Settlement Procedure in Light of the Turkish Competition Authority’s Practices Frequently Asked Questions

The Settlement Procedure, which was explicitly acted in Law No. 4054 on the Protection of Competition in 2020 and first introduced in the Philips[1] case in August 2021, has been used in several cases since then. Gökşin Kekevi, Tuğba Begüm Terzi, Beste Güneş Tımaç, Ezgi Kaplan, Gökçe Karakaya, and Sevcan Yüksel from the Competition Law Department of Özay Law Firm answered frequently asked questions on this matter. We wish it will be beneficial for our readers.

What are the advantages of the settlement?

According to the Settlement Regulation[2], administrative fines may be reduced by 10% to 25%, generally by 25%, as a result of the settlement. Besides, depending on the discretion of the Turkish Competition Authority ("TCA"), favourable treatment such as determining the basic administrative fine calculated according to the Fines Regulation[3] at the minimum rate, making maximum discount due to the presence of mitigating factors, excluding exports from the turnover to which the final fine rate will be applied may be taken into consideration more frequently. Furthermore, the investigation process, which may be costly and time intensive and create legal uncertainty for the parties, is concluded in a relatively short period of time. In this regard, especially companies that are in the process of M&A or public offering may prefer to settle to end the uncertainty as soon as possible since there is a risk of an administrative fine, up to 10% of their turnovers.

Does settlement mean acceptance of the infringement? Is it possible to settle without paying an administrative fine?

Yes, "settlement" means acceptance of the infringement. And no, settlement is not possible without paying a fine. In any case, there will be a fine with some discount. Besides, the fine and claims settled cannot be subject to a lawsuit by the party settled.

Why do some parties prefer not to settle?

Since settling means acceptance of the infringement and a fine is imposed no matter what, those who see the possibility of escaping from the fine as well as annulment of the fine by the administrative courts in subsequent stages, do not prefer the settlement.

Is it possible to learn the amount of the administrative fine to be imposed by the TCA during the settlement process and decide whether or not to continue the settlement process accordingly?

Yes, the maximum administrative fine which may be applied by the TCA can be learned with the interim decision to be made after the settlement negotiations, and accordingly, settlement applicants decide whether to continue the settlement process.

Is it possible to withdraw from the settlement process after an application? Would this cause any negative consequences?

Settlement parties may opt out of the settlement process until the submission of the settlement text. This particularly occurs in cases where the amount of the fine determined by the TCA is higher than what the settlement applicant expects. If this occurs, information and documents submitted by the settlement party within the scope of the settlement negotiations shall be removed from the file and shall not be used as a basis for the final decision to be taken as a result of the investigation. However, despite this legal assurance, in order to prevent a likely perception that "they have committed a violation and therefore they apply" that may occur in practice, an estimation study should be made regarding the maximum penalty that may be imposed in light of the previous decisions of the TCA and all aspects should be evaluated before the settlement application.

Does applying for settlement bring an obligation to submit additional evidence?

No, being involved in the settlement process does not bring an obligation to submit additional evidence.

Would settlement allow to prevent the publication of the reasoned decision?

No, the settlement would not prevent the publication of the reasoned decision.

May the settlement be a reason for a repetition of the breach?

Yes, since the settlement decision by the TCA also means a finding of an infringement, this decision may constitute a basis for a 50% to 100% higher fine within the framework of the relevant provisions of the Fines Regulation in case the infringement is repeated in the future.

May the settlement be used by claimants in damage claims?

Yes, since the TCA determines an infringement, the claimants, who allege that they have been affected by the infringement, may rely on this decision in their subsequent damage lawsuits.

When is it possible to apply for settlement?

It is possible to apply to the settlement process from the moment that TCA initiates an investigation until the notification of the investigation report. However, it is recommended to decide whether or not to apply for settlement immediately after the initiation of the investigation in order to increase both the possibility of the TCA's acceptance of the settlement application and the reduction rate to be obtained through settlement.

How long does it take to complete the settlement?

