Reconciliation: An expeditious alternative to competition investigations?

Reconciliation mechanism was introduced to the competition law with the amendment made to the fifth paragraph of Article 43 of the Competition Protection Law numbered 4054 ("Law") by the law numbered 7246 and dated 16.06.2020. As per this newly-introduced mechanism, Competition Board ("Board") may commence reconciliation process and decide to end the investigation either with the request of the interested parties or on its own motion, by taking into consideration the procedural benefits of an expeditious finalization of the investigation process and the existence or scope of the breach.

Within the scope of reconciliation process, the Board may decide to end the investigation with respect to the concerned parties and make a deduction in the administrative fine between 10 percent to 25 percent upon submission by the concerned parties of a reconciliation text accepting the existence and scope of the breach and other related issues. The concerned parties cannot initiate a lawsuit against the administrative fine and the matters under the reconciliation text upon the finalization of the investigation with reconciliation.

Recent Board decisions with reconciliation applied

The first example of where the reconciliation process was applied in the Turkish competition law is the decision of the Board dated 05.08.2021 and numbered 21-37/524-258, ending the investigation initiated against Türk Philips Ticaret A.Ş., Dünya Dış Ticaret Ltd. Şti., Melisa Elektrikli ve Elektronik Ev Eşyaları Bilg. Don. İnş. San. Tic. A.Ş., Nit-Set Ev Aletleri Paz. San. and Tic. Ltd. Şti. and GİPA Dayanıklı Tüketim Mamülleri Tic. A.Ş. by the decision of the Board dated 07.01.2021 and numbered 21-01/9-M to identify whether or not the Article 4 of the Law was breached, with reconciliation following the submission of the reconciliation text by the said entities. As per the reasoned decision, the Board accepted the reconciliation request, by taking into consideration that the said entities accepted:

• The existence and the scope of the breach
• The maximum ratio and the maximum amount of the administrative fine that will be imposed within the scope of reconciliation process
• That they have been sufficiently informed by the Board about the allegations against them and that they have been given sufficient opportunity to provide their views and comments within the scope of the reconciliation
• That they cannot initiate a lawsuit against the administrative fine and the matters under the reconciliation text

However, the request to have the reconciliation application to be accepted as a mitigating cause was denied by the Board. While doing so, the Board indicated that "In such a case, the other provisions regarding active cooperation and other provisions regarding the acceptance of breach set forth under the Law numbered 4054 or Fine Regulation cannot be applied, since otherwise, a double discount will be implemented for the same behavior". However, the Board then assumed a different approach and with its decisions dated 14.04.2022 and numbered 22-17/283-128 and 18.05.2022 and numbered 22-23/379-158 regarding Beypazarı İçecek and Kınık Maden Suyu, implemented the active cooperation and reconciliation processes simultaneously.

As far as the reasoned decisions published in the official web page of the Board go, other investigations that were ended with reconciliation were regarding Singer and Arnica.

With its Singer decision dated 09.09.2021 and numbered 21-42/614-301, the Board underlined the importance of the categorization of the breach for the reconciliation process by stating that "It is possible to make two distinctions between the referred actions, namely breaches that fall into the scope of explicit and severe breaches and those that do not. Therefore, the correct categorization of the said actions is important for evaluation. In fact, whereas practices which fall within the scope of explicit and severe breaches can be evaluated under reconciliation process, other competitive practices which do not fall thin this scope can be eliminated with undertaking mechanism." Under the same decision, it was also underlined that the intervention to internet sales and control over internet sales can be transformed as a method of determination of retail prices (DORP) to ensure the efficient implementation of DORP in the market and whilst the file in question included a similar situation, DORP and limitation of internet sales were taken into account as a single action within the scope of reconciliation.

In the Singer decision, the administrative fine was deducted 25 percent. This practice has not changed in Arnica decision dated 30.09.2021 and numbered 21-46/671-335.

We conclude that the fact that the Board, in its decisions up until now, has determined the deduction ratio at the maximum amount of 25 percent as permitted by the law, will likely have an encouraging effect on undertakings to prefer this mechanism in the future.