1. Introduction

Law No. 7246 on Amendments Concerning Law No. 4054 on the Protection of Competition has been published in the Official Gazette and entered into force on June 24, 2020 ("Amendment Law"). As discussed throughout this section, in addition to clarifying certain mechanisms in Law No. 4054 on Protection of Competition ("Law No. 4054"), the Amendment Law also introduced new substantive mechanisms and procedural changes, among others the de minimis principle for agreements, concerted practices, or decisions of association of undertakings, except hardcore violations.

In order to shed light on details on the process and procedure related to application of the newly introduced de minimis principle, the Authority published its Communiqué No. 2021/3 on the Agreements, Concerted Practices and Decision and Practices of Associations of Undertakings which Do Not Appreciably Restrict Competition (the "De Minimis Communiqué" or the "Communiqué") on March 16, 2021.

2. De Minimis Principle

The de minimis principle, previously an alien concept to Turkish competition law, was introduced to Law No. 4054 by the amendment of Article 41(2), with the aim to re-direct the public resources to more significant violations.

Before the introduction of the de minimis principle, Turkish practice was bound to decide on the matters that are not necessarily significant, but pushing the boundaries of the existing regulation. The Competition Board (the "Board") used Article 9(3) of Law No. 4054 in a way that was similar to a de minimis principle,1 whereby the Board had the authority to issue an opinion letter to undertakings to terminate the infringement, instead of bringing upon them the full force of the law. However, as Article 9(3) is not a de minimis principle, the implementation standards, as in when the Board would engage Article 9(3) on procedural efficiency grounds, were unclear. Thus, introduction of the de minimis principle, which enables the Board to prioritize cases, appears to be compatible with the strategy to set an efficient procedural process and contributes to legal certainty and consistency. Furthermore, this amendment also supports the Amendment Law's goal to bring the Law No. 4054 closer to the European Union acquis.

By virtue of this newly introduced principle, the Board can decide not to launch a full-fledged investigation for agreements, concerted practices and/or decisions of undertakings / association of undertakings which do not exceed certain market share thresholds. De minimis principle is applicable to agreements falling under Article 4, although not for 'hard core' violations including price fixing, territory or customer sharing and restriction of supply. In other words, cartels do not benefit from the de minimis principle.

The Amendment Law refers to "turnover" and "market share" thresholds for the de minimis exception but leaves the setting of the threshold to the Board. The limits of the safe harbor introduced by the Amendment Law are now clarified with the De Minimis Communiqué.

3. De Minimis Communiqué

By virtue of the De Minimis Communiqué, undertakings will have legal certainty as to which actions fall within the scope of de minimis principle.

In fact, the de minimis principle introduced under Article 41(2) of Law No. 4054 and the relevant De Minimis Communiqué, is closely modeled with the European Commission'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 ("TFEU") ("De Minimis Notice").

Article 1 of the De Minimis Communiqué sets out the main goal of the relevant legislation as "to set out the procedures and principles regarding the criteria to be used to identify agreements, concerted practices and decisions and practices of associations of undertakings which do not significantly restrict competition in the market, so that they can be excluded from an investigation in accordance with Article 41(2) of Law No. 4054, with the exception of evident and hardcore violations." In line with this description, the De Minimis Communiqué aims to direct the resources and time of the Authority towards the resolution of more critical competition law issues and to introduce a "procedural economy" tool for certain violations.

The "evident and hardcore" violations that are left out of the De Minimis Communiqué`s scope are defined as those agreements, decisions and/or concerted practices which also aim to directly or indirectly prevent, distort or restrict competition in the market for a good or service, or which have led or may lead to such effects. As a step further, the De Minimis Communiqué also exemplifies these violations under two categories, i.e., evident and hardcore violation in horizontal and vertical relations. The examples under the two respective categories are (i) "price fixing among competing undertakings, allocation of customers, suppliers, regions or trade channels, restriction of supply amounts or imposing quotas, collusive bidding in tenders, sharing competitively sensitive information including future prices, output or sales amounts" and (ii) "fixing the flat or minimum sales prices of the buyer in a relationship of undertakings operating at different levels of a production or distribution chain."

