1-FREE MARKET ECONOMY AND COMPETITION
Before mentioning competition law, it is useful to
mention the free market and its natural limits. Free market economy or economic
liberalism, in the simplest definition, represents an environment of free
commercial activity and competition without state intervention. In a free
market economy where Adam Smith's famous saying "Laissez-faire,
laissez-passer" (let them do, let them pass) principle is adopted, the
important point in terms of our subject is that competition is also out of
control, and the state does not intervene. Is it possible to establish fair and
equitable competition and competition in favor of the consumer in a market that
is not subject to any restrictions or supervision? Or does the order create its
own big fishes and turn freedom into a hollow word?
Article 3 of the Law Nr. #4054 on Protection of
Competition (“LPC”) defines the concept of competition as follows: "Competition
between undertakings in the goods and services markets that enables free
economic decisions to be made". As can be seen from the definition,
the competitive environment, which is one of the inseparable elements of the
free market, refers to the situation in which undertakings can regulate supply
and demand, pricing, advertising, and all kinds of marketing activities in line
with their profit objectives without state pressure and control. There are four
types of market types according to the status of undertakings across the
market. "These are complete competition, monopoly, monopolistic
competition and oligopoly." [1]
"Firms in complete competition do not have market
power. They compete fiercely and accept the market price as it is... Monopoly
is a form of market that produces goods and services that have no substitutes,
where there is a single seller protected from competition and prevents new
firms from entering the market. A single firm in this market has market
power." [2]
In the case of oligopoly, which is between perfect
competition and monopoly representing the two opposite poles of the market in
terms of competition, there are "few" undertakings and competition is
relatively more controlled. In all markets where the number of undertakings is
more than one, competition regulations
and the state should determine the field of action with legal regulations, even
if limited, in order to ensure just and beneficial competition and to ensure
the benefit of the consumer and the country within the profit-loss balance. For
this purpose, the Law Nr. #4054 on Protection of Competition and the relevant
provisions of the Commercial Code are in force in our country, and audits are
carried out by the Competition Authority.
As a continuation of the previous explanations, it
should be noted that all undertakings aspire to be unique in the market and to
determine production-consumption-price balances alone and freely. Since the
increase in the number of undertakings leads to a "market price",
undertakings are forced to play the game according to the rules, so to speak,
in which all undertakings are involved. In order to limit the aspiration to
become a monopoly and to establish fair competition, statutory regulations keep
undertakings under control.
2. THE "LENIENCY REGULATION" SPECIFICALLY
WITHIN THE SCOPE OF COMPETITION LAW REGULATIONS AGAINST CARTELISATION
"Although there is no clear definition of
competition law, it can be defined in various ways by the authors in the
doctrine. According to one perspective, agreements and decisions, restrictive
practices or economic power of an undertaking in a dominant position with the
aim of affecting the market in which the undertakings operating in various
products or service sectors operate, and the unlawful disruption of the free
market economy that is desired to exist in the market with the economic power
that enables it to be in a dominant position, and all of the regulatory or
prohibitive regulations aimed at preventing the restriction of the free market
economy after this unlawfulness are called cartel law or competition law."
[3]
In other words, Competition Law introduces regulatory
and prohibitive rules in order to prevent the free market economy from being
damaged by unlawful acts and transactions and to prevent strong undertakings in
a dominant position and unlawful business associations from disrupting market
balances and serves the purpose of keeping the market under control.
As we have mentioned, unlawful acts and transactions
carried out by dominant undertakings in order to keep the strings of the order
in their own hands and thus increase their profits to the detriment of other
undertakings, rather than playing the game according to the rules, constitute
unfair competition, and in order to prevent cartelization, cooperation with the
Authority is also presented as an alternative solution under our Law.
The "Regulation on Active Cooperation for the
Purpose of Uncovering Cartels", known as the "Leniency
Regulation", which is based on the Article 16 of the Law on Protection of
Competition, entered into force after being promulgated on the Official Journal
dated February 15, 2009 and bearing the issue number #27142. The Authority has
also published a Guideline on Explanation of the Regulation on Active
Cooperation for the Purpose of Uncovering Cartels. The provision established
pursuant to the Article 16 of the LPC is as follows:
"The penalties specified under the third and
fourth paragraphs may be waived or the penalties to be imposed according to
these paragraphs may be reduced for the undertakings or associations of
undertakings or their managers and employees who actively cooperate with the
Authority for the purpose of revealing the violation of the Law, by taking into
account the nature, effectiveness and timing of the cooperation and by clearly
showing the justification."
As stated under the related provision of the Law,
undertakings that actively cooperate with the Authority for the purpose of
revealing the violation of the Law may not be fined or their fines may be
reduced. The respective procedures and principles are set out under the
aforementioned Regulation.
In competition law, leniency refers to the fact that
undertakings that are involved in a cartel formation and support the growth of
a cartel by supporting this cartelization, may avoid the fine completely by
reporting the cartel to the Competition Authority or obtain a discount from the
fine to be imposed against them in certain circumstances. Briefly referred to
as the leniency program, active cooperation with the Competition Authority
within this system is an important recourse offered by the Competition Law as a
way to avoid heavy fines to be imposed by reporting the cartel and presenting
various evidences and details. [4]
3. CARTEL
"As it is
clearly understood from the regulation, leniency practices only cover cartels.
