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  • Stj. Avukat Şimal KUNCAN

CONCERTED PRACTICES IN TURKISH COMPETITION LAW


INDEX



1. What Is Concerted Practice?


The definition of concerted practice or concerted behavior is not included in Article 3 titled "Definitions" of the Law No. 4054 on the Protection of Competition (“Competition Law”). Article 4 of the relevant law, which prohibits agreements and practices restricting competition, introduces the concept of concerted practice. Article 4 of the Law titled “Agreements, Concerted Practices and Decisions Limiting Competition” states that “Agreements and concerted practices between undertakings, and decisions and practices of associations of undertakings which have as their object or effect or likely effect the prevention, distortion or restriction of competition directly or indirectly in a particular market for goods or services are illegal and prohibited.” Although the concept of concerted practices is not directly defined in the law, this article states that concerted practices between undertakings that have the purpose of restricting competition or that have or may have the effect of restricting competition are unlawful and prohibited.


By definition, concerted practices are the anticompetitive market behavior of two or more undertakings that cannot be explained on economic and rational grounds and that are not based on an agreement but are deliberately parallelized. (1) Concerted practices are intended to harm competition when commercially sensitive information, such as an undertaking's planned future pricing or production or capacity, is shared among actual and/or potential competitors.


Based on this definition, the existence of concerted practices requires the following four elements to be present together:


1. The existence of two or more undertakings,

2. Conscious, parallel behavior between businesses,

3. Inability to explain parallel behaviors on economic and rational grounds,

4. Restriction of competition.


If one of these elements is absent, there can be no concerted practice. (2)



2. Legal Nature of Concerted Practices


Law No. 4054 on the Protection of Competition is a law that is in the field of administrative law, but also includes provisions in the field of private law due to its connection with the law of compensation. In this framework, concerted practice is an act of infringement regulated under the Competition Law on the basis of the rule of good faith as set forth in Article 2 of the Turkish Civil Code, and is subject to legal consequences in both administrative law and private law. (3)



3. Presumption of Concerted Practice


In order for concerted practices to constitute a violation of competition, it is sufficient that parallel practices that do not lead to an agreement between undertakings have the purpose of restricting competition. However, as expected, it is very difficult to prove the causal relationship between these practices.


Paragraph 3 of Article 4 of the Competition Law stipulates that “In cases where the existence of an agreement cannot be proved, a similarity of price changes in the market, or the balance of demand and supply, or the operational regions of undertakings to those markets where competition is prevented, distorted or restricted, constitutes a presumption that the undertakings are engaged in concerted practice.” With this provision, the Law introduces a presumption of concerted practices. In paragraph 4 of the same article, it is regulated that liability may be avoided by proving the contrary of the presumption of concerted practice. Accordingly, each of the parties may relieve itself of the responsibility by proving, on the basis of economic and rational facts that it has not engaged in concerted practices.


Concerted practice is an argument used when the means of proof required for an agreement cannot be reached. The presumption of concerted practices set forth in the Law also places the burden on undertakings to prove that they have not engaged in concerted practices. In its simplest form, the Law actually presumes that undertakings engage in concerted practices with the aim of restricting competition and requires undertakings to prove the contrary -that they do not have anti-competitive intentions when acting concertedly-.



4. Proof of Concerted Practice


In order to prove concerted practices, the connection between undertakings must be demonstrated with evidence. In fact, in terms of the Law, how to prove the agreements between undertakings is more important than the distinction between the concepts of agreement and concerted practices.


According to the Competition Law, the existence of agreements, decisions and practices limiting competition may be proved by any kind of evidence. (4) We can say that the Competition Board is given a wide latitude by allowing the Competition Board to prove competition restrictions by any evidence. (5) However, since concerted practices are carried out through secrecy or concealment methods, it is very difficult to obtain direct evidence in their proof.


It is aimed to facilitate the proof by not including clear and precise regulations on what can be considered as evidence in the Law. Let us explain what can be considered as evidence in the proof of concerted practices with a few examples below:


1. Correspondence between undertakings,

2. Documents containing the names and telephone numbers of executives of rival companies,

3. Hotel records showing that executives of rival companies were in the same location during the same period,

4. Meetings and minutes of meetings held in sectoral associations,

5. Some other documents showing information sharing between undertakings.



5. Board Decisions


In the Competition Board's decision dated 04.07.2007 and numbered 07-56/672-209, it was found that the price lists of six undertakings operating in the Enameled Coil Wire (EBT) sector changed at the same time and that the prices of approximately 40 different diameter EBTs in the lists were identical, and that the undertakings were in communication in this regard. From the evidence and statements in the minutes, it was revealed that there was an agreement between the six EBT producing undertakings to switch to a single price list. For these reasons, it was concluded that the undertakings against which an investigation was initiated, violated Article 4 of the Law No. 4054 on the Protection of Competition through agreements and concerted practices and these six undertakings were imposed an administrative fine of approximately TRY 1.7 million. (6)


In the Competition Board's decision dated 17.7.2008 and numbered 08-45/624-236, the allegation that the seventeen complained banks reduced the interest rates applied in credit card transactions to the maximum interest rate to be applied in credit card transactions determined by the Central Bank of the Republic of Turkey (CBRT) and that this situation is an indication of concerted practices of the banks was analyzed. In the decision in question, it was stated that interest rates were not left entirely to the discretion of the banks and that the CBRT set an upper limit for the interest rate to be applied to credit card transactions every three months, taking into account market conditions. In addition, it was emphasized that the maximum limit and the maximum interest rates to be applied by each bank were published on the CBRT's website, thus ensuring transparency in favor of consumers. For this reason, it is concluded that the simultaneous application of the highest interest rate by seventeen banks can be explained by the market conditions, since the fact that the undertakings that are competitors of the banks have the information on which interest rate they apply will reduce their incentives to compete on interest. (7)



6. Conclusion


Under Turkish Competition Law, concerted practices between undertakings that have the purpose of restricting competition or that have or may have the effect of restricting competition is a competition violation that we frequently encounter in practice. In this article, we have endeavored to explain this infringement with definitions, examples and board decisions and to enlighten our readers on this issue.


F. Şimal KUNCAN

Trainee Lawyer




BIBLIOGRAPHY


1. ASLAN, İ. Yılmaz. Rekabet Hukuku: Teori, Uygulama ve Mevzuat, 3. Bsk., Bursa, Ekin Kitabevi, 2005, s.140


2. Competition Board Decision, Decision No: 00-11/109-54, Decision Date: 23.03.2000


3. CENGİZ, Dilek. Türk Rekabet Hukukunda Uyumlu Eylem ve Bu Eylemin Hukuki Sonuçları, Doktora Tezi, İstanbul Üniversitesi Sosyal Bilimler Enstitüsü Özel Hukuk Anabilim Dalı, 2005


4. Law on the Protection of Competition (Law No. 4054) Art. 59/2, Official Gazette 22140 (December 13, 1994)


5. ŞEN, Mustafa. Rekabet Hukukunda Uyumlu Eylemler, Yüksek Lisans Tezi, Dicle Üniversitesi Sosyal Bilimler Enstitüsü Özel Hukuk Anabilim Dalı, 2013


6. Competition Board Decision, Decision No: 07-56/672-209, Decision Date: 4.7.2007

7. Competition Board Decision, Decision No: 08-45/624-236, Decision Date: 17.7.2008

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