New Draft Communiqué paves the way for the application of the de minimis doctrine under Turkish competition law
October 2020 – The Turkish Competition Board (the “Board”) has presented for public consultation a draft Communiqué on ”Agreements, Concerted Practices, and Decisions and Practices of Associations of Undertakings which are Considered not to Appreciably Restrict Competition” (the “Draft Communiqué”) in accordance with Articles 27(f) and 41(2) of Law No. 4054 on the Protection of Competition (“Law No. 4054”).
The Draft Communiqué provides a safe harbour for agreements between undertakings that the Board considers to have non-appreciable effects on competition and provides guidance for assessing when minor agreements between companies are not caught by the general prohibition of anti-competitive agreements (Article 4 of Law No. 4054) under Turkish competition rules.
The Draft Communiqué aims to regulate the procedures and principles regarding which agreements, concerted practices, decisions and practices of associations of undertakings, excluding those including hard-core violations. The Draft Communiqué states that agreements deemed to not significantly restrict competition in the market may not be subject to investigation. Similar to the European Commission, the Board adopted a market-share threshold test to assess whether an agreement restricts competition appreciably.
Determining market-share thresholds regarding the de minimis exemption
Article 5 of the Draft Communiqué establishes the criteria based on which agreements and decisions will be deemed not to create a significant risk to the restriction of competition. The wording of Article 5(1) sets out the market-share thresholds for agreements concluded between (a) competing and (b) non-competing undertakings. Under Article 5(1)(a), agreements between actual or potential competitors benefit from the safe harbour introduced by the Draft Communiqué provided that the aggregate market share of the parties to the agreement does not exceed 10% on any of the markets affected by the agreement.
Article 5(1)(b), on the other hand, states that agreements between non-competing undertakings are not caught by the general prohibition of anti-competitive agreements under Turkish competition law, provided that the aggregate market share held by the parties to the agreement does not exceed 15% (instead of 10%) on any of the markets affected by the agreement in question. Needless to say, in order to benefit from the Communiqué, the agreements must not have as their object the restriction of competition, especially any hard-core restrictions of competition such as price fixing and market/customer allocation under either scenario (i.e., agreements between competitors and non-competitors). In light of the above, given that the thresholds provided by the Draft Communiqué are identical to those in the European Commission’s De Minimis Notice, one may say that the draft Communiqué is structured in parallel with the European approach.
The Board takes a firm position in cases where it is unclear whether the agreement is between competing or non-competing undertakings. In such cases, where it is indeterminable if the parties are competitors or not, the Board’s view is that they shall be accepted as competitors. Correspondingly, pursuant to Article 5(2) of the Draft Communiqué, the same market share threshold (i.e., 10%) that is applicable to agreements between competitors, will apply.
Moving on, Article 5(3), regarding associations of undertakings, explains that except for hard-core violations, if the total market share of the members of the association of undertakings does not exceed 10% in any of the relevant markets affected by the decision, it is accepted that such decisions do not significantly restrict competition.
Furthermore, under Article 5(4), if parallel networks formed by vertical restrictions of a similar nature include more than 50% of the relevant market, the market-share threshold provided under Article 5 will be applied at 5% for agreements and decisions between both competitors and non-competitors. The threshold of 50% determined by the Communiqué is relatively high compared to the threshold set by the European Commission, 30%, which indicates that the Board has adopted a more flexible approach compared to the European Commission on this issue—one of its few diverging aspects.
Moreover, Article 5(5) provides a safeguard that in cases where the market shares of parties to the agreement or the members of the association of undertakings goes above the established thresholds for two consecutive calendar years during the agreement or decision period, provided that they do not exceed these thresholds by more than 2%, they will not be considered as appreciably restrictive to market competition. Additionally, Article 5(6) states that the fact that the market shares of the parties to the agreement or the members of the association of undertakings exceed the relevant thresholds does not directly indicate that the agreement or decision in question restricts competition in the market.
Board discretion on initiating full-fledged investigations
While Article 5 of the Draft Communiqué sets out the market-share threshold criteria to determine restrictive agreements and practices, Article 6(2) states that, if deemed necessary, in cases where the market shares of the parties to an agreement or members of the association of undertakings do not exceed the market-share thresholds specified in Article 5, such agreements may still be subject to investigation. This provision ultimately suggests that market-share thresholds will not be the only criterion to determine whether an agreement or practice imposes an appreciable effect to prevent, restrict or distort competition. Additionally, Article 6(3) demonstrates that in the event undertakings are subject to an investigation due to the fact that their market shares cannot be determined, but that during the investigation it is understood that the market shares do not exceed the thresholds, the Board may close the investigation.
Calculation of market shares
Article 7 lays out the manner of how market shares are calculated and applied within the framework of the Draft Communiqué. As explained in Article 7, market share is calculated based on sales value. As for the application of market-share thresholds, the market shares pertaining to each calendar year during the agreement or decision period will be considered. Moreover, in determining the market shares of the parties to the agreement and the members of the association of undertakings, the aggregate market shares of the economic entities that form an undertaking within the meaning of Article 8 of Communiqué No. 2010/4 “Concerning the Mergers and Acquisitions Requiring the Approval of the Competition Board” (“Communiqué No. 2010/4”) will be applied.
In light of the above, the Draft Communiqué and the recent amendment to Law No. 4054 on 16 June 2020 pave the way for the implementation of the de minimis doctrine into Turkish competition law. With this recent development on Turkish competition law rules, the Board will be in a position to better allocate its resources and can focus more on competition law infringements that possibly have more adverse effects on competition in Turkish markets. In addition, the Draft Communiqué will likely affect small- and medium-sized enterprises (“SMEs”) favourably. For example, in its on-going practice the Board usually decides not to (i) open a full-fledged investigation despite the presence of adequate evidence, or (ii) impose any administrative monetary fine on SMEs, even if the Board decides that there has been an infringement of Law No. 4054. Instead, it issues a cease and desist order according to Article 9(3) of Law No. 4054 and de facto puts the de minimis doctrine into practice. With the recent amendment of the law and the Draft Communiqué, the Board may base its decisions in maintaining its approach towards SMEs on legal grounds.
For more information please contact Bulut Girgin, Counsel, at firstname.lastname@example.org, Simru Tayfun, Associate, at email@example.com, and Sıla Dilaver, Junior Associate, at firstname.lastname@example.org.
 The term “hard-core violations” refers to behaviours such as price fixing, market sharing, and restriction of supply between competitors.
 E.g. the Turkish Competition Board’s İzmir Container decision, dated 02.01.2020 and numbered 20-01/3-2; Poultry decision, dated 27.02.2020 and numbered 20-12/145-80; Çiğ Köfte decision, dated 10.01.2019 and numbered 19-03/13-5; Elevator and Escalator decision, dated 03.04.2014 and numbered 14-13/234-100.