Since other competition violations are not covered by this regulation, they
will not be able to benefit from the leniency provisions." [5]
At this point,
some applications are rejected due to the fact that the notified undertaking is
not a cartel, even if there is unfair competition. At this point, the concept
of "cartel" is important, and the definition of Cartel is set out
under the Article, titled “Definitions”, of the Regulation as follows:
"c) Cartel:
Agreements and/or concerted practices between competitors restricting
competition in the fields of price fixing, allocation of customers, suppliers,
regions or trade channels, restriction of the amount of supply or imposition of
quotas, collusion in tenders."
At present, undertakings that exceed a certain volume
try to maintain or even increase their dominant position by using their market
influence, especially small enterprises. Small enterprises may contribute to
cartelization in various ways, hoping that they can go much further than they
can go on their own through sector-leading undertakings. By controlling the
trade channels of the dominant undertakings, organizing the customer portfolio
through incentive and discount systems, and getting ahead of rival firms
through various commercial relations, cartels undermine the fair competition
environment by unfairly increasing their market volumes.
As the cartels carry out these co-operations in a
highly secretive and behind the scenes manner, it is often too late or not
possible at all for the Authority to be informed and intervene. For this
reason, the notification of these illegalities to the Authority by an
undertaking within the co-operation serves both to protect the time and
resources that the Authority will lose through inspection, evidence collection
and investigation, and to protect the fair competition environment. The
undertaking that makes the first application without any investigation has the
highest discount rate (or even impunity); other undertakings that apply after
the first undertaking may receive discounts at varying rates depending on the
order of application. In this case, the amount of the reduction is below 50% .
[6]
4. APPLICATIONS FOR LENIENCY IN PRACTICE
Although the leniency remedy has its advantages, it
should not be forgotten that it is an extremely sensitive and risky
institution. The low amount of reduction in penalties will not encourage any
attempt to self-disclose and this remedy will lose its intended function. In
case of complete impunity or high reductions, undertakings that knowingly and
willingly participate in cartelization and unfair competition collaborations
will be exonerated from unfair competition acts with almost no loss in addition
to what they gain if they apply for leniency. For this reason, penalty
reductions and application processes should be closely monitored by the
relevant authorities and abuse of the institution should not be allowed.
The conditions for not imposing a fine and/or reducing
the fine to be imposed are set out under various articles of the Regulation. If
these conditions are summarized in 6 items, they are as follows:
"1. Presentation of Information and Documents,
2. Not to withhold or conceal information and
documents,
3. Cease to be a Party to the Cartel,
4. Confidentiality of the Application,
5. Continued Co-operation,
6. Inability to Benefit from Immunity in Case of
Coercion of Other Undertakings to Infringe". [7]
Similar practices regarding Leniency and Co-operation
applications have been in place for many years in the European Union and the US
Competition Law, and it is seen that they are relatively functional and
facilitate supervision of the competition environment. However, in line with
the precedent decisions, it can be said that this institution, which has only
recently come into force in Türkiye, still has a long way to go in terms of
predictability and transparency. The fact that different decisions are rendered
for similar applications, and that different discount/non-penalty sanctions are
applied for the undertakings and their executives, may put the undertakings in
a dilemma in this respect.
"Under the Condor decision (Decision Nr. #11-54/1431-507, Decision Date: 27.10.2011), the Board was informed that SunExpress and Condor acted in co-operation in determining the ticket prices for flights between Germany and Türkiye. This is an interesting decision in which the Board refrained from defining the actions of the undertakings as a cartel, but granted full immunity by accepting the leniency application made by one of the parties who committed the alleged violations. The Board initiated an investigation against SunExpress Aviation and Condor Flugdienst for restricting competition in relation to flights between Germany and Türkiye through various agreements. The Board decided that the two undertakings violated the Article 4 of the LPC through price fixing under their distribution agreements. At the end of the investigation, Sun Express' application for leniency was accepted and no fine was imposed. Although leniency applications are only possible for cartel cases, the Board applied the provisions of the Leniency Regulation in this decision without defining the violation as a cartel. According to the relevant decision text, the Board automatically reduced the fine based on the information and documents provided by Condor. In a cartel consisting of two undertakings, in order for the second undertaking to benefit from the leniency program, it is necessary to provide substantial and sufficient evidence that will add value to the ongoing investigation. In this decision, it is considered that the Board has been very generous in order to encourage leniency applications." [8]
