Meeting on Fining Regulation and Implementations

Posted on by

0

Loyal followers of this blog would easily acknowledge that we meditate upon and spend much time on the fining regulation and the implementation of the regulation by the TCA. The reason behind this obsession is a subject of a whole another post maybe an article. Anyways, when it comes to the fining regulation, I must admit that our co-author Harun Gündüz is the man who you should ask your questions.

Now here is the opportunity those who are in Ankara nowadays. Tomorrow on February the 26th  Harun will be the guest speaker of Rekabet Derneği‘s (Competition Association) monthly meeting and he is going to share his thoughts on fining regulation and implementation of it.

PS: In order to join the meeting please contact the organization using the link above.

Regional Goldsmith Association Fined 4000 USD

Posted on by

0

According to the the pronouncement (in Turkish) dated 14.02.2013 and numbered 13-10/152-75,  The Association of Goldsmiths and Jewelers in Konya, one of the oldest and biggest cities of Turkey, located in central Anatolia was fined as it was found that this association had violated the Article 4 of the Act no 4054  by fixing selling prices for gold wares and jewelry and by introducing restriction on sales/marketing activities such as advertisements and promotions.

The members of this associations, which was found in 1985, are the retailers and wholesalers of gold and jewelry. The preliminary inquiry, which led the investigation, opened in response to the application claiming that

-businesses were prevented from making sales at prices below those determined by the Association and

-fines were imposed on businesses selling at low prices.

During the investigation phase, it was examined whether the Association fixed sales and repair prices for gold as well as sale and marketing conditions outside of the market.

The fine is about 4000 USD! (That’s about 7000 Turkish Liras).  The fine was calculated as 3% of the 2012 income of the Association, which probably includes only  membership dues.

In fact this case is one of the cases on price-fixing by goldsmith associations in different regions of Turkey. There were similar fines as results of investigations of goldsmith associations of Turgutlu/2005, Afyonkarahisar/2006, Balıkesir/2007, Manisa/2007. More cases resulted with no fines or The Board Opinion according to Article 9/3*.

Fining the associations instead of individual undertakings who are the members of that association is a controversial issue because of the likely lower fines. On the other hand, sometimes it is found that the association has the central decisive role and moreover, dealing with only one body -that is the association- instead of hundreds of undertakings create huge procedural inefficiencies. For example in the Pharmacies’ Boycott Case, The TCA fined the Turkish Pharmacists’ Association instead of thousands of pharmacies, also taking into account its significant role in the infringement of Article 4 of the Act 4054. However, it might be raised as a discussion point that while the association may be the subject of an investigation; the fine may be calculated according to the total turnover of the members, instead of the turnover of the association.

*Article 9/3 of Act no 4054: “The Board, prior to taking a decision, shall inform in writing the undertaking or associations of undertakings concerned of its opinions concerning how to terminate the infringement”

Investigation on Mey İçki

Posted on by

0

According to the TCA’s website, an investigation was initiated on the country’s biggest liquor company, Mey İçki. Mey was established by the joint venture group, comprising Nurol Holding, Özaltın Construction, Limak Construction and Tütsab, that bought the alcoholic beverages department of Tekel (State Monopoly for Alcoholic Beverages and Tobacco) in 2004. Undertaking was acquired by Diageo in 2011 for $ 2,1 billion.

Alleged accusations contain establishing exclusivity on retail selling points and foreclosing the market to rivals thereby violating both the articles 4 and 6 of the Competition Act. Mey İçki is considered to be the dominant company at several liquor markets including the traditional Turkish drink “rakı”.

Since the privatization in 2004, company had been subjected to 5 preliminary inquires but those inquires had never ended up into an investigation. Relying on the statistics that we shared earlier within this blog, we expect that the investigation to be concluded within the first quarter of the 2014.

