The Leniency Regulation Has Been Updated

The Regulation on Active Cooperation for Detecting Cartels, also known as the Leniency Regulation (“Regulation”), has been subject to the revision process for a while. Having completed the consultation works on the Draft Regulation with significant amendments, the amended Regulation was published in the Official Gazette dated 16 December 2023. Abolishing the previously effective 2009 version under the Regulation (“Abolished Regulation”), the Regulation introduces procedures and principles regarding immunity from or the reduction of administrative fines for undertakings, managers, and employees of undertakings who cooperate with the Competition Authority to detect cartels.

Although many provisons of the Abolished Regulation remain in place, some of the most significant introductions and amendments are presented below:

New Concepts

Applicant

The Applicant, as the main actor in initiating an investigation process by filing an application for leniency, can be undertakings, associations of undertakings, and managers or employees who independently apply. In accordance with this definition, employees and managers, who may also be personally liable for competition violations under the existing legislation, are allowed to apply for leniency independent of the undertaking in which they are employed.

Cartel Party / Cartel Facilitator

Cartel Party refers to undertakings acting as a party to a cartel who are at the same level in the market, whereas Cartel Facilitator refers to undertakings and associations of undertakings that facilitate the establishment and/or maintenance of a cartel through their activities and who are not operating at the same level in the production or distribution chain as the parties to the cartel. The concept of “Cartel Facilitator”, which was not included in the Abolished Regulation, has clarified the place and legal nature of undertakings that are “hubs” in terms of hub-and-spoke cartels or providers that implicitly support or encourage the continuation of the cartel in dealer cartels, even if they are not directly party to the cartel, within the leniency mechanism.

Document Creating Added Value

The conditions to apply for active cooperation include providing information and documents in the nature of Documents Creating Added Value, or in other words, to strengthen the possibility of proving the cartel. In recent practice, the requirement to contribute concrete information and documents to help prove the case, which was de facto taken into consideration by the Competition Board, has been included in the Regulation and legal predictability has been ensured.

Application Periods

The Regulation provides that the applicant may benefit from a reduction in administrative fines provided that the applicant applies for leniency within a period of three months following the notification of the investigation, prior to the notification of the investigation report. Under the Abolished Regulation, the necessary information and documents could be submitted from the Board’s decision to conduct a preliminary investigation until the notification of the investigation report.

Immunity from and the Reduction of Fines

Unlike the Abolished Regulation, the lower limits for the reductions to be applied to administrative fines in case of leniency applications made after the preliminary investigation has been initiated have been lowered. Accordingly:

• The reduction rates to be imposed for the first application vary between 25% to 50%,
• The reduction rates to be imposed for the second application vary between 20% to 40%, and
• The reduction rates to be imposed to other applications vary between 15% to 30%.

On the other hand, the condition that the information and documents submitted must create added value to the investigation, listed as a condition under the leniency application criteria, reveals that exemptions or reduction of penalties will be decided according to the nature and strength of the evidence.

This amendment indicates that the motive to benefit from the upper limit discount for leniency applications has now turned into a motive of proportional discount in accordance with the concrete contribution of evidence to the leniency application to reveal cartels. This change in approach regarding the encouragement of a leniency mechanism is in line with the view adopted by the Competition Board over the last few years.

Other Incentives Encouraging Leniency

The Regulation stipulates that, if necessary, information regarding current and former managers or employees of the applicant may be consulted.

In addition, the applicant is given the opportunity to submit additional evidence. If additional information and documents are obtained by the applicant after the completion of the application, they may be submitted until the end of the second written defense period.

Enforcement of the Regulation

Another newly-introduced provision is the protection of the benefit obtained through the leniency application in the event that the leniency application is accepted by considering that the alleged violation was a cartel at the time of the applicant's leniency application, and yet, the investigation shows that there is another type of infringement (e.g., information exchange) instead of a cartel.

In other words, even if the leniency application is accepted on the assumption of a cartel but during the investigation the Board determines the existence of a non-cartel infringement, as the leniency application has already accepted, the applicant may not be fined or the penalty may be reduced.

Finally, an applicant-friendly approach has been adopted by stipulating that the provisions of the legislation favourable to the applicant shall apply to investigations and leniency applications initiated prior to the entry into force of the Regulation.