ABSTRACT
Along with the expansion of global economic market, competition law infringements increase as well. Both national law and European Union Law are affected from these violations. Infringements in question do not only take place within the borders of the countries, but also might have an impact on international field because of economic and commercial activities. In this article, whether anticompetitive, destructive or restrictive behaviors of established undertakings beyond the boundaries of The Republic of Turkey are in the scope of the forbidden activities under the Act No.4054 on the Protection of Competition, and if they are, the question of under which conditions they are possible, will be evaluated. will be evaluated. Furthermore, it will be evaluated whether there will be interference within the context of the Act No.4054 in the event that undertakings established in Turkey attempt to as affecting the competition conditions in other countries’ markets such as export cartel and export ban. In this respect, the “effects doctrine” which implies the application of the rules of competition law for activities and contracts of undertakings that are not under the authority of the state where the rules are acknowledged will be analyzed, at the same time, remarkable decisions will be mentioned regarding the application of the effects doctrine.
I. INTRODUCTION
THE TERM OF COMPETITION THAT IS ONE OF THE UNderlying elements of globalized liberal economy, which refers to the race between the local or multi-national corporations that operate a business in goods and service markets in order to increase their profitability. A competitive marketplace in which the buyers and the sellers interact to set the price and consequently make goods and service exchange is a must for sustainment of the economic life and increase of social welfare for the contemporary economical understanding. Besides, a competitive market keeps producers or corporations under constant pressure to make them offer the best possible range of product and service with best prices. In some cases aforementioned pressure is abolished by some market actors through making certain agreements or mergers and acquisitions, or through abuse of any market member to gain more profit, as a result an unfair advantage might be obtained by precluding the competitive structure of the market. Hence states undertake the task to create, sustain and benefit from an innovative and competitive market, and they make this happen through strict and active regulations that foresee a deliberate competition policy. Therefore, regulations and international conventions have been made across the world on both national and international level in order to prevent these kinds of conducts which are harmful for market’s competitive structure, to protect this structure and again administrative institutions which inspect competition infringements on national and international areas have been established.
As it is same all around the world, competition legislation and a competition authority have been established in our country which embraces modern competition comprehension, aims to encourage and sustain competition, to protect market and consumers against the executions of undertakings that have conscious and coincidental negative effects. Competition legislation and Competition Authority primarily prohibit anticompetitive agreement1, concerted action and decisions made by undertakings regarding the abuse of dominant position and any activities regarding merger and acquisitions that might have negative outcome in the market.
As this matter is regulated under the Act No.40542 on the Protection of Competition which is approved on 7 December 1994 and entered into force on 13 December 1994 by being published in Official Gazette; with the head of “Scope”, Article 2: “Agreements, decisions and practices which prevent, distort or restrict competition between any undertakings operating in or affecting markets for goods and services within the boundaries of the Republic of Turkey, and the abuse of dominance by the undertakings dominant in the market, and any kind of legal transactions and behaviour having the nature of mergers and acquisitions which shall decrease competition to a significant extent, and transactions related to the measures, establishments, regulations and supervisions aimed at the protection of competition fall under this Act.”
However, even though competition law rules and competition supervising institutions have more teeth in national and international fields in recent years; as a result of international integration and liberal economic structuring, effects of multi-national corporations, depending on their own power, expand to a relatively large spectrum and influence of commercial and economic activities cannot be restricted by political or geographical boundaries anymore. In other words, as the accessibility of markets and -with international players- entrance of goods increase; any anticompetitive, disruptive or restrictive conducts of undertakings or association of undertakings established in a country might affect another country’s market in a negative manner. Thus competition law regulations, by their nature, are defined based on infringements’ impacts and accordingly competition infringements, occur as a consequence of the impact’s, which is restrictive of competition, emerging on the market3.
In addition, it comes to the fore whether it is possible to apply competition law regulations abroad in case the effects of competition infringement occur in a different country rather than the one that restrictive trade actions become fact, and if it is, “within the scope of international law principles, by which institution and under whatever conditions this power will be used” is an issue. Indeed, pursuant to the territoriality principle, which is among the fundamental international law principles, a state can only apply its own national rules of law within the borders of its country4. However, according to the justification of Article 2 of the Act No.4054 which the scope of the law is determined, it is stated that the concept named as “effects doctrine” in the competition law literature has been adopted, in another saying, undertakings which have their headquarters out of Turkish Republic borders but operate in this area are also within the context of the Act. Thereunder, in order for the anticompetitive, disruptive and restrictive actions that are executed by the undertakings established beyond Turkish borders to be considered under the Code No.4054, actions in question must have a negative impact on goods and service markets in Turkey.
