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Legal Alerts

27/10/2020

Competition Authority Publishes Draft Communiqué on De Minimis Exception

Legal Alerts
Competition
General

New Developments

The Competition Authority (“Authority“) published the Draft Communiqué on Agreements, Concerted Practices, Acts and Conduct of Association of Undertakings that Do Not Have an Appreciable Effect on Competition (“Draft Communiqué“) on its website on October 23, 2020. The Draft Communiqué aims to establish the de minimis mechanism, which allows public funds to be directed towards investigating more important violations instead of violations that do not significantly restrict competition. Opinions, suggestions and evaluations on the Draft Communiqué may be submitted to the Competition Authority until November 23, 2020.

What Do the Developments Mean?

The Draft Communiqué regulates the conditions under which the Competition Authority may decide not to pursue investigations on the agreements, concerted actions and decisions and actions of association of undertakings deemed not to significantly restrict competition in the market. The procedures and principles specified in the Draft Communiqué are:

  • Clear and hardcore violations cannot benefit from the de minimis exception provided by the Draft Communiqué: The Draft Communiqué states that clear and hardcore violations cannot benefit from the de minimis exception. Article 4 of the Draft Communiqué defines clear and hardcore violations as price fixing, region or customer allocation and restrictions on supply. In this context, the definition of clear and hardcore violations appear to be comparable to the “cartel” definition in the Regulation on Fines to be Applied in cases of Agreements, Concerted Practices and Decisions Restricting Competition, and Abuse of Dominant Position published in 2009 by the Authority. However, the Draft Communiqué’s definition of clear and hardcore violations appear to be narrower, as it does not expressly include bid-rigging, as opposed to the aforementioned regulation.
  • De Minimis mechanism is based on market shares: Similar to the European Union competition law legislation and enforcement, the Draft Communiqué ordains that the following agreements do not appreciably restrict competition:

(i) if the aggregate market share held by the parties to the agreement does not exceed 10% on any of the relevant markets affected by the agreement where the agreement is made between competing undertakings; and
(ii) if the market share held by each of the parties to the agreement does not exceed 15% on any of the relevant markets affected by the agreement, if the agreement is made between non-competing undertakings.

The Draft Communiqué states that the aggregate market share of parties should not exceed 10% on any of the relevant markets affected by the agreement if it is difficult to classify whether the undertakings are competing or non-competing parties, or if the relevant decision belongs to an association of undertakings.

The Draft Communiqué has a specific provision for vertical restrictions. Accordingly, the aggregate market share of competing or non-competing undertakings should be below 5% to benefit from the de minimis mechanism if the parallel networks formed by vertical restrictions cover more than 50% of the relevant market.

Last but not least, the Draft Communiqué indicates that it will not be deemed to be an appreciable restriction on competition if the market shares of the contracting parties or members of the association of undertakings are above the specified thresholds by a maximum of 2% during the agreement or the decision period for two consecutive calendar years.

  • The Competition Board may initiate an investigation even in cases where the market share thresholds are not exceeded, or may terminate an investigation after the investigation is initiated if the aggregate market shares do not exceed the relevant thresholds: The Draft Communiqué states that the Competition Board can launch an investigation even if the abovementioned thresholds are not exceeded. Similarly, the Competition Board may terminate an investigation if it is later calculated that the market shares of the undertakings or associations of undertakings do not exceed the above thresholds where an investigation is initially commenced due to the inability to determine the aggregate market shares of the relevant undertaking or association members.
  • De minimis exception will also be applied to ongoing preliminary and full-fledged investigations when the Communiqué enters into force: The Draft Communiqué states that de minimis exception will also be applied to ongoing preliminary and full-fledged investigations once the Draft Communiqué enters into force. The Draft Communiqué will enter into force on the date of its publication on the Official Gazette and the de minimis exception will be applicable to ongoing preliminary investigations and investigations as of that currently unknown date.

Conclusion

The Authority published the Draft Communiqué on the procedures and principles regarding the implementation of the de minimis mechanism and opened the Draft Communiqué to comments, recommendations and evaluations from the public. This mechanism was added to the Law No. 4054 on the Protection of Competition through the newly enacted Law No. 7246, which entered into force on June 24, 2020. The Draft Communiqué bears significant similarities to the European Union’s Commission Notice on agreements of minor importance which do not appreciably restrict competition under Article 101(1) of the Treaty on the Functioning of the European Union (De Minimis Notice), particularly on the framework and threshold market shares. Opinions on the newly published Draft Communiqué may be submitted to the Competition Authority until November 23, 2020. It is expected that the Draft Communiqué and the eventual communiqué to come into force will enable the Authority to allocate public resources more effectively for competition law enforcement.

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