There is no explicit period specified in the regulation. However, there are cases where the settlement process has been concluded within a short period of two months immediately after the decision to open an investigation (Beypazarı-Kınık[4], Natura[5]), and there are cases where it has been concluded at the end of 12 months, which is the maximum period for the notification of the investigation report (Numil[6]). Besides, there are a few cases in which the TCA postpones initiating the settlement process or negotiations for months due to the need for a more detailed examination of the file, workload, etc.

Would it be possible to apply for settlement and active cooperation (leniency) simultaneously?

Yes, it is possible to apply for settlement and leniency simultaneously in cases where the subject of the investigation is cartel or cartel-like infringements. As a matter of fact, in the Kınık-Beypazarı case, the reductions under the Active Cooperation[7] and Settlement Regulation were combined and applied simultaneously. Thus, Kınık, the first applicant, received an administrative fine of TRY 928,000 instead of TRY 2.3 million, with a reduction of 35% due to the application of leniency and 25% due to the settlement application, totalling 60%. Likewise, the second applicant, Beypazarı, was fined TRY 9.8 million instead of TRY 21.8 million, with a total discount of 55%, 30% for leniency, and 25% for settlement. Therefore, in cases where the subject of the investigation is cartel or cartel-like violations, it may be recommended to simultaneously apply for settlement and leniency.

Would it be possible to apply for settlement and commitment simultaneously?

Yes, in cases where the subject matter of the investigation does not consist only of hard-core infringements such as cartel and cartel-like infringements, as well as resale price maintenance, it is possible to apply for settlement and commitment simultaneously. For instance, the settlement application was accepted in the Singer case regarding the alleged infringement of resale price maintenance, and the administrative fine was reduced by 25%[8]. At the same time, upon the commitment to remove the non-compete clause from the dealership agreements, that part of the investigation was also terminated[9] according to the Commitment Communiqué[10] without imposing any administrative fine in relation to this alleged infringement.

Are there any cases that have been concluded with the settlement but have not yet been announced?

Yes, many settlement decisions have not yet been announced due to the reasons such as the continuation of the relevant investigation in terms of other investigation parties. Commencis decision[11] is an interesting example in this context. Within the scope of the investigation on alleged gentleman's agreements regarding the labour market, the TCA accepted Commencis' settlement application and imposed an administrative fine of TRY 875,000 with a 25% discount. This decision was published on the TCA's website on 17.04.2023, but was removed on the same day, probably because the case was not completed for other parties of the investigation.

[1] Decision dated 05.08.2021 and numbered 21-37/524-258.

[2] Regulation on the Settlement Procedure Applicable in Investigations on Agreements, Concerted Practices and Decisions Restricting Competition and Abuses of Dominant Position, published in the Official Gazette dated 15.07.2021 and numbered 27142.

[3] Regulation on Fines to be imposed for Agreements, Concerted Practices and Decisions Restricting Competition and Abuse of Dominant Position, published in the Official Gazette dated 15.02.2009 and numbered 27142.

[4] https://www.rekabet.gov.tr/tr/Guncel/aktif-isbirligi-ve-uzlasma-kurumlarinin--fd72d3e60cdcec11a22000505685ee05

[5] https://www.rekabet.gov.tr/tr/Guncel/natura-gida-sanayi-ve-ticaret-as-hakkind-50cfa9b3956ced11a23100505685ee05

[6] https://www.rekabet.gov.tr/tr/Guncel/numil-gida-urunleri-san-ve-tic-as-hakkin-38e4baa2f9fcec11a2270050568595ba

[7] Regulation on Active Cooperation (Leniency) for the Purpose of Uncovering Cartels, published in the Official Gazette dated 15.02.2009 and numbered 27142.

[8] Decision dated 30.09.2021 and numbered 21-46/672-336.

[9] Decision dated 09.09.2021 and numbered 21-42/614-301.

[10] Communiqué on Commitments to be Submitted in Preliminary Investigations and Investigations Regarding Agreements, Concerted Practices and Decisions Limiting Competition and Abuse of Dominant Position (Communiqué No: 2021/2).

[11] Decision dated 24.03.2022 and numbered 22-14/228-99.

List of Settlement Decisions Announced on the TCA Website

Tagged with: Ozay Law Firm, Gökşin Kekevi, Tuğba Begüm Terzi, Gökçe Karakaya, Competititon