Turkish Competition Authority Publishes New Fines Regulation

The Regulation on Fines to Apply in Cases of Agreements, Concerted Practices, and Decisions Limiting Competition, and Abuse of Dominant Position (“New Regulation”) was amended and published in the Official Gazette dated December 27, 2024 (number 32765). Perhaps most importantly, there is no longer a fixed-base fine range. Changes to calculation of fines according to duration of breach and aggravating/mitigating factors have also been introduced. The amendments represent a significant milestone as the previous Regulation has been in force since 2009; they will substantially impact fines for breach of Law No. 4054 on the Protection of Competition (“Law No. 4054”).

Elimination of the Fixed-Base Fine

The previous regulation defined two categories: (i) cartel breaches and (ii) other breaches. The base-level fine for the former was 2%-4% and 0.5%-3% for the latter with both increased according to duration. The New Regulation removes these categories and no longer stipulates a base fine range. The Competition Board will now determine the base fine granting it a broad margin of discretion.

Gradual Increase in Fine according to Duration of Offence

Under the previous regulation, fines were increased by 50% for offences of more than one year but less than five years; and by 100% for offences of more than five years’ duration. The New Regulation has introduced staggered increases:

» An increase of 20% of the base amount for breaches lasting more than one year but less than two years.

» An increase of 40% of the base amount for breaches lasting more than two years but less than three years.

» An increase of 60% of the base amount for breaches lasting more than three years but less than four years.

» An increase of 80% of the base amount for breaches lasting more than four years but less than five years.

» An increase of 100% of the base amount for breaches lasting more than five years,

Revisions to Aggravating and Mitigating Factors

The previous regulation stipulated an increase in fines where parties continued cartel activities on notification of an investigation. The wording has now been changed to “if the parties maintain the infringement after the investigation notice.” Furthermore, the New Regulation stipulates that playing a determining role in the infringement, or breaching confidentiality requirements under agreed settlement regimes, will also be considered aggravating factors (and potentially result in a 100% increase in the base fine).

The New Regulation also introduces some important nuances. For example, the addition of “maintaining the infringement” after the investigation notice could increase the compliance burden on businesses - especially in more complex cases, such as abuse of dominance, where immediate cessation may not be as feasible. Therefore, the new provision could result in the Competition Board and businesses taking different views on how to cease said activity. Moreover, since the presumption of innocence remains in place until the investigation is concluded, companies may not expect to be penalized until an official decision is made. Continuation of infringing activities after receiving an investigation notice could potentially result in an increased fine which, it could be argued, unfairly restricts the undertaking’s right of defence. Therefore, companies facing an investigation should carefully review their actions while, on the Board’s side, it may be useful to provide guidance on allowed actions in the face of alleged breaches. Precautionary injunctions are consequently likely to increase in both regularity and importance in the near future.

As with the previous regulation undertakings may argue case-specific mitigating factors, not explicitly stated in the New Regulation, before the Board. These include:

»  Facilitating on-site inspections.

»  Pressure from other businesses that contributed to the breach.

»  The breach constituting a minor proportion of annual income.

»  The inclusion of foreign sales income in gross revenue used to calculate the fine.

The last of these is of particular note as it could effect an important change in calculation of gross revenue (though whether this will create a significant shift in the application of fines remains to be seen).

Under the New Regulation the size of mitigating fine reduction is entirely at the discretion of the Competition Board and not subject to a limited range of between 25%-60% of the original amount (as it was under the previous regulation).

Conclusion

The most striking changes are the removal of limits for determining base penalty rates and mitigating fine reductions – both of which significantly increase the Board’s discretionary power. The gradual increase in fines for duration and relatively minor changes in aggravating/ mitigating factors may nevertheless have significant consequences for calculation of fines in certain cases.

Those wishing to take a deeper dive can view the previous regulation here and the New Regulation here (both in Turkish).