The Turkish Competition Authority's New Regulation on Fines Has Entered Into Force

The Regulation on Administrative Fines to Apply in Cases of Agreements, Concerted Practices and Decisions Limiting Competition, and Abuse of Dominant Position (“Regulation on Fines” or “New Regulation”), was published in the Official Gazette No. 32765 on December 27, 2024, and concurrently entered into force. Accordingly, The Regulation on Fines to Apply in Cases of Agreements, Concerted Practices and Decisions Limiting Competition, and Abuse of Dominant Position (“Former Regulation”), which had been in force since February 15, 2009 has been repealed.

The new Regulation on Fines introduces significant changes to the practice of competition law. Below, we address the issues among these changes that may be particularly critical for undertakings.

• New Methodology for Determining the Applicable Fine Rate. One of the most significant changes introduced by the New Regulation is the elimination of the distinction between “cartels” and “other violations,” and the removal of the minimum and maximum base fine rates prescribed for these violations under the Former Regulation. According to the Former Regulation, a base fine rate of between 2% and 4% of an undertaking’s turnover applied in cases of cartels, while a rate of between 0.5% and 3% applied for other violations. In contrast, the New Regulation stipulates that the base fine rate (the “initial fine rate” as per the new terminology) shall be determined “in particular, by taking into account the severity of the damage incurred or likely to be incurred due to the violation, as well as whether the nature of the vioalltion is naked and/or hardcore,” and entrusts this determination to the Board’s discretion without specifying any lower or upper limits. Nevertheless, it is anticipated that, in setting administrative monetary fines for naked and/or hardcore violations versus other violations, the Board will continue to maintain a fair distinction between the two.
• Duration of the Violation. Under the Former Regulation, infringements lasting more than 1 year but less than 5 years were subject to a 50% increase, while those lasting more than 5 years were subject to a 100% increase. Under the New Regulation, however, a more gradual system has been introduced. It is understood that the base fine rate will be determined by increasing the initial fine rate:

• by 20% for infringements lasting more than 1 year but less than 2 years,
• by 40% for infringements lasting more than 2 years but less than 3 years,
• by 60% for infringements lasting more than 3 years but less than 4 years,
• by 80% for infringements lasting more than 4 years but less than 5 years,
• by 100% for infringements lasting more than 5 years.

It may be inferred that the new system introduced by the Regulation on Fines offers a structure more suitable for establishing a direct relationship between the duration of the infringement and the severity of the fine, thus being more in line with the principle of relative equality. With this change, accurately determining the start and end dates of the alleged infringement is expected to become even more critical.

• ​​Repetition of the Infringement. It is observed that the phrase “for each instance of repetition” in the Former Regulation is not included in the New Regulation. This may be interpreted to prevent the possibility of multiple increases for repeated infringements in the calculation of fines for undertakings, a matter that has recently been raised in competition law practice. Additionally, considering that the New Regulation does not stipulate a minimum threshold similar to the 50% set out in the Former Regulation, it may now be noted that the Board could determine an increase rate that is below 50%.
• Breach of Commitments. The phrase “The base fine may be increased; by half to one fold, where the commitments made for the elimination of the competition problems raised within the scope of Article 4 or 6 of the Act are not met” present in the Former Regulation has not been kept in the New Regulation, therefore breach of propped commitments by the undertakings is not listed as an aggravating factor. In this regard, it may be considered that the Board could exercise its discretion in such cases.
• Changed Scope of the Aggravating Factors. It is observed that the phrases “[providing] no assistance with the examination”^[1] and “coercing other undertakings into the violation”^[2] which were included in the Former Regulation, are not stated in the New Regulation. Moreover, “having a decisive influence in the infringement” and “violation of the confidentiality obligation set out in the third paragraph of Article 12 of the Settlement Regulation” are now listed as the new aggravating factors.
• The Dilemma Facing Undertakings Upon Receiving Investigation Notices. It is noted that the phrase in the Former Regulation, “in case the cartel is maintained after the notification of the investigation decision” has been revised in the New Regulation to “in case the violation is maintained after the notification of the investigation decision”. This change raises the question of whether every behavior subject to  investigation is now expected to be terminated. Since the behavior subject to  investigation may not yet qualify as an infringement, a strict interpretation of this change would imply the application of interim measures to every behavior subject to  investigation, which, in light of the Board’s case law, is clearly neither reasonable nor proportionate. Accordingly, it is considered that the term “violation,” emphasized in the said provision, refers to situations in which interim measures have been taken and/or cartels which are deemed naked and hardcore infringements based on the Board’s previous decisions. It is thus anticipated that the Board’s case law will serve as a guiding reference in this regard.
• Calculation of the Increase Rate Based on Aggravating Factors. Pursuant to paragraph 3 of Article 6 of the New Regulation, it is stipulated that if the repetition of the infringement set forth under paragraph 1 of the same article and the aggravating factors set forth under paragraph 2 coincide, the increase rates determined under each paragraph shall be added together and applied to the base fine rate. Consequently, in a case where there is no repetition of the infringement, it follows that only the increase rate for aggravating factors under paragraph 2 of the same article would apply.
• Ongoing Investigations. Contrary to the Provisional Article 1 of the Former Regulation, it is observed that no exception has been provided in the New Regulation for investigations that were initiated prior to its effective date and for which an investigation report has already been served. Consequently, the question of whether the New Regulation might also apply to ongoing investigations could arise. Having said this, applying the provisions of the New Regulation (which were not in force at the time the infringement was committed or at the time the investigation report was served on the undertaking) retroactively to ongoing investigations may raise certain questions in light of the principle of non-retroactivity (lex praevia).
• Mitigating Factors. Under the New Regulation, although not limited in number, five main mitigating factors are listed:

• Providing assistance with the on-site inspection (beyond fulfilling legal obligations) either by making available physical and/or technical means that enable the on-site inspection to be completed more quickly or more effectively, or by voluntarily submitting additional information or documents related to the subject of the inspection during the on-site inspection.
• The existence of coercion by other undertakings in the violation,
• Limited participation in the infringement.
• ​Occupation of a very small share by practices subject to the violation within annual gross revenues,
• The presence of foreign/export sales revenues within the annual gross revenues that form the basis for the administrative monetary fine.

The first point to note is that under the Former Regulation, assistance with on-site inspections was referred to in terms of a “where no assistance with the examination is provided” whereas the New Regulation further clarifies the scope of what is meant by providing assistance with on-site inspections.

It is also observed that the existence of coercion by other undertakings in the infringement and the small share of the activities subject to the infringement in annual gross revenues continue to be counted among the mitigating factors.

With the New Regulation, the condition of limited participation in the infringement has also been introduced as a mitigating factor. It may be concluded that this addition is capable of covering infringements under both Article 4 and Article 6 of Law No. 4054. Moreover, it is considered that the extent to which the undertaking actually engaged in the behavior determined to be an infringement, or the extent of its impact if engaged in, may also be taken into account under this article; an approach that can be interpreted as a positive development in terms of the principle of proportionality.

Additionally, the New Regulation stipulates that if foreign/export revenues are included in the annual gross revenues used as the basis for calculating the administrative monetary fine, the Board may apply a reduction as a mitigating factor.

Perhaps the most critical point for future competition law practice regarding mitigating factors is that, contrary to the Former Regulation, the New Regulation does not set any minimum or maximum limits for the rate of reduction. Therefore, in cases where it is decided that mitigating factors are present, the rate of reduction to be applied is left to the Board’s discretion.

The full text of the Regulation on Fines (In Turkish) can be accessed here.

 

 

 

8.1.2025