The Competition Board has issued a new communiqué on block exemptions in the motor vehicle sector after a sector inquiry carried out by the Competition Authority and obtaining opinions and amendment proposals of stakeholders. The Communiqué No. 2017/3 (published in the Official Gazette dated February 24, 2017 and numbered 29989) is almost same with the previous communiqué (Communiqué No. 2005/4 – published in the Official Gazette dated November 12, 2005 and numbered 25991), which has been abolished on the same date when the Communiqué No. 2017/3 has entered into force. With the Communiqué No. 2017/3, new provisions have been introduced whereas certain other provisions have been amended for the development of Turkish competition legislation and harmonization with EU legislation. Agreements enjoying block exemption in accordance with the provisions of Communiqué No. 2005/4 and failing to meet the block exemption conditions stipulated under the Communiqué No. 2017/3 shall be revised within two years in order to meet the conditions stipulated under the new communiqué. The Competition Board has also issued guidelines including detailed explanations on provisions of the Communiqué No. 2017/3 and their implementation.
Certain provisions of Communiqué No. 2010/4 have been amended pursuant to the Communiqué No. 2017/2 (published in the Official Gazette dated February 24, 2017 and numbered 29989). As per the Communiqué No. 2017/2, Article 7(2) of the Communiqué No. 2010/4 has been abolished. The abolished Article 7(2) provided that thresholds applied to merger and acquisition notifications to be reviewed by the Competition Board every two years. Furthermore, the Communiqué No. 2017/2 introduced a provision with respect to acquisition of securities trading on the stock exchange from different sellers via a series of transactions and provides that the filing with the Competition Board may be made following completion of the transaction provided that (i) the transaction is notified without delay; and (ii) voting rights attached to the acquired securities are not exercised or exercised only to maintain full value of the investments based on a derogation granted with a decision of the Competition Board. The third and the last amendment to the Communiqué No. 2010/4 is related to merger or acquisition transactions realized by the same persons or same parties in the same relevant product market. Accordingly, two or more merger or acquisition transactions realized between the same persons or same parties in the same relevant product market within a period of three years shall be considered to be a single transaction in the calculation of thresholds stipulated under Article 7 of the Communiqué No. 2010/4. This period was two years before the amendment. The Communiqué No. 2017/2 entered into force on its publication date of February 24, 2017.
Pursuant to the Regulation on Payments to be made by Joint Stock and Limited Companies (published in the Official Gazette dated October 1, 2004 and numbered 25600) (the “Regulation”), companies were required to pay a contribution fee in the amount of 4/10,000 of the share capital of the company to be incorporated and 4/10,000 of the increased share capital amount to the bank account of Competition Authority. As per the Communiqué No. 2017/4 (published in the Official Gazette dated March 31, 2017 and numbered 30024) (the “Communiqué No. 2017/4”) issued by the Competition Board, such contribution is now required to be paid to the trade registries during the registration procedure of company incorporations or share capital increases. The Regulation has been abolished on March 31, 2017, the date on which the Communiqué No. 2017/4 has entered into force.
The administrative penalty imposed under the Article 16 of the Law Regarding the Protection of Competition (Law No.4054) for merger or acquisition transactions subject to approval and realized without the approval of the Competition Board and for situations where incomplete, false or misleading information or document is provided, or information or document is not provided within the determined duration or at all and on-site investigation held by the Competition Board is obstructed or made difficult has been amended by the Communiqué published in the Official Gazette dated December 10, 2016, and numbered 29914, which entered into effect on January 1, 2017. Accordingly, the penalty to be determined pursuant to the Article cannot be less than TL 18,377.
The Communiqué on Right of Access and Protection of Trade Secrets (Communiqué No.: 2010/3) published in the Official Gazette dated April 8, 2010 and numbered 27556 has been amended by a Communiqué dated January 31, 2016 and numbered 29610. Pursuant to the amendment, relevant undertakings should now completely fill the “Access to File Request Form” attached to the Communiqué in order to claim the confidentiality of information provided to/obtained by the Competition Board during the implementation of the Law on the Protection of Competition.
Pursuant to amendment communiqués both published in the Official Gazette dated February 13, 2016 and numbered 29623, undertakings should now provide also their MERSIS (Central Registration System) numbers in addition to other information such as title, address, telephone and fax numbers during merger & acquisition clearance applications and complaint applications before the in cases of violation of the Law on the Protection of Competition.
