Commitments in Turkish Competition Law and Claim for Damages

The commitment procedure is an increasingly popular tool used in competition law that serves procedural economy by bringing closure to preliminary inquiries and investigation proceedings (“assessment proceedings”) while diminishing competition issues before they become competition infringements. The use of the term “competition issues” rather than “competition infringements” is significant for the commitment procedure as it allows undertakings to make amendments for potential anti-competitive behavior that does not constitute a hard-core infringement of competition. However, clarification is still needed with respect to whether the competition issues that will be resolved with a commitment procedure has reached the extent that an undertaking’s competitors have incurred damage and whether such competitors can claim damages once the Turkish Competition Board (“the Board”) accepts the commitment offer. To approach this question, first an evaluation must be made to determine to what extent commitment decisions can be accepted as a prima facie case or if plausible proof is needed.

What is a commitment procedure and how does it work?

Commitment procedures were introduced to the Law on the Protection of Competition No. 4054 (“Competition Code”) with Article 43 and act as a binding pledge of compliance that brings closure to assessment proceedings under competition law. During assessment proceedings, Article 43(3) of the Competition Code allows undertakings to submit commitments to the Board explaining the ways that they propose to adopt to ensure compliance with competition law and further precautions and steps to address any current or potential competition issues. Such competition concern may be related to an agreement or a concerted practice between undertakings, potential abuse of dominant position or any other competition concern. Once such concern is taken at hand by the Board, companies can choose to make offers that can avoid competition problems and possible fines that may be imposed on them.

To concretize with examples, a company assessed due to a potential abuse of dominance may offer to commit that it will avoid exclusionary behavior against other market operators by nullifying contractual terms that result in non-compete obligations with its distributors. Similarly, a company that is under the Board’s assessment for abuse of dominance may commit that it will facilitate market entry for small and medium scale enterprises and it will not use any rebate system to exclusively bind customers to itself. Likewise, a company assessed for potential exploitative behavior arising from unfair contract terms may offer to commit that it will employ similar practices with its trade partners that will lead to a more impartial treatment. Including but not limited to the abovementioned, any commitment (concrete examples of which are further discussed below) that will prevent potential competition concerns or benefit competition in the market and render assessment proceedings redundant can be offered by the companies as long as the companies believe that those commitments are proportionate and sufficient to put an end to the concerns of the Board [1] .

Such commitments become strictly binding on the undertaking upon approval of the Board if the Board finds the commitments sufficient to eliminate current or potential competition issues subject to the assessment proceedings. This approval closes ongoing assessment proceedings related to the issue of competition resolved with the commitment. Regardless of the approval of these commitments, the Board holds the right to reopen proceedings should one or more of the following situations arise:

a) A material change in any of the facts on which the decision was based;

b) The concerned undertakings act contrary to their commitments; or

c) The decision was based on incomplete, incorrect, or misleading information provided by the parties.

The commitment procedure can be used when there are competition issues that fall within the scope of Articles 4 and/or 6 of the Competition Code which prohibit restrictive agreements and abuse of dominance, respectively. Companies can use it as an early closure mechanism to avoid a lengthy investigation process concerning the possibility of an anti-competitive behavior. However, the Competition Code does not allow all competition issues to be resolved by the commitment process. It strictly prohibits the approval of commitments when there is suspicion about a hard-core violation of competition law, such as price fixing, territory or customer allocation between competitors, or restriction of supply.

• Legal Standpoint of Communiqué No. 2021/2 on Commitments to be Submitted in Preliminary Inquiries and Investigations on Anti-Competitive Agreements, Concerted Actions and Decisions, and Abuse of Dominant Position (“Communique”)

The details of the commitment procedure are defined in the Communique the Board issued on 16 March2021. Under Article 5, the Communique regulates that the parties who want to terminate an investigation may submit a commitment application during the assessment proceedings.

Article 14 states that if the Board accepts the application and decides that the proposed commitments can eliminate the competition issues subject to the assessment, it can approve and make those commitments binding on the undertaking. Such decision cannot include a competition infringement finding (the implications of which is further discussed below), rather it can only state whether the Board approves the commitments.

