Communiqué on Commitments Enters Into Force
The Competition Authority’s (“Authority“) Communiqué No. 2021/2 on Commitments for Preliminary Investigations and Investigations on Anticompetitive Agreements, Concerted Practices, Decisions and Abuse of Dominant Position (“Communiqué”) was published on the Official Gazette on March 16, 2021 and No. 31425 and entered into force on the same day. The Communiqué already demonstrated its potential implementations during its draft phase, and now it is expected to provide further guidance for the submission of commitments by undertakings or association of undertakings during the preliminary and full-fledged investigations, implementation and observations of the commitments. Previously, the draft communiqué (“Draft Communiqué“) was published on the Authority’s website on December 28, 2020. You may find our legal alert on the Draft Communiqué here.
What Do the Developments Mean?
Even before the finalized version of the Communiqué, the Competition Board (“Board“) has been providing insights on the Communiqué by terminating the investigation against Havaalanları Yer Hizmetleri A.Ş. with its decision No. 20-48/655-287 and dated November 5, 2020 and the investigation against the Insurance Association of Turkey and OSEM Sertifikasyon A.Ş. with its decision No. 21-01/8-6 dated January 7, 2021 pursuant to the commitments submitted by the relevant undertakings/association of undertakings. In addition, the Board rejected the commitments submitted within the investigation against Arslan Nakliyat with its decision No. 20-36/485-212 and dated July 28, 2020.
The main aspects of the Communiqué are provided as below:
- The Communiqué is inapplicable to clear and hardcore violations: In line with the Communiqué No. 2021/3 on Agreements, Concerted Practices, Acts and Conducts of Association of Undertakings that Do Not Considerably Restrict Competition, the Communiqué states that clear and hardcore violations cannot benefit from the Communiqué. While the definition of “clear and hardcore” violations under the Draft Communiqué only referred to price fixing, customer or region allocation and restrictions on supply, Article 4 of the Communiqué defines these violations as having the object or effect of directly or indirectly preventing, distorting or restricting competition in a market for goods and services by further categorizing them in terms of the nature of the relationship between the undertakings.
- Horizontal clear and hardcore violations: Price fixing; customer/supplier/territory/trade channel allocation; restrictions or quotas on supply; bid-rigging; and sharing competitively sensitive information such as future prices, production or sale volumes, between competitors.
- Vertical clear and hardcore violations: Determination of the buyer’s fixed or minimum sales price between undertakings operating at different levels in production or distribution chains.
- Time limitation to submit commitment requests: Although the third paragraph of Article 43 of Law No. 4054 on the Protection of Competition (“Law No. 4054“), which regulates the commitment mechanism, stipulates that a commitment can be submitted during the preliminary investigation and investigation process, the Communiqué limits the time period for the submission of the commitments to three months following the date of receipt of the investigation notice. Furthermore, the Communiqué would be applicable for undertakings already subject to a preliminary or full-fledged investigation, despite the three months period having expired on the date of the publication of the Communiqué. The investigated parties could submit their request for submission of commitment until the deadline to submit their third written defenses, despite not being explicitly regulated under the Communiqué. In fact, the Board, in the Arslan Nakliyat decision No. 20-36/485-212 and dated July 28, 2020, considered that a commitment can be submitted until the investigation phase is completed, by underlining that the investigation period ends once the third written defenses are submitted to the Authority’s records. The Board rejected Arslan Nakliyat’s proposal because it failed to meet the necessary timeline envisaged by the Law No. 4054.
- Discussions with the Board: While Article 6 of the Draft Communiqué stated that the deliberations with the Authority in relation to the commitment will start as soon as possible following the commitment submission request conveyed to the Authority, the Communiqué introduces further steps following the submission of the commitment. Accordingly, after the submission, the Board will consider the nature of the agreement, decision or practice, i.e., whether it falls within the category of a clear and hardcore violation, and other necessary factors, and then decide either to start the commitment discussions or to reject the request for submission of the commitment and terminate the commitment process. As mentioned under paragraph 4 of the same article, the commitment discussions can be done either verbally or in written form. Additionally, the Communiqué also provides the Board the discretion to extend the timelines in case the investigated competition concerns cannot be sufficiently and explicitly demonstrated and in the need of a more detailed assessment.
- Content of the commitment letter: Parallel to the draft, Article 8 of the Communiqué clearly states that the commitment letter should clearly include the submitted commitment and should not include alternative commitments. The same article outlines the elements that the commitment letter should entail. Accordingly, the commitments letter should explicitly entail the following elements: (i) the competition problems to be mitigated by the commitments; (ii) what the commitments entail; (iii) the date the commitments begin; (iv) the duration and manner in which the commitments will be applied; (v) other important deadlines for the commitments’ application; (vi) on what grounds could these deadlines be extended; (vii) the commitments’ effect on the market; (viii) how the commitments would solve the competition problem; (ix) how could the Authority observe compliance with the commitments; and (x) other aspects deemed necessary.
- Revising previously rejected commitments: Pursuant to Articles 10 and 11, the Board has the discretion to give the parties a chance to amend the commitments only once; or decide to terminate the commitment process in cases where it does not find the commitments to be appropriate or following its re-assessment of the commitments based on the opinions of third parties.
- Second-time submissions are prohibited: As further clarified under Article 13 of the Communiqué, the undertakings will have only one chance to revise their commitments and if the Board does not find the revised commitments sufficient to eliminate the concerns, the commitment process will be terminated. If terminated, the undertakings cannot request any further submission of commitments.
- Acceptation, observation and execution of the commitments: Further to Article 14 of the Communiqué, if the Board considers that the commitments are sufficient to eliminate competition concerns, the Board may make the commitment binding on the parties involved at any stage of the commitment process; decide not to open an investigation; or to terminate the investigation. However, the Communiqué explicitly indicates that this decision would not include any findings on whether the agreement, decision or practice generating the competition concern is a violation. Finally, Article 15 of the Communiqué indicates that observing parties’ compliance with the commitment can be done by the parties regularly submitting reports; appointing third parties for audit purposes; or cooperating with professional associations or relevant institutions and organizations. Article 15 specifically refers to the Board’s authority to ex officio observe the implementation of the commitments.
The Communiqué, which recently entered into force, regulates the procedures and principles regarding the implementation of the commitment mechanism in an effort to limit anti-competitive damages and save time and resource costs in detailed examination processes required for extensive competition investigations. 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 and is a reflection of compliance with the EU Regulations as it is aligned with the Council Regulation No. 1/2003 of December 16, 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the EC Treaty. The Board has already started to render decisions on the commitment procedure, and more decisions are expected with the introduction of the Communiqué.
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