Competition Law
Competition; as a doctrine it is defined as the relationship between undertakings that sell the same type of goods or services to a consumer group in the same period. In 3rd Section of the Law Number 4054 on the Protection of Competition with the title “Definitions”, it is defined as “the race that enables free economic decisions to be made between enterprises in the goods and services markets.
Procedures Regulated in the Light of Law Number 4054:
Purpose of this law is to prevent agreements, decisions and practices that hinder, disrupt or restrict competition in the markets of goods and services, and to prevent the undertakings that dominate the market from abusing their dominance, and to ensure the protection of competition by making the necessary regulations and inspections. In order to achieve this purpose, it is possible to collect the transactions within the scope of the Law under three main topics. First, agreements, practices and decisions that prevent, disrupt and restrict competition between all kinds of enterprises operating in the markets of goods and services within the borders of Turkey or affecting these markets; second is the abuse of dominance by the undertakings that dominate the market; and third is any legal transaction in the nature of a merger and acquisition that is intended to create a dominant situation or to strengthen an existing dominant situation and, as a result, significantly reduce competition.
1- Competition-Restricting Agreements, Concerted Actions and Decisions
Agreements, concerted actions and decisions of association of undertakings that have the purpose of limiting competition or that give rise to or may give rise to this activity are prohibited by 4th Section of the law. It should be emphasized here that the agreements and decisions composed by the undertaking or association of undertakings have the purpose of restricting competition or that they may have the effect of restricting competition are sufficient for the application of prohibitive provision of the Section. In other words, agreements and decisions that have not been implemented and have not had an impact on the market can be included into the scope of Section 4 in terms of their purpose and possible effects. Another point is that the Section in question deals with the transactions that occur with the will of more than one undertaking. In other words, if economic decisions that need to be taken independently are jointly created, the transaction is included into the scope of Section 4. At this point, it should be revealed that the decisions of association of undertakings will be deemed to have been formed by more than one enterprise because they reflect the will and interests of its members and will therefore be examined within the scope of this Section. Written or non-binding agreements and decisions are considered within the scope of Section 4 if they are of a nature that may limit competition regardless of their legal validity.
Concerted actions that are performed with the will of enterprises without an agreement, which can be characterized as parallel behaviors in the market, are also covered by Section 4. In the 2nd paragraph of Section 4, a presumption of action has been introduced in accordance with the statement that “in cases where the existence of an agreement cannot be proven, the price changes in the market or the balance of supply and demand or the regions of activity of the undertakings are similar to those in the markets where competition is prevented, disrupted or restricted, constitutes a presumption that the undertakings are engaged in concerted action”. The burden of proof that there is no concerted action lies with the undertakings. In this context, one of the elements that distinguishes concerted action from agreements and decisions is that the burden of proof is imposed to the alleged undertakings due to the presumption.
It is possible to group competition-limiting transactions under two main topics as horizontal and vertical transactions. Agreements, concerted actions and decisions carried out by undertakings operating at the same level of the market are horizontal transactions; Agreements concluded between the undertakings at different levels of the market, such as the supplier of goods and the distributor, are called vertical transactions. However, it should be noted that a transaction can adversely affect competition both at the level at which the undertakings operate and at other levels of the market. Regarding this point, it is worth noting that it is generally accepted in competition law practices that horizontal transactions that limit competition between brands, such as in the examples of price determination and market sharing together, have more restrictive effects on competition in the market than vertical transactions that limit intra-brand competition.
2-Exemption
Section 5 of the Law stipulates that in the presence of certain conditions, the parties may be exempted from the application of the provisions of Section 4 to the decisions of the agreement, concerted action and association of undertakings upon the request of the parties. For this, the parties must request individual exemptions by applying to the Board about the competition restrictive action. The exemption granted in the cases specified in Section 13 of the Law can be withdrawn.
In Section 5, conditions of exemption are stipulated as providing new development in production, distribution or provision of services, the consumer benefits from this, not eliminating competition in a significant part of the relevant market and not limiting competition more than necessary for the achievement of the listed objectives. In 3rd paragraph of Section 5; it is stated that if these conditions are met, certain types of agreements and decisions may also be exempted as a group.
3-Abuse of Dominant Position
In the 6th Section 6 of Law; one or more undertakings are prohibited from abusing their dominant position. In the same Section; following situations are given as examples of abuse of a dominant position; preventing the entry of another enterprise into the market, complicating the activities of undertakings in the market, discriminating against equal buyers by applying different conditions, linking the purchase of one good or service to the purchase of another good or service, imposing restrictions on the conditions of resale, taking actions aimed at disrupting the conditions of competition in another market based on the prevailing situation in one market, and restricting marketing or technical development to the detriment of consumer. For the purposes of the application of Section 6, it is important to determine whether an undertaking is in a dominant position. In 3rd Section of Law, the dominant situation is defined as “the power of one or more undertakings in a particular market to act independently of their competitors and customers and determine economic parameters such as price, supply, production and distribution amount”. Although it is not explicitly included into this definition, in practice, it is accepted that the ability of buyers to act independently of sellers indicates the dominant position of buyers against sellers. The prevailing situation, which is concretized depending on factors such as market share, product diversity, market entry barriers, vertical integrity, substitution of the relevant product and other characteristics, enables the enterprise to make decisions independent of the competitive pressure of other undertakings operating at the same level of the market and the bargaining power of the buyers.
4-Mergers and Acquisitions
The first paragraph of 7th Section of Law provides that “The merger of one or more undertakings in order to create a dominant position or to further strengthen their dominant position, resulting in a significant reduction of competition in the market for any goods or services in the whole or part of the country, or the merger of any undertaking or person in all or part of the assets or partnership shares of another undertaking, or authorizing him to have rights in the management. it is unlawful and forbidden to take over the vehicles, except in the case of acquisition by inheritance.“. In 2nd paragraph of the same Section, it is stated that the notifications to be issued will determine which kind of merger and acquisition must be submitted to the Board in order to gain legal validity. Accordingly; in order for a merger, acquisition or joint venture to be considered within the scope of competition law, the transaction must first be carried out between independent undertakings and the control must change hands as a result of the transaction.
Mergers and acquisitions aimed at creating or strengthening the dominant position are also prohibited if they significantly limit competition in the market. In this context, it is examined whether the competition in the relevant market is significantly limited in the merger or acquisition transaction in which a dominant enterprise is carried out.
If there are doubts that competition in the market will decrease significantly as a result of the transaction subject to the notification, the Competition Board may decide to take the transaction to a final examination. In cases where a final examination is required, the transaction is not as valid and enforceable as the final decision, in other words, it is suspended. In the event that the mergers and acquisitions required to be notified in accordance with 11th Section of the Law are not notified to the Board, as a result of the examination initiated by the Board as aware of the transaction, the penalty sanction specified in 1st paragraph of Section 16 is applied because the notification is not made even though the permission application should be made first, and if it is determined that the transaction is also within the scope of Section 7; As in the case of transactions contrary to Sections 4 and 6, administrative fines shall be imposed on the undertakings carrying out the transaction in accordance with 2nd paragraph of Section 16 of the Law and the merger or acquisition shall be terminated.
5-Negative Clearance
According to 8th Section of the Law; Upon the application of the undertaking or associations of undertakings concerned, the Board may issue a negative clearance certificate showing that an agreement, decision, action or merger and acquisition is not contrary to Sections 4, 6 and 7. Board may withdraw the negative clearance decision if the conditions specified in 13th Section of the Law are fulfilled. The negative clearance document is important because it eliminates the ambiguity of the transactions carried out by the undertakings in the eye of Law.
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