For a Fistful of Turkish Liras

Posted on by

0

As you are familiar with from our previous posts, we are nearly obsessed with the amendments which were made to the Competition Act in 2008. The reason for that obsession is that these changes were regarded as a massive opportunity for Turkish Competition Law enforcement. Introduction of new instruments such as leniency and fines on individuals as well as the requirement to issue regulations on fines (and leniency) are the prominent innovations of the new act.

Apart from that, fixed amount of fines for procedural infringements, i.e. providing false or misleading information, failure to submit to the inspection etc., was replaced with fines that are based on a percentage of annual gross revenue of undertakings. Furthermore, the amendments have brought a lower limit for procedural infringements while it removed the lower limit for substantive infringements of competition law.

This lower limit, which was set as 10.000 Turkish Lira, has been regularly increased by the Competition Board at the beginning of every calendar year pursuant to the relevant legislation in Turkish law. In this regard, the amount was determined as 11.200, 11.446, 12.327, 13.591, and 14.651 Turkish Liras for calendar years 2009, 2010, 2011, 2012, and 2013 respectively.

All of these brings us to the topic of this post: when we look at the track record of the TCA, it is seen that a considerable number of undertakings’ fines for substantive violations are below the lower limit which is determined for procedural violations. You can see the table below for the information about the cases where substantive fines imposed are lower than a procedural fine if imposed. It also gives the ratio between the number of undertakings fined below the lower limit and the total number of undertakings fined in the same case.

Fistful of liras

In the same period, a total of 227 undertakings was fined, which means that 22,03 % of these undertakings’ fines were below the lower limit which is set for procedural infringements. However, we are yet to come to the most interesting part of the story. In Medical Gases case, for instance, the amount of the fine imposed on one of the undertakings investigated was only 0,42 Turkish Lira (around 20 cents Euro).

Given that the first and foremost goal of the Competition Act is to prevent and deter substantive infringements, it becomes questionable to remove the lower limit for substantive violations of competition law. It is also interesting that the amendments bring a lower limit for procedural violations whilst removing the one for substantive violations. I guess the legislator simply thought that these amendments would not lead to such a low level of fines at all.

Turkcell Judgment of The Council of State

Posted on by

0

turkcell-logo

Last week, we have been informed that the Council of State has rendered a stay of execution order (available here) with regard to the TCA’s decision imposing nearly 92 million Turkish liras (equivalent to 42 million Euros) fine to Turkcell, the largest mobile phone operator in Turkey. The reasoning behind the court judgement is again related to procedural grounds.

As a reminder, the TCA’s decision, which was adopted in June 2011, concluded that Turkcell had abused its dominant position by its practices directed at its distributors and dealers and it was resolved that an administrative fine of TL 91,942,343.31 be imposed on Turkcell. That is still the highest fine ever imposed on a single company. However it was a highly controversial decision that 2 members had dissenting opinions while other 4 members concluded that Turkcell committed an infringement although one of them had a concurring opinion.

According to the Council of State, opinion of one of the Competition Boards’ members is not a concurring opinion despite its title says so, instead it was a dissenting opinion in its nature. Therefore the Competition Board must have been met second time to be able to decide on the matter due to the Article 51 of the Competition Act. Since that article, which sets out meeting quorum for the Competition Board, stipulates;

“In its final decisions, the Board convenes with the participation of at least a total of five members including the Chairman or the Deputy Chairman, and it decides via the parallel votes of at least four members.

Where the necessary quorum for the decision cannot be attained in the first meeting, the Chairman ensures that all members participate in the second meeting. However, if not possible, the decision is made via the absolute majority of the participants in the meeting. In this case, the quorum for the meeting may also not be less than the one mentioned in the first paragraph. In case of a tie vote in the second meeting, the vote of the side of the Chairman is deemed preponderant.”

At this point, it not difficult to guess what the TCA will do. In the light of its previous practice in relation to similar judgments of the court, it will cure this procedural defect in its decision and adopt a new decision imposing the same amount of fine. Hence we will reach to the same place by following a different path.