Turkish Competition Authority Changes Fine Regulation

The "Regulation on Administrative Fines to be Imposed in Cases of Agreements, Concerted Practices, and Decisions Restricting Competition and Abuse of Dominant Position" (“New Regulation”)[1] repealed a previous regulation (“Repealed Regulation”) issued on 15 February 2009. This summary highlights the key changes introduced by the New Regulation.

The New Regulation updates the term "fine" to "administrative fine" to enhance consistency in terminology and emphasize the administrative nature of the penalty. This change aims to clarify the legality of the fines.

The definitions section now includes broader explanations to address concepts that may create uncertainty in practice and to improve the understanding of legal grounds. The New Regulation incorporates the definitions of undertakings and associations of undertakings from Law No. 4054 on the Protection of Competition and adds the concept of "decisive influence." Decisive influence refers to an indispensable function in the occurrence or continuation of infringement and plays a critical role in determining the liability of executives.

Under the Repealed Regulation, the base fine rate was calculated as a percentage of annual gross revenue at the end of the financial year preceding the final decision. If this could not be determined, the Board used the most recent financial year. The rates were:

• ▪️ 2% to 4% for cartels,
• ▪️ 0.5% to 3% for other infringements.

The New Regulation eliminates fixed base fine rates and grants the Board full discretion to set the initial rate. However, the upper limit remains at 10%.

By removing fixed rates for different types of infringements and eliminating the definition of cartels, the New Regulation allows the Board to impose higher fines on cartels. When setting the initial fine rate, the Board will consider whether the infringement is explicit and/or severe. The New Regulation also replaces the two-tiered system for calculating increases based on infringement duration with a more gradual scale. The Board will first assess the severity of the actual or potential harm and the explicit and/or severe nature of the infringement to determine the initial rate. The Board will then increase the fine according to the following scale:

• ▪️ 1-2 year infringements: increased by one-fifth,
• ▪️ 2-3 year infringements: increased by two-fifths,
• ▪️ 3-4 year infringements: increased by three-fifths,
• ▪️ 4-5 year infringements: increased by four-fifths,
• ▪️ 5 years or longer: increased by 100%.

For aggravating factors, the New Regulation standardizes the fine increase for repeated infringements to 100%, compared to the 50-100% range under the Repealed Regulation. Continuing an infringement after notification of the investigation decision now qualifies as an aggravating factor for all types of infringements, not just cartels. The New Regulation also treats violations of confidentiality obligations during the settlement process as an aggravating factor. According to Article 12 of the Settlement Regulation, parties must keep settlement discussions and any information or documents obtained confidential until the final decision. Breaching this obligation can increase the fine.

Regarding mitigating factors, the New Regulation removes fixed reduction rates, giving the Board full discretion. The Board may reduce fines if evidence shows coercion by other undertakings, if the undertaking’s involvement was limited, if the activities in question represent a small portion of annual gross revenues, or if foreign sales revenues are part of the calculation. The Regulation also explicitly allows fine reductions for active cooperation during investigations or voluntary submission of evidence.

A significant change affects fines for executives and employees. The New Regulation ties liability to their decisive influence over the infringement. Unlike the Repealed Regulation, which imposed a minimum fine, the New Regulation allows the Board to fine executives or employees up to 5% of the fine imposed on the undertaking or association if they exert decisive influence over the infringement.