 – The Regulation on Fines to Apply in Cases of Agreements, Concerted Practices, and Decisions Limiting Competition and Abuses of Dominance (“New Regulation”) was published in the Official Gazette on 27 December 2024 and came into force the same day. The New Regulation repeals the previous Regulation on Fines to Apply in Cases of Agreements, Concerted Practices and Decisions Limiting Competition (“Old Regulation”) that had been in force for 15 years and introduces substantial changes to the fining regime in Turkish competition law.
In our article, we summarise the important changes brought by the New Regulation..
Changes brought about by the new regulation
Basic fine rate
One of the most important changes in the New Regulation is in Article 5, which concerns the basic fining rate. Article 5 no longer includes a starting rate for the fining rate ranges for cartels and other violations and drops this distinction altogether. The New Regulation also does not introduce a starting rate for the fining rate range that would be applicable to all misconduct. As such, the New Regulation provides wide discretion to the Competition Board to set the basic fining rate within the general limit imposed by Article 16 of Law No. 4054 on the Protection of Competition (“Law No. 4054”). With that said, the New Regulation sets out that, in determining the basic fining rate, it is in particular to be considered whether or not the violation is clear and/or severe.
Additionally, there are changes to the duration ranges that will be relevant in determining whether and how much the basic fine rate is increased based on the duration of the infringement. In this context, the relatively broad ranges in the Old Regulation are replaced by a series of shorter durations. In the New Regulation, the basic fining rate is increased based on the duration of the infringement in the following manner:
- by one-fifth where the infringement has lasted for more than one year but less than two years;
- by two-fifths where the infringement has lasted for more than two years but less than three years;
- by three-fifths where the infringement has lasted for more than three year but less than four years;
- by four-fifths where the infringement has lasted for more than four years but less than five years;
- by 100% where the infringement has lasted for more than five years.
Following these changes, the calculation of the infringement duration is expected to become an even more crucial issue in investigations..
Aggravating factors
The New Regulation also brings changes to aggravating factors. The differences with the Old Regulation are as follows:
- As in the Old Regulation, “repetition” remains an aggravating factor. However, the New Regulation further clarifies the application of the concept and specifies that repetition is to be applied where Articles 4 and 6 of Law 4054 are violated.
- The aggravating factor of “coercing other undertakings into the violation” is no longer included, and instead we have the element of “having decisive influence over the violation”. Decisive influence is defined in the New Regulation as “having an indispensable role in the occurrence or continuation of the violation”.
- The Old Regulation included “maintaining the cartel after the notification of the investigation decision” as an aggravating factor. In the New Regulation, this factor is revised to refer to “maintaining the infringement after the service of the investigation decision”, without any limitation to cartels, and therefore the scope of this aggravating factor is increased.
- In addition to the above, violation of the confidentiality obligation under Article 12/3 of the Settlement Regulation is added as a new aggravating factor, while not abiding by commitments and not assisting the examination are no longer specified as aggravating factors.
In addition to the above changes, there is also a change regarding by what degree the aggravating factors shall influence the basic fine rate. While the Old Regulation set out different upper and lower limits for different aggravating circumstances, the New Regulation does not set out any lower limits. As such, the Competition Board can generally increase the fining rate by up to 100% but does not have any lower limits to observe. The New Regulation also clarifies that if both “repetition” and other factors are present, the rate increases will be added and then applied to the basic fine rate. Given the above, it can be said that the Competition Board will also enjoy greater discretion is applying aggravating factors.
Mitigating factors
The New Regulation brings about the following changes in the section regarding mitigating factors, as described below:
- The mitigating factor regarding assisting the examination beyond the fulfilment of legal obligations has been further detailed and clarified.
- The existence of encouragement by public authorities, voluntary payment of damages to those harmed, and termination of other violations no longer constitute mitigating factors.
- Instead of the above, the New Regulation includes new mitigating factors of “having limited participation in the violation” and “existence of export revenues in the gross revenues, which are taken as a basis for the fine”.
Among the above, the “existence of export revenues in the gross revenues taken as a basis for the fine” is noteworthy, as taking domestic sales as a basis for the fine calculation had become a commonplace position for the Competition Board in its recent decisions. As such, the decisional practice of the Competition Board will show whether this mitigating factor will be applied in this way or whether it will have varying effect from case to case.
Lastly, the New Regulation no longer includes upper or lower limits for fine reduction rates and thereby also increases the discretion of the Competition Board in this area
Assessment of separate violations
The New Regulation provides that the basic fine rate will be determined separately for each infringement. With that said, the New Regulation no longer refers to “more than one independent behaviour in terms of market, nature, and chronological process”, which was the previous legal standard for assessing the existence of separate violations and had been discussed at length in a number of past Competition Board decisions. This could potentially lead to new debates regarding the circumstances under which infringements will be deemed to be separate and independent of each other and thereby merit separate fines.
Date of coming into force
The New Regulation entered into force on the date it was published in the Official Gazette, as there are no delaying provisions.
Conclusion
The New Regulation brings important changes to the fining regime under Turkish competition law and significantly increases the discretion of the Competition Board in setting the rates for turnover-based fines to be imposed on undertakings for competition law violations.
It bears noting that, in its announcement regarding the New Regulation, the Competition Authority emphasised the importance of the rising market power of large tech companies, and that the resulting competition law violations affect a large seg ment of the economy and have significant negative effects on consumer welfare. As such, it seems that achieving sufficient deterrence for such violations was a motivating factor for the changes to the fining regime. Given the above, it can be expected that the additional discretion provided to the Competition Board through the New Regulation will be important, particularly in the case of abuse of dominance investigations concerning large tech companies.