Stories on the Fining Regulation (1): Can Anyone Spot The Difference?

The story begins in January 2008 by the amendments made to the Competition Act. These amendments mainly contain the inclusion of the leniency and the possibility of imposition of fines on individuals. Apart from that, the TCA was (and has been) required to issue regulations on fines and leniency.

Following these developments, the TCA adopted two distinct regulations on fines and leniency in February 2009. Both of the regulations were expected to enhance the arsenal of the TCA in its fight against violations of competition law, in particular to cartels. Therefore, it was considered by some commentators (see here) as the beginning of a new era in Turkish competition law  since the new rules provided effective tools such as leniency and sanctions against individuals as well as more transparent policy in relation to fines.

When we look at the pre-regulation era, the TCA generally listed factors in its decisions without giving any explanation about how these factors affect the amount of the fine. Alongside the lack of transparency arisen from this practice, the TCA could not manage to develop a consistent approach as well. Therefore it was highly criticised for its imprecise fining policy. A further criticism articulated about the fining policy of the TCA is that it did not ensure deterrence especially in relation to cartels (see OECD Peer Review here in page 41 and here for these criticisms).

Even though very promising secondary legislation was adopted in Turkish law, the Fining Regulation itself is also the target of criticisms in addition to the criticisms about the application of the Regulation by the TCA. When we look at the bright side, these criticisms will be the topics of our forthcoming posts.

In a recent article, it is mainly argued that the Fining Regulation includes the term “cartel”, although it is not included under the 2006 Guidelines of the EU Commission or in the Competition Act. For these reasons, the Regulation on Fines constitutes nonconformity with the 1998 and 2006 Guidelines due to inappropriate usage of nomenclature. More importantly, it also examines the issue from the Turkish law perspective by stating that;

“The principle of legality and clear statement requires that; at the time of commitment, if a matter is not governed by a piece of legislation, it is not possible to impose criminal sanctions for that matter. In other words the Regulation on Fines cannot impose sanctions upon cartels, where the Competition Act does not prescribe an action as an offence, thus the situation violates the “nulla crimen sine lege/ no crime and punishment without law” principle, a well-established maxim of law.”

This criticism also raised by a board member of the TCA in his dissenting opinions to every decisions imposing a substantive fine on undertakings after the adoption of the Fining Regulation. Further information is that this argument was rejected by the Council of State as well. Within this context, I would like to share 4 excerpts without making any comments. These are respectively as follows:

 1) The wording of the Article 167 of the Turkish Constitution,

2) The reasoning of that Article

3) The wording of the Article 4 of the Competition Act

4) The wording of the Article 3 of the Fining Regulation

Let’s start with the Turkish Constitution. Article 167 entitled “Supervision of Markets and Regulation of Foreign Trade” is read as follows (emphasis added):

“The state shall take measures to ensure and promote the sound, orderly functioning of the money, credit, capital, goods and services markets; and shall prevent the formation, in practice or by agreement, of monopolies and cartels in the markets.”

And we go on with the reasoning of the afore-mentioned article of the Constitution (emphasis added):

“This article entrusts the State with three tasks.

(…)

The third one is to prohibit cartels that are formed by way of price agreements, production lines, sharing of geographic areas and the like.

(…)

In doing so, it is intended to prevent drawbacks of being a society in which competition is eliminated and prices are determined and affected by monopolies and cartels, and they are even stepped out of the production-price lines.”

The Article 4 of the Competition Act similarly prohibits 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 restriction of competition. When we look at the examples contained in that article, such cases are, in particular, as follows (emphasis added):

a) Fixing the purchase or sale price of goods or services, elements such as cost and profit which form the price, and any terms of purchase or sale,

b) Partitioning markets for goods or services, and sharing or controlling all kinds of market resources or elements,

c) Controlling the amount of supply or demand in relation to goods or services, or determining them outside the market

And finally, Article 3 of the Fining Regulation defines cartels as follows (emphasis added):

Cartels: agreements restricting competition and/or concerted practices between competitors for fixing prices; allocation of customers, providers, territories or trade channels; restricting the amount of supply or imposing quotas, and bid rigging.

In the light of these legal documents, I kindly ask (indeed beg) anyone could help me spotting any difference between these statements, thereby any unconformity with the principle of “nullum crimen sine lege”.

One thought on “Stories on the Fining Regulation (1): Can Anyone Spot The Difference?

  1. Pingback: Stories on the Fining Regulation (2): A New Hope? | Turkish Competition Bulletin

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