Within the extent of this article, firstly the “effects doctrine” which establishes the implementation of the competition law rules out of the country will be analyzed within the frame of Turkish competition law, then Competition Board’s and Council of State’s approach in practice will be examined.
II. THE EFFECTS DOCTRINE
The effects doctrine means the application of competition law regulations to undertakings’ activities and agreements that are not under the domain of the state which is where competition law rules are accepted. Within this framework, the effects doctrine is an exception of an abovementioned territoriality principle. Yet states in the context of the effects doctrine are vested with the jurisdiction for actions outside their judicial and executive domain due to purely negative consequences that arise in their own territory. Concordantly, the principle of the effects doctrine overlaps the purpose of the competition law when international extent of economic and commercial activities is taken into consideration.
As it is stated above, according to the Act numbered 4054 Article 2: Any restrictive actions or agreements between any undertakings that have an effect on market or operate in markets within the borders of Turkish Republic are within the context of the code. According to this provision, independently of the rule that Turkish Republic statutes shall be applied within its territory, while disregarding “venue” where restrictive trade actions take place and also effect goods and service markets in a negative way within Turkey borders, or “the place where undertakings established” which execute these conducts and arising of restrictive effect in Turkey market is adequate in respect to enforcement of this act. So, for the main requirement for the correlation between enforcing competition law regulations’ extraterritorially and international public law rules, there has to be a reasonable causal connection, in other words, an effect5. However, there is no clear regulation neither in Turkish Competition Law regulations nor in referenced EU legal acquis regarding which criteria should be used in order to measure the impacts of undertakings’ restrictive trade actions. Albeit, as long as it complies with the concrete case, criteria regarding impact’s being “direct”, “significant” and “objective/foreseeable” can be based upon6.
About which agreements that will be counted as a restrictive trade practice, it is stated in justification of the Act No.4054 Article 4, second paragraph; with the provision “Restrictive trade practices can be vertical or horizontal agreements. Agreements which are made on the same level, are called horizontal agreements and it is accepted that these type of agreements have destructive impact on competition, per se. Based on this approach, the most common restrictive trade agreements are counted as an example in the second paragraph of the article and it is emphasized that these type of agreements are forbidden on their own.”, it is underlined that horizontal agreements outrightly constitute as competition law infringement. Nevertheless on vertical agreements, which are “exclusive sale agreements” that main seller sells to one or limited number of sellers, restrictive or disruptive effects can be observed as well. Primary restrictions for vertical agreements: (i) the enclosing of the buying market for competitors, due to certain buyers’ inability to supply goods or services from certain suppliers in related market (ii) the convenience to cooperate against competition at a level of reseller or supplier when most or all competing suppliers restrict the number of buyers, and iii) reducing or eradication of in-brand competition since there will be less resellers7; can manifest in these ways. Finally, at this juncture it should be understood that in order for any action disruptive or restrictive for competition to be considered within the scope of the Act. No 4054, undertakings’ restrictive or disruptive goals for the goods and services market that are within the boundaries of Turkey should be identified through aforementioned agreements or, even if these kind of goals cannot be identified, these effects should emerge or potential for emergence has to exist.
In this context, consideration within the scope of Turkish Competition Board’s jurisdition, by the acceptance of Turkish Competition Authority, for anticompetitive for anticompetitive actions of undertakings that are established out of Turkish boundaries, can appear in multiple forms. For instance, existence of affiliates settled in Turkey of a foreign undertaking or performed activities that are of a subsidiary settled in Turkey of a foreign conglomerate or forming a cartel of undertakings which export to Turkey by setting the price of exported goods, are issues that are within the framework of this Code8.'
'However, even if undertakings established abroad do not have an affiliate, distributor or subsidiary within the borders of Turkey, any actions of aforementioned undertakings that constitute competition violation in the market of goods and services can be taken under review by the Board. One of the decisions made by Board which should be noted is the imported coal decision regarding this topic9. In aforementioned decision, Competition Board launched an investigation with the claim that collusions restrictive of competition have been made regarding the market of imported lump coal by an international cartel, solely for the reason that the effect restrictive of competition emerged on Turkish Market, regardless of whether concerned undertakings are located in Turkey, or even if they have any subsidiary in Turkey, by referring to the effects doctrine. Within the framework of the effects doctrine, in the Board decision, the plea of one of the cartel members who settled abroad regarding; “it made coal delivery as FOB and CIF, it made no sale in Turkish territory, all agreements concerning selling of coal to Turkish Corporations were made out of Turkey” was not accepted10. In another decision11 Competition Board- in respect to the taking over of %50 share and partnership of an undertaking settled abroad by another undertaking also settled abroad and operating in the market of “thermoplastic resin”-, due to the fact that undertakings’ Turkey revenues exceed 5 million TL and transfer transaction creates an horizontal relation between parties, reached the conclusion that aforementioned action would be effective on Turkish market and therefore decided that it is subject to permission of the Board. However, on the examination, the conclusion that aforementioned action would not lead to creation of a dominant position or strengthening of an existing dominant position was reached.
