Two-minute Recap of Turkish Competition Law Developments - August 2024

5 Mergers and Acquisitions Reviewed

2 Investigation Launched

1      Phase II

1      Full-fledget investigation

3 Investigations Closed

0      No fines imposed after regular procedure

0      No fines imposed with commitments

2      Fines imposed after regular procedure

1      Fines imposed via settlement

1      Oral Hearings Announced

Turkish Competition Authority publishes annual activity report

»  145 investigations were launched in 2023, 117 of which were full-fledged investigations while 28 were preliminary investigations.

-  25 preliminary investigations were resolved via rejection of the allegations.

-  80 full-fledged investigations resulted in monetary fines of which 68 were resolved by settlement while 28 resolved with commitments and no monetary fines.

»  Decisions in the following sectors constituted 71% of violation decisions rendered in 2023: (i) machinery (16); (ii) automotive (14); (iii) chemistry and mining (38); (iv) food (26); (v) culture, art and entertainment (9).

»  The number of dawn raids almost doubled from 831 to 1642 this year.

Turkish Competition Authority announces strategic plan

The Turkish Competition Authority (TCA) has announced its four-year strategic plan which can be summarized as follows:

»  Undertaking legislative updates (particularly by considering digital transformation)

»  Updating evidence gathering tools

»  Strengthen cooperation with other public authorities

»  Increase academic activities

»  Improve public awareness of competition law through media channels

»  Increase the role of economics in enforcement

»  Make efforts to publish its activities globally through media channels

EssiLux reasoned decision published

The TCA published its reasoned decision on EssiLux’s breach of commitments and anti- competitive practices arising from concerns it breached commitments made during the 2018 merger of Luxottica1 and Essilor2 when it had undertaken that it would not:

(i) refuse to sell ophthalmic lenses, optical frames and sunglasses separately in Türkiye (i.e. no tying).,

(ii) engage in contractual or de facto exclusivity limiting or forbidding its resellers to purchase ophthalmic lenses, optical frames and sunglasses from its competitors in Türkiye.

As a result of its investigation, the TCA concluded that EssiLux did not tie any of the above-mentioned products and therefore did not breach that part of its commitments. On the other hand, it found that EssiLux breached the second part by its de facto and contractual exclusivity (the latter only featuring in a handful of contracts) practices.

The TCA analyzed de facto exclusivity practices in EssiLux’s bundled sales and rebate scheme. Firstly, it noted that the bundle was not below cost. However, it further noted that EssiLux was subsidizing the loss from the glass cutting machine (where EssiLux was deemed dominant) with high profits generated from sales of ophthalmic lenses (where it was also found dominant in production and wholesale). Since opticians consider discounts when choosing a supplier, the TCA concluded that this influenced their purchasing behavior.

Secondly, the TCA remarked that the rebates were personalized and comprised all or a sizable amount of a reseller’s total purchases. Furthermore, there were punitive clauses for not meeting targets which meant the glass cutting machine could also be taken back. It concluded that this incentivized opticians to purchase as much as they could from EssiLux to keep the discount and avoid punishment.

The TCA therefore determined that EssiLux’s bundled sales and rebate scheme created de facto exclusivity and thereby breached its commitments. A daily monetary fine totaling EUR 16.9 million and beginning from the date of approval of the merger (the end date was redacted in the published decision) was imposed.

Tetra Pak – a retro tying practice?

The TCA’s full-fledged investigation into Tetra Pak concerning anti-competitive tying practices resulted in fines.

In its recent announcement, the TCA stated that it fined Tetra Pak a total of approx. EUR 3.4 million for abusing its dominant position in “production and sale of filling machines for aseptic liquid food carton packaging” and “production and sale of aseptic liquid food carton packaging”.

We will know more once the TCA publishes its reasoned decision. For now, the TCA has stated that Tetra Pak was fined for “abuse of its dominant position through its 3D aseptic prism shape brand and registered design applications, as well as other 3D brand applications in the evaluation stage, and through its acts.”

The English version of the announcement can be viewed here.

Automatic fines on hindering dawn raids criticized

According to the TCA’s standard practices, deletion of a document or correspondence after a dawn raid is initiated automatically results in a fine - regardless of the content of the deleted item. This approach has been supported by the courts while Article 16 of Law No. 4054 lists “prevention of or impeding on-site inspections” as requiring administrative fines.

However, in a recently published reasoned decision, the members of the Board (including the chairman) wrote a dissenting opinion concerning the decision dated 12.10.2023 (numbered 23-48/910-324) arguing that automatic imposition of a fine should only occur in cases involving cartels.

The president and a board member wrote similar (though not identical) dissenting opinions arguing that

(I) the content of the deleted file,

(II) whether the deleted files were recovered,

(III) and whether the dawn raid as a whole was successful (stating that, in the relevant case, only one employee deleted data and “the dawn raid as a whole was completed and achieved its purpose”)

should be considered.

They also noted that panic reflexes during raids are normal and agreed that the current strict approach should still apply in cartel-related cases.

While the approach of Law No. 4054 and the TCA remains consistent, dissenting opinions are criticizing existing practice.

Deeper probe into pharma deal

The TCA also announced it has initiated a Phase II review of Curium International Trading B.V.’s acquisition of sole control over Eczacıbaşı Montrol Nükleer Ürünler Sanayi ve Ticaret A.Ş. Both companies are active in the radiopharmaceutical sector.