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Legal Alerts

11/11/2020

Competition Authority Applies Newly Adopted Commitment Mechanism for First Time

Legal Alerts
Competition
General

 

New Developments

According to the announcement published on the Competition Authority’s (“Authority”) website on 06.11.2020, the Competition Authority applied the newly adopted commitment mechanism, a novelty of changes to the Law No. 4054 on Protection of Competition (“Law No. 4054“), for the first time with the Competition Board’s (“Board”) decision dated 05.11.2020.

The Board’s first of its kind decision comes after Havaalanları Yer Hizmetleri A.Ş. (“Havaalanları“) submitted its commitment. Havaalanları is one of the undertakings subject to an investigation launched by the Board’s decision dated 24.07.2020 and numbered 20-35/460-M. The investigation focuses on whether the undertakings providing temporary bonded warehouse services violated Art. 6 of the Law No. 4054.

The Board concluded that this commitment addresses competitive concerns and thus decided to terminate the investigation in relation to Havaalanları. This is the Board’s first commitment decision rendered in an infringement proceeding.

What Do the Developments Mean?

The Law No. 7246 on Amending the Law on the Protection of Competition brought significant changes to the Law No. 4054. You may find our Legal Alert on these changes here. One of these major changes was the extension of the commitment mechanism to infringement investigations.

Undertakings are entitled to submit legally binding commitments to the Authority within the scope of a preliminary/full-fledged investigation per Article 43(3) of the Law No. 4054, which is the commitment mechanism’s legal basis. However, proceedings concerning clear and hardcore violations such as price setting, market or customer allocation, and restriction of supply are excluded from this application. Undertakings under investigation can voluntarily submit commitments to address the identified competition concerns so that infringement proceedings may be brought to a close following procedural economies. The Board makes the submitted commitments legally binding on the undertaking and terminates the investigation if it finds that the submitted commitments would eliminate the competition issues.

With this amendment, the Law No. 4054 now also complies with its source EU law on this matter. In its 18 years of competition enforcement, the European Commission settled cases based on provided commitments in 41 files since the introduction of commitments with the Council Regulation (EC) No 1/2003 of 16.12.2002. The European Commission recommends and supports the merits of the commitment mechanism in its reports and studies due to efficiency gains in restoring competition to markets and procedural economies.

The Authority’s announcement indicated that the Board found the relevant commitments sufficient to address the investigation’s competition concerns. However, no determination was made as to whether the undertaking committed a competition violation, on the nature of the violation, or whether the infringement continues. The announcement also mentions that the Board examined and concluded the commitment in a short period of one month.

Conclusion

With its decision dated 05.11.2020, the Board accepted the commitment submitted by an undertaking in the scope of a pending investigation and thus terminated the investigation in relation to that undertaking according to Article 43(3) of the Law No. 4054. This marks the first commitment decision in Turkish competition law practice after the law dated 16.02.2020 and numbered 7246 amending the Law No. 4054 introduced the commitment mechanism to infringement proceedings. The Authority’s quick, month-long review of the commitment further confirms the considerations of procedural economy, which were demonstrated as the amending law’s reasoning. In conclusion, commitments are expected to the frequently used, particularly once the secondary legislation per Article 43(3) of the Law No. 4054 enters into force.