Walking Dead: Article 5

Article 5 of Turkish Competition Act (Aping article 101(3) of TFEU) establishes an exemption system. Pursuant the article 5, any agreement that fulfills the four conditions is exempted from the prohibition of article 4 (Aping article 101(1) of TFEU). Prior to August 2005, article 5 had had an obligation to notify. Undertakings which took a part in a restrictive agreement had to notify it to the TCA. With the Act dated 2.7.2005 and numbered 5388, notification obligation mentioned above was abolished. Following the amendment, the TCA issued Guidelines on the Voluntary Notification of Agreements, Concerted Practices and Decisions of Associations of Undertakings (Guidelines) in 2006.

 In the guideline, the TCA, evaluating the notification obligation, states that;

 “In the past period, it was observed that undertakings, mostly for purposes of ensuring legal certainty and guarantee, opted for the way to notify to the Board their agreements, concerted practices and decisions which did not contain an important infringement of competition, benefitted from block exemption or could fall under communiqués of block exemption with small amendments.

 The TCA envisages the result of the voluntary notification system as

 “The removal of the obligation to notify shall result in the fact that the assessment of exemption be primarily made by undertakings and associations of undertakings.

This may be summed up as the TCA wanted to relief the job burden which stems from exemption notifications that involves unimportant restrictions by following the EU Commission’s footsteps and removed notification obligation. It was expected such an amendment would decrease notification numbers and somehow kill the exemption system. But the TCA had neglected some facts and aspects of the matter.

While totally removing the notification based exemption system, the EU Commission shared its power of applying 101(3) with local authorities and courts. But pursuant to the Act, the TCA has exclusive power of applying article 5. Therefore any agreement which has restrictive clause or clauses is in legal limbo until the Board’s examination of article 5 on that agreement is completed. Most of the undertakings wouldn’t want to bear such a legal uncertainty and voluntarily notify.

Another issue is that  the TCA, while promoting self assessment, did not provide any guidance to undertakings. This lack of guidance, especially in tricky area of exemption analysis, increases legal uncertainty and undertakings motive to notify i think.

Below is the number of exemption decisions per year (Special cases which are well-known as to usufruct rights are excluded in this table)

2002 

2003 

2004

2005

2006

2007

2008

2009

2010

2011

Total

31

38

76

50

33

14

40

22

40

30

It is obvious from the table above that the TCA’s attempt to kill exemption system is backfired. Contrary to the TCA’s intentions, the number of exemption notification has not decreased and exemption notifications/cases, not surprisingly, are still hale and hearty in Turkey.

TCA released the draft Communiqué on Specialization Agreements and the draft Guidelines for Horizontal Cooperation Agreements.

TCA released the drafts of Communiqué on Specialization Agreements and of Guidelines for Horizontal Cooperation Agreements on its web site and announced that any contribution are welcomed until 30th November 2012 to duzenleme@rekabet.gov.tr.

Draft Communiqué on Specialization Agreements (Turkish)

Draft Guidelines for Horizontal Cooperation Agreements (Turkish)

Adoption of a secondary legislation as to the horizontal cooperation agreements is an eagerly awaited development in Turkish competition law since the TCA has been constantly criticised by the EU Commission in its Proggress Reports for Turkey in recent years (See here on page 52, here on page 62, and here on page 54).