Baran Baş
I.Introduction
Turkish Competition Authority’s (the “TCA” or the “Authority”) new Regulation on Administrative Fines to Apply in Cases of Agreements, Concerted Practices and Decisions Limiting Competition and Abuses of Dominant Position was updated with the new version published in the Turkish Official Gazette dated 27 December 2024 and numbered 32765 (the “New Regulation on Fines”)[2]. The New Regulation on Fines replaced the previous version of the TCA’s regulation on fines (the “Former Regulation on Fines”), which was in force since 2009 and provided the ground for the administrative monetary fines to be applied by the Turkish Competition Board (the TCA’s decisive body, the “TCB” or the “Board”)[3].
The amendments in the New Regulation on Fines introduced fundamental changes in Turkish competition law enforcement, particularly regarding monetary fines, and entered into force on the same date without any transitional period being foreseen.
Moreover, the TCA’s Guidelines on Administrative Fines to Apply in Cases of Agreements, Concerted Practices and Decisions Limiting Competition and Abuses of Dominant Position (the “Guidelines”) which contains comprehensive explanations on the implementation of the provisions of the New Regulation on Fines, was approved by the TCB on 13.02.2025 and published on the website of the TCA[4]. The annex of the Guidelines includes illustrative tables on the calculation of administrative fines to shed light on the practice.
In the Guidelines, the need to update the Former Regulation on Fines, which has been in force for 15 years, is explained by pointing to the transformation of competition law practice driven by digitalisation. According to the Guidelines, the nature of the markets to which competition law is applied today differs from the traditional markets; new types of infringements have emerged, and the nature of the relevant undertakings to whom competition law is applied has also changed. As stated in the Guidelines, due to the negative effects of competition law infringements by transnational big tech companies in digital markets and the resulting harm to consumer welfare, the need to reconsider the TCB’s administrative monetary fine policy has arisen[5].In line with this need, the New Regulation on Fines, which entered into force on 27.12.2024, aims to establish the principle of transparency and legal certainty in the calculation method of administrative monetary fines and to ensure specific and general deterrence in administrative fines to be imposed for competition infringements[6].
Considering that the anticipated amendments to Law No. 4054 on the Protection of Competition (the “Law No. 4054”)[7] focus on digital markets and big tech companies (gatekeepers), it is significant that the TCA highlights the impact of digitalization and the competition violations of large technology firms when explaining the rationale behind the New Regulation on Fines.: With the New Regulation on Fines, the TCB has laid the foundations of the “sanction” pillar of the new digital competition law policy that will be implemented with the anticipated amendments to Law No. 4054.
With the New Regulation on Fines, the approach where the basic fine rate is determined based on the distinction between “cartel” and “other infringements” (a distinction that is actually not included in Law No. 4054) has been abandoned. Therefore, the lower and upper limits, which were introduced based on the distinction between “cartel” and “other infringements” in determining the basic fine rate, have been abolished, and a new method, which takes into account the nature of the infringement and its negative impact on competition, has been adopted. In addition, the New Regulation on Fines shortens the time intervals to be taken into consideration in the increase of the fine depending on the duration of the violation. Moreover, the increase rates corresponding to the duration of the violation are clearly determined in stages. Furthermore, changes have been made to the regulation of aggravating and mitigating factors, including the abolition of the lower and upper limits for the increase rates of aggravating factors and the lower and upper limits for the discount rates of mitigating factors.
In this information note, the new provisions introduced by the New Regulation on Fines are explained in detail in the light of the Guidelines, by following the structure of the Guidelines.
II.New Regime for Determining the Basic Rate of Fine
- Abolition of the distinction between “cartels” and “other infringements”
The New Regulation on Fines replaces the Former Regulation on Fines’ regime for determining the basic rate of fine, which was based on a distinction between cartels and other infringements.
Under the regime of the Former Regulation on Fines, in determining the administrative fine to be imposed on the infringing undertakings, firstly, a basic rate of fine is determined (pursuant to Article 5 of the Former Regulation on Fines) with varying rates depending on whether the infringement gives rise to a cartel or not and the duration of the infringement, and then an increase and/or a reduction is made over the determined basic fine by taking into consideration the aggravating and mitigating circumstances (under Articles 6 and 7 of the Former Regulation on Fines) and, thus the administrative fine to be imposed was determined. Pursuant to Art. 5 of the Former Regulation on Fines, the calculation of the basic rate of fine was based on a ratio between “two per cent and four per cent of the turnover of the undertaking for cartels” and “five per thousand and three per cent of the turnover of the undertaking for other violations”.