In another Board decision12 within the framework of the effects doctrine, it was came to conclusion that the Act No.4054 Article 4 has been violated by price fixing in the air transportation market between Germany and Turkey through the distribution agreements made between SunExpress and Condor. According to the Board examination, it is stated that violation practices between SunExpress and Condor did not only emerge in an effective way on German market but also on Turkish market and agreements in question affected goods and services market of Turkey.
When it comes to Board decisions made concerning export cartels, it is seen that interfering occur when it is identified that national and international activities have a restrictive effect on competition, on conditions that any kind of cooperation, including the information interchange with only themselves, serve as a purpose restrictive of competition in Turkish market or in case an export cartel is established as a “veil” for an internal market cartel.
Besides that, in some cases, export prohibition agreements between undertakings which may have a restrictive effect on competition might also be forbidden within the scope of the Act No.4054. In order to consider the export prohibition agreements within the scope of this act, existence of circumstances like reestablishment of conditions regarding exchange of any goods and services between undertakings or dividing up or control of market factors or prevention of an undertaking’s independent actions are sought. Since the export prohibitions among undertakings affect foreign country markets as first, pursuant to the effects doctrine, are only deemed as within the context of the Code No.4054 Article 2 in case they create an effect on goods and services market. In this part of the article, what will be discussed is, in which aspects that agreements which consist of export prohibitions between undertakings will be subject to reassessment and an important current Board decision concerning this issue and also Council of State’s approach to the aforementioned decision.
III. BOARD DECISIONS AND APPROACH OF COUNSIL OF STATE ABOUT EXPORT PROHIBITION
The provision which regulated export prohibition of an agreement made between two undertakings operating in pharmacy sector of Turkish market became a subject of a preliminary investigation which was conducted by the Board in 2010. Within the scope of the investigation, pharmaceutical company Roche, in order to supply the requested products from itself, imposed the signature of the contract13 which included sales ban regulation and refused to give products to Corena pharmaceutical warehouse since Corena did not accept the conditions and refrained from signing the agreement. Also withinthe extent of the investigation, as it is claimed by Corena, Roche obstructed the selling of Roche branded products by other pharmaceutical warehouses as well.
Two aspects were evaluated in the examination of Board. First one is the imposing of prohibition to sell abroad through the agreement; second one is the rejection of Corena’s demands by other pharmaceutical warehouses. Pursuant to the Board decision, inclusion of restriction to regions and to people that seller can make sale to in a vertical agreement, in other words, any kind of action and agreement of seller regarding reestablishment of the resell requirements, is clearly within the context of the Act No. 4054 as it is stated. At this point, the matter which should be noted is that ban of abroad sale was brought to warehouses by agreement in question but same condition was not brought for the Turkish Market. Therefore, the effect of constraint which was brought by aforementioned prohibition to pharmaceutical warehouse should be evaluated and it should be analyzed as whether it has effect on Turkey’s human pharmaceutical product market.
According to the Board decision14, on the grounds that the provision of agreement between parties which regulates export prohibition would not have an effect on Turkish Market and would not be considered within the scope of the Act numbered 4054, Article 2 and therefore infringement did not exist. The Board has rejected the claim regarding Roche was pressuring other pharmaceutical warehouses to prevent the distribution of pharmaceutical product to Corena in the investigation since relevant documents and information regarding the issue did not reach them. Thereby, if there was access to sufficient document and information, prevention of other pharmaceutical warehouses to supply medicine to Corena on the grounds that they demanded these products for the purpose of export could be deemed as competition infringement.