Should the essence of commitments require an agreement with third parties, Article 8(3) clearly indicates that it is possible to ask for their opinion or to ask the undertaking to submit proof of such mutual agreement to the Board. According to Article 9(2) of the Communique, commitments must be proportionate to the competition issues at hand, must be suitable for resolving these problems, and the commitments must be implemented effectively in a short time. Therefore, it can be inferred that the commitment mechanism aims to protect competition in markets through a preventive and cooperative approach rather than a correctional method based on infringement findings. In this way, it is ensured that the time and resources required by the investigation process for the detection and prevention of possible anti-competitive acts can be saved. [2]

• Application in Turkish Competition Law

Commitments find their application in Turkish competition law through the interpretation of the Communique in conjunction with the Competition Code. The commitment procedure has been used in several assessment procedures, such as Tadım (Decision No 21-38/549-M dated 12 August 2021), Yemeksepeti (Decision No: 20-27/336-M dated 04 June 2020), and Coca-Cola (Decision No: 21-41/610- 297 dated 02 September 2021). In the Tadım decision, the Board closed its assessment concerning suspicions of the abuse of a dominant position through exclusionary practices and resale price maintenance in the packaged dried nuts and fruit market by accepting Tadım’s commitments. [3]

In the Yemeksepeti decision, the Board accepted commitments of the online food delivery service, Yemeksepeti, with respect to refraining from entering into agreements that prevent restaurants in its portfolio from selling their products on their own websites or take-away services for lower prices than the prices announced on Yemeksepeti. [4]

In the Coca-Cola decision, the Board accepted Coca-Cola’s commitments that the company will eliminate potential exclusionary behavior through exclusivity clauses in its agreements with retailers.[5] In all of these assessments, the Board accepted the undertakings’ commitments to avoid or eliminate possible anticompetitive behavior, such as exclusionary transactions, and the distortion of competition in the relevant markets. As the cases mentioned reveal, the commitment mechanism is a useful tool for resolving competition problems that may have the potential to harm competition in the market[6] without an actual finding of infringement.

• Does a commitment decision constitute a presumption of infringement?

As exemplified above, under the case law, an approved commitment by itself is not enough to procure private law rights on competitors as they do not, in principle, state whether there is or has been an infringement of competition proved through a Board decision[7]. In conjunction with the fact that the national courts often require a Board decision pointing to the presence of an infringement, it may be argued that competitors have a smaller chance of proving their case if they solely base their arguments on the presence of a commitment decision. [8] On the other hand, one may argue that any party asserting the existence of harm before a court regardless of where such harm originated from (the commitment itself or the act of the undertaking that is subject to the assessment) can claim for damages arising thereof.

In lawsuits regarding claims for damages for anti-competitive behavior, Article 50 of the Turkish Code of Obligations applies. [9] Under that article, the claimant has to prove its damages with concrete evidence. The court does not make an evaluation based on speculative claims, as it requires solid proof to calculate the appraisal value of damages. [10] In parallel, when evaluating a claim for damages, the Turkish courts of first instance primarily look for a finalized Board decision indicating the presence of an infringement. Such decision demonstrates either conclusively or with strong evidence the existence of the constituent elements of a contra legem act (i.e., an unlawful act). [11] If they encounter an ongoing assessment procedure instead of a finalized infringement decision, courts make it a preliminary issue and await for the final decision of the Board to make a decision regarding the claim for damages. [12]

The commitment procedure does not restrict the rights of third parties that are affected by the competition issues at hand. According to the dominant opinion, third parties can appeal commitment decisions insofar as they can prove that there is a causality link between the competition issue and the harm. Yet, private law actions are found to be more effective for compensating damages arising from such issues rather than trying to reverse a commitment decision. [13]