The Block Exemption Communiqué on Research and Development Agreements numbered 2003/2 (published in the Official Gazette dated August 27, 2003 and numbered 25212) has been abolished whereas the new Block Exemption Communiqué on Research and Development Agreements (numbered 2016/5) is came into force with the Communiqué published in the Official Gazette dated March 16, 2016 and numbered 29655. The new Communiqué broadened the extent of the exemption and revised the scope of the restrictions.
The administrative penalty imposed under the Article 16 of the Law Regarding the Protection of Competition (Law No.4054) for merger or acquisition transactions subject to approval and realized without the approval of the Competition Board and for situations where incomplete, false or misleading information or documents are provided, or information or documents are not provided within the determined duration or at all and on-site investigation held by the Competition Board is obstructed or made difficult, has been amended by the Communiqué published in the Official Gazette dated December 25, 2015, and numbered 29573, which entered into effect on January 1, 2016. Accordingly, the penalty to be determined pursuant to the Article cannot be less than TL 17,700.
The Annual Activity Report (the “Report”) for the year 2013 was published by the Competition Board (the “Board”) on April 14, 2014. The Report includes statistical information regarding files examined within the year 2013. The Board examined 191 files regarding claims of violation of competition rules, 37 of which were in petroleum, petro chemistry and petroleum products sector. Additionally, the Board decided over 58 files on Negative Clearances/Exemptions. The Pharmaceuticals sector, with 12 files, and Capital Market, Finance and Insurance Services sector with 11 files each were leading sectors in such decisions of the Board. Lastly, the Board had decided over 213 Merger and Acquisition applications. 29 applications were in Food, Agriculture, Forestry, Fishery and Livestock sector and 22 applications were in the Transportation and Automotive sector. There has been no change in Competition legislation for the last quarter.
On January 2014, the draft law (“Draft Law”) amending the Law on Protection of Competition (“Competition Law”) was submitted to the review of the Grand National Assembly of Turkey.
The Competition Law, which was entered into force in 1994, was being criticized and a need for modernization was being raised by increasing number of academicians and practitioners. Such discussions intensively increased particularly following the reforms in the EU legislation, conducted through a number of regulations including Council Regulation (EC) 2003/1 and Council Regulation (EC) No 139/2004. An attempt was conducted in 2008 but the draft law amending the Competition Law could not successfully pass the Grand National Assembly of Turkey.
At the moment, the Draft Law is under review of the Industry, Commerce, Energy, Natural Resources, Information and Technology Commission of the Grand National Assembly of Turkey and yet to be finalized and enacted.
Although there is considerable room for improvement in the Draft Law and a number of concerns have been rightfully raised, it should be noted that the enactment of the Draft Law would be a significant step forward for the development of Turkish competition legislation and harmonization with EU legislation.
Some of the novelties proposed by the Draft Law are briefly explained below.De Minimis Principle: In accordance with the EU legislation, the Draft Law, for the first time in Turkish competition practice, provides flexibility to the Competition Board in terms of not initiating an investigation with respect to certain potential infringements, parties to which do not trigger certain criteria based on market share, turnover etc., which would be determined by the Competition Board. Concentrations (currently referred to as “mergers and acquistions” under Competition Law): Not only the terminology, but also the approval test and procedure for Competition Board’s review of merger and acquisition transactions is proposed to be amended significantly. According to the Draft Law, creation or strengthening a dominant position will no longer be a part of the test for the approval. The approval test will be based only on whether the transaction significantly impede effective competition in the market or a part of it, through creating or strengthening a dominant position . Review Period: Among the changes in the procedure of the review, it is worth to mention that the Draft Law proposes the review period to be extended to 30 business days (from 30 days), which, if necessary, can be extended to 4 months by the Competition Board. Investigations: Important amendments clarifying the Competition Board’s powers (mainly in terms of information requests) with respect to investigations are proposed by the Draft Law. Confidentiality: Among these, a provision which is expected to be subject to a revision before the Draft Law is enacted, concerns Competition Board’s right to request information and documents from public and private persons, entities and authorities. The proposed wording provides that the Competition Board’s power shall override the provisions of other laws and one cannot deny providing the requested information or document based on the confidentiality or secrecy provisions in other applicable laws, so long as the information/document is not a state secret. Serious concerns have been rightfully raised in terms of the proposed provision, which may easily be interpreted to prevail over the secrecy and privilege of attorney-client relationship protected by the Lawyers Act (Law No. 1136) and open the door for requesting client’s confidential information and documents from the lawyer or potentially making unannounced investigations in the lawyer’s office.
In addition, in February 2014, the Competition Board published the draft Regulation on Administrative Fines to be Imposed in case of Violation of Law No. 4054. Such draft regulation sets forth various reforms in the determination of the administrative fines to be imposed by the Competition Board.