The Turkish Competition Board’s Poultry Producers Decision
The Turkish Competition Board (the “TCB”) had determined in the investigation relating to in its decision no. 19-12/155-70 dated 13.03.2019 that nine poultry producers and the association of undertakings in the sector infringed article 4 of the Law no. 4054 on the Protection of Competition (the “Law no. 4054”) by -in summary- fixing the price level together and exchanging information on the control of the demand in the Aegean region of Turkey. In its investigation, the TCB had found that the relevant undertakings discussed stock details and price increases during the meetings of the association of undertakings that they participated and that competitors were informed of the pricing and supply strategies of each other in advance since future price lists were provided prior to the commencement of application of those prices. Accordingly, the TCB had decided to impose administrative fine on the relevant undertakings on the basis of the above findings.
The TCB, which classifies acts such as exchange of competition-sensitive information with competitors and supply restriction as “cartel” under its secondary legislation and established case law, had avoided the finding of a cartel in this file and this had made a considerable effect on the amounts/ratios of monetary fines and consequentially, the parties had only borne administrative fines that could be qualified as insignificant compared to the type of the alleged anti-competitive behaviour in issue. In this extent, the relevant decision of the TCB had led to debates ever since.
Nevertheless, various undertakings, including Er Piliç Entegre Tavukçuluk Üretim Pazarlama ve Tic. A.S.  (“Er Piliç”), had resorted to administrative judicial proceedings against the mentioned decision of the TCB with the request for the annulment of the relevant administrative act of the TCB. This article relates to disagreement of one of the judges with the decision of “dismissal of the lawsuit” at the stage handled by the Council of State, which is the usual last stage of the administrative judicial procedure, and to the dissenting opinion written by him in this respect.
In the relevant dissenting opinion, it is opined in summary that the commitment and settlement mechanisms are in the nature of favourable law that newly entered into force and it is stated that those mechanisms should have been applied for the plaintiff as well or another decision should have been rendered with respect to the plaintiff by paying regard to the favourable new legal provision.
The Decision of the First Instance Administrative Court
In the annulment lawsuit, the plaintiff Er Piliç alleged that the administrative act in dispute (i.e. the TCB’s infringement decision) is unlawful since such act was conducted in consequence of an incomplete and insufficient examination, that its right of defence was restricted, that an incorrect turnover was taken as the basis in calculating the administrative fine and only the poultry meat market should have been taken as the basis, that the price analyses were not sufficiently made, and that the provisions concerning repetition of infringement were wrongfully applied in imposing the fine.
After hearing the TCA and evaluation the claims of the plaintiff, the 6th Administrative Court of Ankara concluded that the allegations of incomplete examination were groundless, that the administrative fine was imposed by the TCB by evaluating all existing evidence in their entirety, that monetary fine could be imposed on undertakings on the basis of their annual gross revenue in the end of the financial year closest to the date of the final decision, that there was no act or procedure which would restrict the defence right of Er Piliç, that defence right was granted to it and there was no unlawfulness in the increase of the fine by means of application of the provisions relating to repetition of infringement since there was a previous decision of infringement passed against Er Piliç. Consequently, the first instance court decided on 25.11.2020 to dismiss the lawsuit.
The Decisions of the Regional Administrative Court and the 13th Chamber of the Council of State
The plaintiff Er Piliç resorted to the first-degree appeal against the decision of the court of first instance, upon which the 8th Administrative Law Chamber of the Regional Administrative Court of Ankara concluded that the decision was in line with the procedure and the law, and decided on 05.11.2021 to dismiss the application of Er Piliç for the first-degree appeal in a way to pave the way of an application to the second-degree appeal.
Er Piliç filed a second-degree appeal against the decision of the regional administrative court and accordingly, the 13th Chamber of the Council of State addressed the file. The high court evaluated whether the new commitment and settlement mechanisms subsequently put into effect could have been applied in the lawsuit initiated against a decision of the TCB under which it was ruled to impose an administrative file on grounds of a finding of infringement.
According to the commitment mechanism that has been newly introduced to the Turkish competition law, the relevant undertakings or associations of undertakings can offer commitments in order to eliminate the competition problems under Article 4 or 6 of the Law no. 4054 which may arise during an ongoing preliminary inquiry or investigation process, and if the TCB decides that the proposed commitments can resolve the competition problems, then it may render these commitments binding for the relevant undertakings or associations of undertakings, resulting in non-initiation of an investigation or cessation of an ongoing investigation.
As per the newly introduced settlement mechanism, the TCB may -after initiating an investigation and upon the request of the parties concerned or ex officio- start the settlement procedure taking into account the procedural benefits that may arise from a swift resolution of the investigation process; and until the notification of the investigation report, the TCB may come to a settlement with the undertakings and associations of undertakings under investigation which acknowledge the existence and scope of the infringement; and in consequence of settlement, the administrative monetary fine may be reduced up to 25%.