Conclusion

The commitment mechanism aims to eliminate possible competition problems at an early stage and to reestablish effective competition in the relevant market. [14] A mere commitment decision does not automatically entail the right for compensation in favor of competitors of an undertaking. Such an approach evokes "approximate proof", which is a prerequisite for the acceptance of interim injunction requests under Turkish law, yet there is no such regulation or precedent for it in competition law. The existence of such practice will render the commitment mechanism ineffective by intimidating undertakings and preventing cooperation through commitments. However, it is still possible to bring the commitment decision in front of the courts to claim for damages, but the existence of harm originating from an undertaking’s behavior is rather difficult to prove compared to a case where there is an investigation decision with a clear infringement finding. Therefore, it is necessary to evaluate in each individual case the aggravation of damage as well as the link between the damage and the competition issue based on the evidence that is apart from the mere fact that a commitment mechanism was applied. [15] In conclusion, in Turkish competition law, the commitment mechanism and its role in claim for damages is a rather new area that requires guidance that will be established by the Board’s approach, case law, and future court decisions.

1 European Commission’s “Antitrust: commitment decisions, frequently asked questions” (2013) - https://ec.europa.eu/commission/presscorner/detail/en/MEMO_13_189

2 See Competition Board’s note on commitment applications - https://www.rekabet.gov.tr/tr/Sayfa/Basvuru-danismani/taahhutbasvurulari

3 Tadım Decision, No 21-38/549-M dated 12 August 2021 - https://www.rekabet.gov.tr/tr/Guncel/tadim-gida-maddeleri-san-vetic-a-s-hakk-0afa37a49bfeec11a22400505685ee05

4 Yemeksepeti Decision, No: 20-27/336-M dated 04 June 2020 - https://www.rekabet.gov.tr/tr/Guncel/yemek-sepeti-tarafindanrekabet-kurumuna-a10a849086e1ec11a2240050568595ba

5 Coca-Cola Decision, No: 21-41/610-297 dated 02 September 2021 - https://www.rekabet.gov.tr/tr/Guncel/coca-cola-satis-vedagitim-a-s-(ccsd)-ha-1b4c244d440eed11a22400505685ee05

6 Applied Competition Law Seminars by Kerem Cem Sanlı, Dilan Alma, March 2021, p.384 - https://www.lexpera.com.tr/literatur/derleme-makaleler/rekabet-hukukunda-alternatif-bir-yol-taahhut-yontemiyle-uzlasi-vsonuc-384-384/1

7 Yalçın, U., Uluç, Ş., & Bekgöz, G. (2021, November 3). The role of the competition board in competition law infringement cases. Lexology

8 Commitment and Settlement in Competition Law by M. Haluk Arı, Esin Aygün, H. Gökşin Kekevi, p 8.

9 Tort Liability Arising From Infringement of Competition Law: Ruling on the Amount of Damages, Buğra Kesici, April 2017, p.223-225 - https://www.lexpera.com.tr/literatur/kitaplar/i-zarar-miktarinin-takdir-edilmesi-9786051525051-1/1

10 Tort Liability Arising From Infringement of Competition Law: Ruling on the Amount of Damages, Buğra Kesici, April 2017, p.223-225 - https://www.lexpera.com.tr/literatur/kitaplar/i-zarar-miktarinin-takdir-edilmesi-9786051525051-1/1

11 See Istanbul Bar Association’s Memo on 12 Banks Decision, 15 January 2020 - https://www.istanbulbarosu.org.tr/HaberDetay.aspx?ID=15382

12 See Istanbul Bar Association’s Memo on 12 Banks Decision, 15 January 2020 - https://www.istanbulbarosu.org.tr/HaberDetay.aspx?ID=15382

13 Commitment and Settlement in Competition Law by M. Haluk Arı, Esin Aygün, H. Gökşin Kekevi, p 8.

14 Applied Competition Law Seminars by Kerem Cem Sanlı, Dilan Alma, March 2021, p.384 - https://www.lexpera.com.tr/literatur/derleme-makaleler/rekabet-hukukunda-alternatif-bir-yol-taahhut-yontemiyle-uzlasi-v-sonuc384-384/1

15 Tort Liability Arising From Infringement of Competition Law: Ruling on the Amount of Damages, Buğra Kesici, April 2017, p.223-225 - https://www.lexpera.com.tr/literatur/kitaplar/i-zarar-miktarinin-takdir-edilmesi-9786051525051-1/1