The Communiqué sets certain market share thresholds to determine the agreements, concerted practices, or decisions of association of undertakings that will benefit from the de minimis principle. Accordingly, Article 5 of the De Minimis Communiqué stipulates the following categorization and thresholds to describe which agreements/decisions would be deemed not to appreciably restrict competition:

  • If the agreement is signed between competing undertakings: cases where the total market share of the parties to the agreement does not exceed 10% in any of the relevant markets affected by the agreement for the agreements signed between competing undertakings
  • If the agreement is signed between non-competing undertakings: cases where the market share of each of the parties does not exceed 15% in any of the relevant markets affected by the agreement
  • If the agreement cannot be classified as between competing undertakings or between non-competing undertakings: In such a case, the provision for agreements signed between competing undertakings would be applicable.
  • Decisions of undertaking associations: Cases where the total share of the members of an association of undertakings does not exceed 10% in any of the relevant markets affected by the decision.
  • If the agreement is signed between competing and non-competing undertakings, as well as decisions, which include vertical restrictions: If parallel networks created by similar vertical restrictions cover more than 50% of the relevant market, the thresholds set out under Article 5 of the Communiqué are applied as 5%.

In addition to the above, Article 5(5) of the Communiqué also states that 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, it will not be deemed to be appreciably restricting competition in the market.

4. De Minimis Notice

Parallel to Article 4 of Law No. 4054, Article 101 of the TFEU also prohibits those agreements and concerted practices which have the object or effect of preventing, restricting or distorting competition. As an auxiliary provision linked with Article 101 of TFEU, De Minimis Notice was introduced to set out market share thresholds under which it can be presumed that an agreement does not appreciably restrict competition. Thus, the De Minimis Notice provides legal certainty for undertakings in determining which agreements can be presumed to be lawful as they do not create an appreciable effect on competition.

The Communiqué bears significant similarities to the EU Commission's De Minimis Notice, particularly on the framework of the newly introduced principle and the thresholds set under Article 5 of the Communiqué. Although the extent of the discretion granted to each authority differs, since the Board may still choose to initiate an investigation in cases that fall within the scope of the De Minimis Communiqué, where the De Minimis Notice sets out that the Commission will not institute proceedings in such cases; it is still observed that, similar to the De Minimis Notice, the Communiqué also provides rather a safe harbor for certain non-significant agreements.

The most significant similarity lies in the fact that the market share thresholds set in the Communiqué are closely modeled to the De Minimis Notice. Similar to the Communiqué, the De Minimis Notice also stipulates that agreements between actual or potential competitors with a combined market share of less than 10% and those between non-competitors whose market share does not exceed 15% can benefit from the de minimis "safe harbor." Further, the market share threshold of 10% that is applicable in cases where the agreement cannot be classified as between competing undertakings or between non-competing undertakings is also the same in both legislations. Similarly, both the De Minimis Notice and the Communiqué hold the view that agreements do not appreciably restrict competition if the relevant market share thresholds are not exceeded by more than 2 percentage points during two successive calendar years.

Besides, both the Communiqué and the De Minimis Notice exclude hardcore restrictions from their scope. The De Minimis Notice notes that it does not cover agreements which have as their object the prevention, restriction or distortion of competition within the internal market which is covered by the definition of evident and hardcore violations in the Communiqué.

Moreover, the method of calculation of the market shares in both legislations does not show significant difference. In both jurisdictions, the market shares are calculated based on the sales value in the market, or based on the purchase value where appropriate. If value data are not available, estimates based on other reliable market information, including volume data may be used.

5. Conclusion

All in all, it is observed that Turkish competition regime has adopted a similar approach to the European legislation, with regard to the newly introduced de minimis principle and ultimately brought the Turkish competition law practice closer to the European competition law practice. With the application of this principle, the Board may decide to forego a full-fledged investigation, or to terminate an on-going investigation if it decides that the relevant agreements, concerted practices or decisions do not appreciably restrict competition based on the De Minimis Communiqué. However, certain points, such as the necessity to file a request to benefit from the de minimis principle is yet to be determined with the Board's decisional practice.

This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in June 2021. A link to the full Legal Insight Quarterly may be found here.

Footnote

1. For instance, in the Board's Raw Meatball  decision (October 10, 2019, 19-03/13-5), the Board decided to issue an opinion letter pursuant to Article 9(3) of Law No. 4054 although there was concrete evidence showing a price-fixing agreement, a mechanism for monitoring of that agreement, a penalty mechanism for breach and the effects of this agreement on the market. 

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