The Regulation on Administrative Fines to Apply in Cases of Agreements Concerted Practicesand Abuse of Dominant Position (the "New Regulation") was published in the Official Gazette on December 27, 2024, and came into effect as of its publication date. With the entry into force of the New Regulation, the Regulation on Administrative Fines to Be Imposed in Case of Anti-Competitive Agreements, Concerted Practices, and Decisions, and Abuse of Dominant Position (the "Previous Regulation") has been repealed. The New Regulation introduces significant changes in the methodology for determining administrative fines to be applied due to competition violations.
In this article, we examine the changes brought by the New Regulation and the differences between the New Regulation and the Previous Regulation under various headings below.
Definitions
The definitions such as "Regulation on Active Cooperation," "other infringements," and "cartel" have been removed. As detailed below, the distinction between "other infringements” and "cartel" has also been abolished.
The New Regulation introduces the definition of "decisive influence," which refers to the "indispensable function in the occurrence and/or continuation of the violation."
Following the introduction of the settlement mechanism into our legislation in recent periods, the definition of "Settlement Regulation" has been added to the New Regulation, and corresponding arrangements have been made under Article 6 titled "Aggravating Factors."
Principles and Calculation of the Base Fine Rate
While the Previous Regulation used the term "base fine," the New Regulation introduces the term "base fine rate."
One of the most significant changes brought by the New Regulation is the removal of the distinction between "cartel" and "other infringements" present in the Previous Regulation and the fine systematics associated with this distinction. The New Regulation stipulates that the starting fine rate will be determined by considering the severity of the harm caused or likely to be caused by the violation and whether the nature of the violation is explicit and/or severe.
Under the New Regulation, the base fine rate will first be determined by increasing the starting fine rate based on the duration of the violation. To this end, new durations have been established to determine the starting fine rate. The increases in the starting fine rate are as follows:
- One to two years: 1/5 of the rate,
- Two to three years: 2/5 of the rate,
- Three to four years: 3/5 of the rate,
- Four to five years: 4/5 of the rate,
- Exceeding five years: Double the rate.
After calculating the base fine rate following the procedure above, aggravating factors will be considered to increase the base fine rate, and mitigating factors will then be taken into account to reduce the rate.
Aggravating and Mitigating Factors, Administrative Fines for Managers and Employees
Regarding aggravating factors that lead to an increase in the base fine, the discretionary criteria in the Previous Regulation, such as non-compliance with commitments, failure to assist in investigations, and coercing other undertakings into the violation, are not included in the New Regulation.
Within the scope of aggravating factors, the term "recurrence of the violation" in the Previous Regulation has been replaced with a provision stating that "if Articles 4 and/or 6 of the Law are violated again by the same undertaking or association of undertakings," the base fine rate will be increased by one fold. The Previous Regulation provided for an increase in the fine if "the cartel" continued after the investigation decision was notified, whereas the New Regulation allows for an increase in the fine if "the violation" continues. Additionally, under the New Regulation, the base fine rate may be increased up to one fold in cases where decisive influence in the violation exists or the confidentiality obligation regulated under the Settlement Regulation is violated.
The New Regulation introduces significant changes concerning mitigating factors. Criteria such as voluntarily compensating the harmed parties, ceasing other infringements, and the presence of incentives from public authorities, which were included in the Previous Regulation, have been removed. Instead, factors such as providing effective contributions to on-site inspections by submitting additional information or documents, the low share of the activities subject to the violation in the annual gross income, and the presence of foreign sales revenues in the annual gross income forming the basis for the administrative fine have been added.
For "Administrative Fines for Managers and Employees," following the abolition of the distinction between "cartel" and "other infringements," fines applied under the "other infringements" category are no longer discretionary. Instead, the New Regulation provides that managers or employees of undertakings or associations of undertakings identified as having decisive influence in the violation may be subject to an administrative fine of up to 5% of the fine imposed on the undertaking or association of undertakings.
Conclusion
The New Regulation is expected to significantly impact the defense strategies developed by undertakings during investigations and lead to discussions regarding the application principles of the new provisions in specific cases. Moreover, given that the New Regulation came into effect as of its publication date, w emay conclude that the changes will also apply to ongoing investigations.