In other words, under the regime of the of the Former Regulation on Fines, in the first step of determining the basic rate of fine, a distinction was made between the types of infringement, namely “cartel” and “other infringements” (contrary to the Law No. 4054, which merely states that a fine between 0% and 10% of the turnover may be imposed in case of infringement). Since Law No. 4054 did not provide for this distinction, the definition of “cartel” was provided by the Former Regulation on Fines (Art. 3). The fact that the definition of cartel has been made by a regulation, not by Law No. 4054, and the introduction of different lower and upper limits of penalties for cartel and other violations based on this definition of cartel, which is not included in Law No. 4054, has been criticised in the doctrine on the grounds that it is contrary to the principle of legality[8]. In addition, the argument that the Former Regulation on Fines was contrary to the principle of legality was frequently raised by the undertakings party to the investigation in their defences submitted to the TCB[9].
The New Regulation on Fines amends the criticised regime of the Former Regulation on Fines, abolishes the system of determining fines based on cartel and other violations, thus does not include the definition of “cartel” in the New Regulation on Fines, and instead stipulates that the determination of the basic rate of fine shall be based on whether the violation is a naked and/or hardcore violation.
- Determination of the Starting Rate of Fine and Basic Rate of Fine in the New Regime
Pursuant to the New Regulation on Fines, the starting rate of fine to be imposed on undertakings (and associations of undertakings or members of such associations) will be determined initially. The starting rate of fine will be determined “specifically, by taking into account the severity of the actual or potential damages stemming from the infringement and whether the infringement concerned has the characteristics of a naked and/or hardcore one” (Art. 5/2 of the New Regulation on Fines).
According to the Guidelines explaining the new competition penalty regime, in which the theory of harm will have an important place, the TCB will take into account the harm of the infringement to competition in general, and thus to consumers, trading partners such as buyers and suppliers, third parties such as existing or potential competitors, or the economy in general.
In terms of whether the infringement is naked and/or hardcore, the Guidelines exemplifies infringements such as price fixing between competitors, customer or territory allocation, supply restriction, collusive bidding in tenders as naked and/or hardcore and indicates that effect-based defences for such infringements will not be accepted. In addition to this criterion, it is stated that it may also be taken into consideration which competition parameter or parameters the infringement is related to and whether the infringement is secretive in nature and/or whether the infringement is likely to be detected.
The “basic rate of fine” will be determined by increasing the starting rate of fine (if conditions exist) due to the duration of the infringement (Art. 5/1 of the New Regulation on Fines). Following the determination of the basic rate of fine (if there are aggravating and/or mitigating factors in the relevant case), an increase due to aggravating factors and a reduction due to mitigating factors will be made in accordance with Articles 6 and 7 of the New Regulation on Fines.
The fine rate determined after the increase and/or reduction, if any, in the basic rate of fine determined over the starting rate of fine will be applied to the gross revenues (turnover) at the end of the financial year preceding the final decision of the TCB, and thus the final administrative monetary fine amount will be reached.
Pursuant to Article 4/3 of the New Regulation on Fines, the amount of administrative fines imposed as a result of the application of the provisions of the relevant regulation cannot exceed 10% of the revenues of the undertakings to be penalised for each separate violation. Administrative fines exceeding this limit shall be reduced to 10% of the annual gross revenues of the undertakings to be fined for each violation.
Article 4/1 of the New Regulation on Fines stipulates that the basic rate of fine shall be determined separately for each infringement. The TCB will determine whether the acts of the undertakings have led to one or more infringements and will impose separate administrative fines for each infringement. As explained in the Guidelines, the TCB will determine whether one or more infringements are concerned by taking into consideration various factors including the geographic markets in which the conduct forming the basis of the infringement took place, relevant product markets, input and output markets, nature of the conduct, temporal unity of conduct, whether the conduct is carried out during the execution of the same decision, whether they form a strategic whole, whether the actions are carried out through unilateral conduct of the undertaking, fundamental distinction between the nature and substance of the conduct[10].