Upon appeal of the aforementioned Board decision by complainant pharmaceutical warehouse, the appointed investigation judge and prosecutor of State Council delivered an opinion for the Board decision was accurate for the reason that the restriction imposed on export would not be effective on Turkish human pharmaceutical product market. Despite this, the Council of State15 reversed the aforementioned Board decision. Council of State in its reversal, has indicated the following: in the inquiries and investigations which would be carried outby Competition Board, it is mandatory to be proven beyond any doubt that there are no actions, decisions and agreements which infringe competition rules, every allegation and evidence has to be reviewed ex-officio by Competition Board, in case there is an inadequacy on documents and findings that are presented by parties to the Authority or obtained by the Authority itself, it is necessary to start a thorough investigation in order to remove the inadequacy in question, otherwise nonclarification of allegations regarding the violation of competition rules wouldn’t serve the purpose of protecting the competition and within this framework there should be a more detailed investigation by getting more information and documents in order to determine the effects of export prohibition on Turkish market; and finally on inquiries and investigations made by the Board, it is necessary to evaluate by reaching satisfactory information and documents which show that there is no infringement. In this decision, we can see that Council of State used its established case-law regarding the direction of “nonexistence of competition infringement should be substantiated as left with no room for doubt, otherwise it is obligatory to open an investigation” one more time.
On the other hand, in this decision of the Council of State, there are some noteworthy findings with regard to the scope and application range of the effects doctrine: for the export prohibition which was considered as bearing no effect on Turkish market by the Board, Council of State decided as following: “It is clear, that all allegations submitted by plaintiff on request of complaint would have an effect on Turkish markets within the context of the act.” Regarding the claim -which was overruled on the ground that sufficient documents and information were not reached- that Roche prevented the supply of medicine to Corena by pressuring other pharmaceutical warehouses, it expressed that evidence which fall into appendix of plaintiff’s complaint petition should be evaluated with a serious investigation.
As it is seen, in the event that suppliers block sell of products from buyers/distributors to undertakings which want to procure products from buyers/distributors on Market to export, it is accepted both by Board and Council of State that this might lead to restrict the competition in Turkey market. Apart from that, in respect to interpretation and application of the effects doctrine, Council of State tends to define “effects” much broader in comparison with the Competition Board.
Upon reversal of judgment accordingly to the abovestated justifications of the Council, in the Board meeting dated 08.06.2017, Board reconsidered the complaint petition in the light of Council of State’s reversal decision and conducted an investigation for Roche through its decision numbered 17-19/306-M and this investigation is still on-going.
IV. CONCLUSION
Within the scope of the Turkish Competition legislation and its execution, the actions of undertakings settled out of Turkey that have an effect that is restrictive of competition on Turkish market, while disregarding of the fact whether undertakings have affiliates settled in Turkey, there is no hesitation regarding the application of the Act numbered 4054, within the context of the effects doctrine. In other words, in order to examine an action restrictive on competition in connection with Turkish Competition Law within the framework of the Act No.4054, it is sufficient for it to have an effect on goods and services markets within the boundaries of Turkey and the matter that on which country the undertakings are settled carry no significance whatsoever. Here, the challenge is while they operate out of Turkey, the carrying out of the inquiries and investigations which are laid down on Act numbered 4054 and application of the sanctions when it is necessary, on undertakings which restrict the competition on any market of Turkey16.Again within the framework of the effects doctrine, the exportation cartels or exercises like export prohibitions that are imposed on buyers by undertakings which operate in Turkey, if they restrict competition on foreign markets and as long as there is no effect on Turkish market, are not subject to Act No.4054 as principle. However, at this point, even though it is not regarding the exportation cartels, the determination of whether they influence the Turkish markets or not is a highly controversial subject17 for export prohibitions imposed on buyers. In the light of Competition Board and Council of State decisions, provided that a supplier blocks the sales of buyers/distributors to undertakings which look forward to procure products for the purpose of export, thus competition in Turkey would be affected negatively and consequently inquiries would take place and necessary sanctions would be imposed within the extent of the Act numbered 4054. In the event that the supplier downright brings export prohibition for buyers, while evaluating the effects of this ban on Turkish market, we see that Council of State tends to interpret the effects quite broadly. Therefore, it is very likely that Competition Board will interfere with these kinds of export prohibitions on the grounds that competition is being affected. Additionally, it should be always kept in mind that against the actions like export cartel or export prohibition of undertakings operating in Turkey, particularly the European Commission or other countries’ competition authorities can open an investigation once again within the scope of the effects doctrine.
BIBLIOGRAPHY
Cemal Şanlı, Milletlerarası Özel Hukuk, 5th Edition, İstanbul 201.
Chris Noonan, The Emerging Principles of International Competition Law, Oxford University Press, 2008.
Gülçin Dere, Uluslararası Hukuk Bağlamında Rekabet Otoritelerinin Yetki Sorunu ve Türkiye İçin Çözüm Önerileri, Thesis of Expertise for Turkish Competition Authority, No. 127, Ankara 2012.
İsmail Yılmaz Aslan, Rekabet Hukuku Teori-Uygulama-Mevzuat, 4th Edition, Bursa 2007.