In its examination, the 13th Chamber of the Council of State stated that the settlement mechanism could not be applied in this lawsuit on the grounds that, in case of a finding of infringement, it would not be possible to suggest the presence of a competition problem or an ongoing investigation and that the investigation report was served and the presence of the infringement was identified; and decided on 12.10.2022 to approve the decision of the Regional Administrative Court of Ankara with the majority of votes, and thus the request of Er Piliç for the annulment of the TCB’s decision was dismissed for the third time.
The Dissenting Opinion of the Judge of the 13th Chamber of the Council of State with Reference to the “Application of the Favourable Law”
A member of the Council of State dissented to the relevant decision (passed with the majority of votes) stated in his dissenting opinion -with reference to the Misdemeanours Act no. 5326- that the Turkish Criminal Code no. 5237 and the Law no. 5252 on the Manner of Enforcement and Implementation of the Turkish Criminal Code should be applied and, accordingly, the subsequently enacted favourable rules such as the settlement and commitment mechanisms should have been applied to the plaintiff Er Piliç. The judge opined that the amendments introduced under the Law no. 7246 to the Law no. 4054 with respect to the commitment and settlement mechanisms in 2020 are favourable for the plaintiff, and that it should be noted that (i) no monetary fine may have been imposed on the undertaking in case of acceptance of the commitment, and (ii) a fine reduction of twenty five percent on the plaintiff may have been made in case of implementation of the settlement process and that, accordingly, the favourable provisions should have been applied as per the “principle of legality in crimes and punishments” provided for under the Turkish Constitution.
The judge further stated that Article 43 of the Law no. 4054 contains provisions relating to time-based application such as “an ongoing preliminary inquiry or investigation process” for the application of the commitment mechanism and “ability to come to a settlement until the notification of the investigation report” for the application of the settlement mechanism; yet, if those provisions are construed within the framework of the constitutional principles, it will be seen that they are related to the process concerning the allegations of infringement arising after the enactment of the Law and to the investigation thereof, but those can in no way prevent the retroactive application of the favourable law, which is a universal legal principle.
Finally, it is opined that the decision of the Regional Administrative Court of Ankara should be dismissed/reversed, considering that, as the TCB has discretionary power in accepting the commitment and settlement mechanisms, the relevant decision of the TCB should have been dismissed for the exercise of such discretionary power, and a contrary approach may prevent the exercise of the discretionary power by the administration.
The extensive revision made in the Law no. 4054 in 2020 has caused such and many similar unjust treatments due to the absence of any transitional provisions in the law introducing the relevant amendments (unlike the EU legislative rules). This is because an undertaking on which the allegation of infringement has arisen one month after the allegation on another undertaking could conclude the process without any monetary fine by means of the commitment mechanism, whereas an administrative fine may have been imposed on the other undertaking.
In any case, even if the law introducing the amendments do not contain transitional provisions, the TCB and the judges should have clearly adopted and implemented the universal legal principle, and thus, the dissenting opinion of the judge of the 13th Chamber of the Council of State shall be considered as an opinion going down in Turkish legal history.
. The TCB’s decision no. 19-12/155-70 dated 13.03.2019 (https://www.rekabet.gov.tr/Karar?kararId=ecfabeca-53c4-44e3-9d86-648ddaea2d7b).
. As it was found that the acts of Er Piliç in breach of article 4 of the Law no. 4054 lasted more than 1 year and less than 5 years, 0.5% determined as the ratio to be taken as the basis in the base monetary fine was increased by half and the base monetary fine was found as 0.75%. On the other hand, considering the provision as to repetition in terms of Er Piliç on which an administrative fine was imposed under the TCB’s decision no. 09-57/1393-362 dated 25.11.2009, the base monetary fine was increased by half and the TCB applied an administrative fine of 1.125%, corresponding to TRY 22,481,899.41, on Er Piliç.
. The Decision Dated 25.11.2020 with File No. 2020/466 and Decision No. 2020/1869 of the 6th Administrative Court of Ankara (https://www.rekabet.gov.tr/Safahat?safahatId=d67b0e1f-7674-4b4f-807d-79e6715ed338)
. The Decision Dated 05.11.2021 with File No. 2021/307 and Decision No. 2021/1578 of the 8th Regional Administrative Court of Ankara (https://www.rekabet.gov.tr/Safahat?safahatId=69ada980-12a8-4d29-a88c-3769d3171f4c)
. The Law No. 7246 Amending the Law on the Protection of Competition.
. The Decision Dated 12.10.2022 with File No. 2021/5236 and Decision No. 2022/3636 of the 13th Chamber of the Council of State (https://www.rekabet.gov.tr/Safahat?safahatId=042a535d-63c1-496a-990f-43489b0d75ce)