- Determination of the Starting Rate of Fine in Increasing Proportions to the Duration of the Infringement
One of the important changes introduced by the New Regulation on Fines is the shortening of the time intervals to be taken into account in the increase of the fine depending on the duration of the infringement and the gradual determination of the increase rates corresponding to the duration of the infringement. In the Former Regulation on Fines, the structure foreseen regarding the duration of the violation was that the penalty would be increased by half (50%) for violations lasting between 1-5 years and by one time (100%) for violations lasting longer than 5 years.
Under the regime introduced by the New Regulation on Fines, the starting rate of fine rate will be increased at the following rates:
- One fifth (20%) for infringements that lasted for longer than one, shorter than two years,
- Two fifths (40%) for infringements that lasted for longer than two, shorter than three years,
- Three fifths (60%) for infringements that lasted for longer than three, shorter than four years,
- Four fifths (80%) for infringements that lasted for longer than four, shorter than five years,
- One-fold (100%) for infringements that lasted for longer than five years.
III.Aggravating Factors
Art. 6 of the New Regulation on Fines provides details regarding the aggravating factors. Its first paragraph provides repetition of infringement, the second paragraph regulates other factors that may require the aggravation of the basic penalty rate at the discretion of the TCB in a numerus clausus manner, and the third paragraph regulates the increase method to be adopted in case of the existence of the aggravating factors in the first two paragraphs together.
- Repetition
Pursuant to Article 6/1 of the New Regulation on Fines, the basic rate of fine will be increased up to one time (up to 100%) in the event of a repeated infringement of the Law No. 4054 by the same undertaking after the determination of the infringement. The New Regulation on Fines sets only this upper limit (up to one times) for the increase of the basic rate of fine in case of repetition, and unlike the Former Regulation on Fines, it does not stipulate any lower limit.
As stated in the Guidelines, the condition that the undertaking has violated the same article of Law No. 4054 will not be sought in the increase to be made based on repetition. The Guidelines also emphasises the principle of ne bis in idem by explicitly stating that a TCB decision that has already been taken as a basis for repetition shall not be subject to a repetition increase in other decisions to be taken by the TCB.
- Discretionary Aggravating Factors
Article 6/2 of the New Regulation on Fines provides other aggravating factors that may require the aggravation of the basic rate of fine at the discretion of the TCB, which were existing in the TCB’s case law[11]. Accordingly, if the violation continues after the notification of the investigation decision, if there is a decisive influence in the infringement, and if the confidentiality obligation stipulated in Article 12/3 of the Regulation on the Settlement Procedure is violated, the basic rate of fine may be increased up to one time (up to 100%). The New Regulation on Fines abolishes “failure to comply with commitments, failure to assist in the investigation and forcing other undertakings to violate” from being aggravating circumstances as stipulated under the Former Regulation on Fines.
The first discretionary aggravating factor stipulated in Article 6/2 of the New Regulation on Fines is the continuation of the violation after the notification of the investigation decision. In the Guidelines, it is stated that the purpose of providing this aggravating factor is to ensure that undertakings, which are notified that an investigation has been initiated against them due to suspicion of violating Law No. 4054, cease their anti-competitive practices at the earliest possible stage[12]. The change of this discretionary aggravating factor from the continuation of the “cartel” after the notification of the investigation decision in the Former Regulation on Fines to the continuation of the “infringement” (after the notification of the investigation decision) in the New Regulation on Fines is in line with the fundamental change made in the regime of determining the basic rate of fine.
The second discretionary aggravating factor stipulated in Article 6/2 of the New Regulation on Fines is the decisive influence in the infringement. This new discretionary aggravating factor is defined in Article 3 (Definitions) of the said regulation as “Decisive influence shall mean indispensable role in the formation and/or continuation of the infringement”. The Guidelines exemplifies decisive influence as “the definition of the strategic elements of an anti-competitive agreement, leading a meeting or holding meetings to implement or maintain an agreement, playing a leading or encouraging role in the infringement, forcing the other undertakings into the infringement, imposing control, pressure, discouragement and sanction mechanisms on the other undertakings through warnings, instructions, guidance, and similar conduct”[13].
The third discretionary aggravating factor foreseen in the New Regulation on Fines is the “violation of the confidentiality obligation” added in line with the third paragraph of Article 12 of the Settlement Regulation.
