New Regulation on Administrative Fines for Anti-Competitive Practices

The “Regulation on Administrative Fines for Anti-Competitive Agreements, Concerted Practices, and Decisions, and Abuse of Dominant Position” (“Regulation”), published in the Official Gazette No. 32765 dated 27 December 2024, establishes the procedures and principles for determining administrative fines to be imposed under Article 16 of the Law No. 4054 on the Protection of Competition (“Law”) replacing the “Regulation on Fines to Be Imposed in Cases of Anti-Competitive Agreements, Concerted Practices, and Abuse of Dominant Position” published in the Official Gazette No. 27142 dated 15 February 2009. These fines are applicable to enterprises, associations of undertakings, their members, managers and employees who engage in prohibited behaviors as defined in Article 4 (Anti-Competitive Agreements, Concerted Practices, and Decisions) and Article 6 (Abuse of Dominant Position) of the Law.  As per the announcement of the Competition Board announced on its website, in accordance with the Regulation, the approach where the basic penalty rate determined based only on the types of infringement categorised as ‘cartel’ and ‘other infringements’ has been abandoned and a new method has been adopted, which takes into account the nature of the infringement and its negative impact on competition. Furthermore, the lower and upper limits based on the distinction between ‘cartel’ and ‘other infringements’ in determining the fines were also removed. Therefore, a new methodology was adopted that takes into account the nature of the infringement and its negative impact on competition.

Under Regulation, the base penalty rate is calculated separately by the Competition Board (“Board”) for each violation. Accordingly, the administrative fines are calculated based on the annual gross revenue of enterprises, associations of undertakings or their members, as of the end of the fiscal year preceding the final decision. If this calculation is not possible, the annual gross revenue at the end of the closest fiscal year to the date of the decision is taken as the basis.  After the calculation of the basic penalty rate, the basic penalty shall be increased by taking into account the aggravating factors or decreased taking into account the mitigating factors. In any case the administrative fine cannot exceed 10% of the annual gross revenue of the said enterprise. Additionally, it is stipulated that managers or employees who have played a decisive role in the violation may be subject to an administrative fine of up to 5% of the fine imposed on the enterprise or association of undertakings.

The base penalty rate is calculated based on the severity of the damage and the nature of the violation and is increased according to the duration of the violation.

The base penalty rate is increased as follows:

• For violations lasting longer than one year but less than two years, by one-fifth,
• For violations lasting longer than two years but less than three years, by two-fifths,
• For violations lasting longer than three years but less than four years, by three-fifths,
• For violations lasting longer than four years but less than five years, by four-fifths,
• For violations lasting longer than five years, by one-fold.

Aggravating Factors

The base penalty rate may be increased up to one-fold in the following cases:

1. Repetition of anti-competitive behaviors after the Competition Board has identified the violation of articles 4 and/or 6 of the Law,
2. Continuation of the violation after the notification of the investigation decision,
3. The presence of a decisive role in the violation,
4. Breach of confidentiality obligations as stipulated in Article 12/3 of the Regulation on the Settlement Procedure Applicable to Investigations Concerning Anti-Competitive Agreements, Concerted Practices, Decisions, and Abuse of Dominant Position.

In cases where the repetition of anti-competitive behaviors occurs simultaneously with any other aggravating factor, the respective increase rates are aggregated and applied to the base penalty rate.

Mitigating Factors

The base penalty rate or the aggravated penalty rate may be reduced in case of the existence of the following is proven by the undertaking:

• Facilitating the on-site investigation as set forth in the Regulation,
• Coercion of other undertakings in the infringement,
• Limited participation in the infringement,
• Low share of the activities subject to the infringement among the annual gross revenues,
• Foreign sales revenues within the annual gross revenues forming the basis for the administrative fine.