"In the Board's decision on Otuzbir Kimya
(Decision Nr. #12-24/711-199, Decision Date: 03.05.2012), an investigation was
initiated with the allegation that Otuzbir Kimya ve Sanayi Türk Ltd. Şti. and
Sodaş Sodyum Sanayi A.Ş., the producers of sodium sulphate, had formed a cartel
in the powder sodium sulphate, crystalline sodium sulphate and raw salt markets
through price determination and customer sharing. Sodaş applied for leniency
after the preliminary investigation decision for the cartel in the sodium sulphate
markets but did not receive full immunity and the fine was reduced. In this
decision, the Board fined both the undertakings that were parties to the cartel
and the "persons who had a decisive influence on the infringement" but
reduced the fines of Sodaş Sodium and the general manager who applied for
leniency. The Otuzbir Kimya decision is the first decision in terms of imposing
penalties on persons who have a decisive influence on the infringement." [9]
"In the 3M decision (Decision Nr. #12-46/1409-461,
Decision Date: 27.09.2012), 3M Sanayi ve Ticaret A.Ş. alleged that some
undertakings operating in the traffic marking sector had committed acts in
violation of the Law and applied for leniency. In the Decision, the leniency
applicant 3M did not fully cooperate, moreover, dawn raids were carried out on
its premises, and although the investigating team recommended the Board not to
grant full immunity to the leniency applicant 3M on the grounds that it did not
provide all the documents that could be obtained in a dawn raid, full immunity
was granted to the undertaking in question. In the decision, the Board decided
that there was insufficient evidence to prove the violation of the Article 4 of
the LPC and did not impose a fine on the undertakings in question. With this
decision, a negative implicit message was given to the undertakings that,
contrary to the purpose of the leniency programs, they would not benefit from
the leniency programs." [10]
5. CONCLUSION
When the aforementioned exemplary decisions and all
other decisions of the Board regarding leniency applications are evaluated
together, the fact that inconsistent decisions have been made on issues such as
whether the undertaking is a "Cartel" or not, evaluations regarding
the stage and timeframe of the application, evaluation of the evidence
submitted within the scope of cooperation, and cooperation with the applicant,
carries the risk of causing undertakings that plan to apply for leniency to
take a step back and fail to meet the purpose of the Law. It is thought and
hoped that in time, with the increase in the practice of the Institution, it
will gain operability and a more solid jurisprudence unity will be formed.
Att. Gamze Nur Şan
References:
1. Prof. Werner SICHEL, ON THE OLIGOPOL MARKET TYPE,
Western Mishigan University, Translated by: İzzettin ÖNDER
2. Translated by: A. Semih UZUNDUMLU Murat KÜLEKÇİ,
EKSİK REKABET VE FAKTÖR PİYASALARI, Atatürk University Publications, p. 89
3. Özsunay E. 1985, "KARTEL HUKUKU" İstanbul
University Publication Nr.: 694, Fakülteler Printing House, İstanbul, p.4
4. Official Website of the Competition Authority,
Pişmanlık ve İşbirliği Süreci,
https://www.rekabet.gov.tr/tr/Sayfa/Rekabet-savunuculugu/rekabet-hukuku/rekabet-hukukunda-usul/pismanlik-ve-isbirligi-sureci,
Date of Visit: 20.01.2024
5. Dr. Murat Şahin, KARTELLE MÜCADELEDE UZLAŞMA
YÖNTEMLERİ VE YARGISAL DENETİMİ, Manisa Celal Bayar University İ.İ.B.F. YÖNETİM
VE EKONOMİ Year:2018 Volume:25 Issue:3
6. Official Website of the Competition Authority,
Pişmanlık ve İşbirliği Süreci,
https://www.rekabet.gov.tr/tr/Sayfa/Rekabet-savunuculugu/rekabet-hukuku/rekabet-hukukunda-usul/pismanlik-ve-isbirligi-sureci
, date of visit: 20.01.20247. H. Gökşin KEKEVİ, ISSN 1302 - 552X Peer-Reviewed
Competition Journal, 2009, 10(4):73-116, p.100
7.
H. Gökşin KEKEVİ, ISSN 1302 – 552X Peer-Reviewed
Competition Journal, 2009,
10(4):73-116, p.100
8. Asst. Assoc. Prof. Dr. Sevda
Yaşar COŞKUN, TÜRK REKABET KURULU KARARLARI IŞIĞINDA PİŞMANLIK PROGRAMININ
UYGULANMASI: BELİRSİZLİKLER VE TUTARSIZLIKLAR, Journal of the Faculty of Law, Erzincan
University, C. XVIII, S. 3-4 (2014) p.94
9. Assist. Assoc. Prof. Dr. Sevda
Yaşar COŞKUN, TÜRK REKABET KURULU KARARLARI IŞIĞINDA PİŞMANLIK PROGRAMININ
UYGULANMASI: BELİRSİZLİKLER VE TUTARSIZLIKLAR, Journal of the Faculty of Law,
Erzincan University, C. XVIII, S. 3-4 (2014) p.95
10. Assist. Assoc. Prof. Dr.
Sevda Yaşar COŞKUN, TÜRK REKABET KURULU KARARLARI IŞIĞINDA PİŞMANLIK
PROGRAMININ UYGULANMASI: BELİRSİZLİKLER VE TUTARSIZLIKLAR, Journal of the
Faculty of Law, Erzincan University, C. XVIII, S. 3-4 (2014) p.96