- Application of more than one aggravating factor at the same time
Article 6/3 of the New Regulation on Fines provides how the rate of increase will be determined in the case of repetition and other discretionary aggravating factors at the same time. In this respect, in the event that one or more of the discretionary aggravating factors specified in Article 6/2 are found together with the repetition under in Article 6/1, the increase rates determined under both paragraphs shall be added together and applied to the basic rate of fine determined within the framework of Article 5.
IV.Mitigating Factors
In the New Regulation on Fines, mitigating factors are listed, but not in a numerus clausus manner. In addition, it is noteworthy that the lower and upper limits of the discount rate to be applied in the presence of mitigating factors have been abolished and the TCB has been granted a wider scope of action in terms of mitigating circumstances compared to the former fine regime.
The mitigating factors stipulated in the New Regulation on Fines are as follows (Art. 7):
- Apart from fulfilment of legal obligations, provision of assistance in on-site inspections by offering physical and/or technical facilities to ensure faster or more efficient completion of on-site inspections or by the inspected party submitting any additional information or documents connected to the subject of the inspection on their own accord,
- Coercion by other undertakings to the infringement, (as stated in the Guidelines, for example, termination of the infringement immediately after the TCB’s intervention, limited participation in the meetings subject to the anti-competitive agreement, implementation of the infringement to a more limited extent than the agreed upon elements, refraining from implementing the agreement or remaining passive in this regard and/or adopting competitive behaviour despite being a party to the conduct subject to the anti-competitive agreement[14])
- Infringing activities having a small share in the annual gross revenues,
- Having overseas sale revenues within the annual gross revenues that were taken as the basis of the administrative fine.
In the New Regulation on Fines, incentives of public institutions, voluntary payment of compensation, cessation of other violations (which were mitigating factors in the old penal regime) are not listed as mitigating circumstances. In addition, the mitigating factor of “the share of the activities subject to infringement in the annual gross revenues is very low” in the Former Regulation on Fines has been changed to “the share of the activities subject to infringement in the annual gross revenues is low”, and with the expression of the Guidelines, the application area of this mitigating factor has been expanded[15].
V.Penalties to be Imposed on Managers and Employees
In the New Regulation on Fines, the distinction between cartel and other infringements has been abolished, and it is regulated that the managers or employees of the undertaking or association of undertakings, who are found to have a decisive effect on the infringement, will be imposed an administrative fine up to five per cent of the fine imposed on the undertaking or association of undertakings for all infringements. There is no lower limit for penalties to be imposed on managers or employees. However, considering that the TCB has not imposed administrative fines on employees for a long time, it will be seen in the future cases of the TCB whether this amendment will make a significant difference in practice.
VI.Conclusion
In accordance with the principle of legality, the New Regulation on Fines abolishes the distinction between cartels and other violations in determining the basic rate of fine. The adoption of a gradual increase system depending on the duration of the violation can be considered as a step towards increasing predictability in the penalisation regime. The relatively minor changes made in terms of aggravating and mitigating factors, on the other hand, may have important consequences in the calculation of penalties in practice.
In conclusion, the New Regulation on Fines aims to create a more flexible and effective sanction mechanism against competition infringements. The case law of the TCB that will emerge during the implementation process will determine how the Regulation will be shaped in terms of legal foreseeabilityand legal certainty.
[1] Attorney Gülce Korkmaz is the external competition law consultant of Baş | Kaymaz Law Firm. After completing her master’s degree at Bilkent University, she is currently pursuing her doctoral studies in the field of competition law at the Faculty of Law of Lüneburg Leuphana University (Germany) as a PhD researcher with the scholarship of the Joachim Herz Foundation.
[2] For the official English version of the full text of the New Regulation on Fines published by the TCA, please see https://www.rekabet.gov.tr/Dosya/para-cezalari-yonetmeligi-20250306110611418.pdf.