İsmail Yılmaz Aslan, Rekabet Hukuku Dersleri, 5th Edition, Bursa 2015.
Nazmi Ocak, Rekabet Hukukunda Teşebbüsler ve Teşebbüslerin Hakim Durumunun Tespiti, PHD Dissertation, Marmara University Institute of Social Sciences, Istanbul 2016.
Cemal Şanlı, Milletlerarası Özel Hukuk, 5. Baskı, İstanbul 2016.
Chris Noonan, The Emerging Principles of International Competition Law, Oxford University Press, 2008.
Gülçin Dere, Uluslararası Hukuk Bağlamında Rekabet Otoritelerinin Yetki Sorunu ve Türkiye İçin Çözüm Önerileri, Rekabet Kurumu Uzmanlık Tezi, No. 127, Ankara 2012.
İsmail Yılmaz Aslan, Rekabet Hukuku Teori-Uygulama-Mevzuat, 4. Baskı, Bursa 2007.
İsmail Yılmaz Aslan, Rekabet Hukuku Dersleri, 5. Baskı, Bursa 2015.
Nazmi Ocak, Rekabet Hukukunda Teşebbüsler ve Teşebbüslerin Hakim Durumunun Tespiti, Doktora Tezi, Marmara Üniversitesi Sosyal Bilimler Enstitüsü, İstanbul 2016.
FOOTNOTE
1 Chris Noonan, The Emerging Principles of International Competition Law, Oxford University Press, 2008.
2 Mal ve hizmet piyasalarındaki rekabeti engelleyici, bozucu veya kısıtlayıcı anlaşma, karar ve uyumlu davranışlar ile hâkim durumun kötüye kullanılmasını önlemek ve böylelikle pazarda rekabetin korunmasını sağlamak amacıyla mevzuatımıza kazandırılan 4054 sayılı Kanun, Avrupa Topluluğu rekabet kuralları, temel ilkeleri ve uygulamaları esas alınarak hazırlanmıştır. Bu bağlamda, Türk Rekabet Hukuku mevzuatının Avrupa Birliği Rekabet Hukuku mevzuatından bağımsız olarak değerlendirilmesinin mümkün olmadığını açıkça söyleyebiliriz. Zira 4054 sayılı Kanun, Avrupa Birliğinin İşleyişine Dair Anlaşmanın (“ABIDA”) (eski adı ile Avrupa Topluluk Anlaşması (ATA)) rekabet ve yoğunlaşma alanları ile ilgili hükümlerini (eski ATA 81 ve 82. maddeler, yeni ABIDA 101 ve 102. maddeler) birebir içerdiği gibi, uygulamaya ilişkin düzenlemeleri itibarıyla da Topluluk mevzuatını önemli ölçüde yansıtmaktadır.
3 Gülçin Dere, Uluslararası Hukuk Bağlamında Rekabet Otoritelerinin Yetki Sorunu ve Türkiye İçin Çözüm Önerileri, Rekabet Kurumu Uzmanlık Tezi, No. 127, Ankara 2012, s.2.
4 Cemal Şanlı, Milletlerarası Özel Hukuk,
5. Baskı, İstanbul 2016, s.71. 5 Dere, s.11.
6 Kurul’un, 16.12.2015 tarihli ve 15-44/740-267 sayılı kararı.
7 Kurul’un, 29.04.2009 tarihli ve 09-20/404-99 sayılı kararı.
8 Nazmi Ocak, Rekabet Hukukunda Teşebbüsler ve Teşebbüslerin Hakim Durumunun Tespiti, Doktora Tezi, Marmara Üniversitesi, Sosyal Bilimler Enstitüsü, İstanbul 2016, s. 259.
9 CBD, dated 02.09.2010 and numbered 10-57/1141-430.
10 Dere, p.34.
11 CBD dated 21.12.2011 and numbered 11-62/1640-577.
12 CBD dated 27.10.2011 and numbered 11-54/1431-507.
13 Agreement’s relevant part is as following: “Within the scope of herein agreement all products that Roche will sell to Corena will be sold due to be used within the boundaries of Turkey.
14 CBD dated 17.06.2010 and numbered 10-44/785-262.
15 Council of State 13th Chamber dated of 16.12.2016 and numbered 2010/4617E., 2016/4241K.
16 İsmail Yılmaz Aslan, Rekabet Hukuku Dersleri, 5th Edition, Bursa 2015, p.42.
17 İsmail Yılmaz Aslan, Rekabet Hukuku TeoriUygulama-Mevzuat, 4th Edition, Bursa 2007, p.364.