[3] Although it is stated in the doctrine that the term “Regulation on Fines” is and incorrect term since fines can only be imposed by law in accordance with the principle of “nulle poena sine lege” (no punishment without law), this nomenclature is accepted both in practice and in positive law. Please see Korkmaz, Gülce: Rekabet Kurumu Tarafından Uygulanan Para Cezalarının Kanunilik İlkesi Yönünden Değerlendirilmesi, The Symposium Book of the Bilkent University’s “II. Genç Hukukçu Araştırmacılar Sempozyumu – Ceren Damar Şenel Anısına” Symposium (held on 26-27 November 2021, (Ed.: Göka, E./Orhan, U./Aksoy, H. C.), 2022, p. 262, footnotes 39 and 40. In addition, in this regard, Prof. Dr. Duygun Yarsuvat’s remarks as Session Chair at the conference “New Era in Competition Law Enforcement Policy: Fine and Leniency Regulations” conference organised jointly with the Competition Authority at Istanbul Bilgi University on 14 May 2009 can be accessed from the printed text of the conference (in Turkish). See Sanlı, Kerem Cem: Rekabet Hukuku Yaptırım Politikasında Yeni Dönem: Ceza ve Pişmanlık Yönetmelikleri, Istanbul, 2009, p. 77.
[4] For official English version of the full text of the Guidelines published by the TCA, please see https://www.rekabet.gov.tr/Dosya/ceza-yonetmeligi-kilavuzu-20250306110146946.pdf.
[5] Guidelines p. 2, para. 5.
[6] Guidelines p. 2, para. 7.
[7] For the anticipated amendments to the Law No. 4054, see. Korkmaz, Gülce: Navigating Digital Markets: A Challenge for Turkish Competition Law
[8] Please see Korkmaz, Gülce: Rekabet Kurumu Tarafından Uygulanan Para Cezalarının Kanunilik İlkesi Yönünden Değerlendirilmesi, The Symposium Book of the Bilkent University’s “II. Genç Hukukçu Araştırmacılar Sempozyumu – Ceren Damar Şenel Anısına” Symposium (held on 26-27 November 2021, (Ed.: Göka, E./Orhan, U./Aksoy, H. C.), 2022, pp. 262-270. This is because “the principle of legality in offences and punishments (…) recognises that the determination of the type and amount of criminal sanctions can only be made by law in a formal sense. Please see Katoğlu, Tuğrul: “Ceza Hukukçusu Gözüyle Rekabet Hukuku Mevzuatında Yapılması Öngörülen Değişiklikler”, Journal of Ankara Bar Association (Ankara Barosu Dergisi), Year: 2014, Volume: 3, pp. 395-412.
[9] As an example, see the Board’s decision dated 20.06.2019 and numbered 19-22/352-158, in which the allegation that Istanbul Customs Brokers Association violated Article 4 of Law No. 4054 with its decisions, para. 113. The Board responded to the aforementioned defences by referring to the 13th Chamber of the Council of State’s decision dated 06.04.2017 and numbered E. 2011/3814, K. 2017/958. See also the Board’s decision dated 14.12.2017 and numbered 17-41/640-279, para. 200; Board’s decision dated 20.06.2019 and numbered 19-22/352-158, para. 114. Please see Korkmaz, Gülce: Rekabet Kurumu Tarafından Uygulanan Para Cezalarının Kanunilik İlkesi Yönünden Değerlendirilmesi, The Symposium Book of the Bilkent University’s “II. Genç Hukukçu Araştırmacılar Sempozyumu – Ceren Damar Şenel Anısına” Symposium (held on 26-27 November 2021, (Ed.: Göka, E./Orhan, U./Aksoy, H. C.), 2022, p. 266-267.
[10] Guidelines p. 3, para. 12. The decisions referred to in this regard in the Guideline are as follows: the Board’s decisions dated 25.03.2021 and numbered 21-17/208-86; dated 15.12.2022 and numbered 22-55/863-357; dated 24.02.2022 and numbered 22-10/152-62; dated 17.08.2023 and numbered 23-39/754-263; dated 23.11.2023 and numbered 23-54/1044-376; dated 17.08.2023 and numbered 23-39/755-264 and the decision of the 13th Chamber of Council of State’s decision dated 02.12.2020, numbered 2020/1939 E. and 2020/3507 K.
[11] Guidelines, p. 9, para. 37.
[12] Guidelines p. 10, para. 39.
[13] Guidelines p. 10, para. 38. The decisions referred to in this regard in the Guideline are as follows: the Board’s decisions dated 19.12.2008 and numbered 08-74/1180-455; dated 25.03.2021 and numbered 21-17/208-86; dated 18.01.2024 and numbered 24-05/83-33.
[14] Guidelines p. 12, para. 49.
[15] Guidelines p. 13, para. 50.
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