Introduction
Competition law in Turkey plays a critical role in regulating market behavior, preventing anti-competitive practices, and overseeing mergers and acquisitions that may restrict competition. For both domestic and foreign investors, compliance with Turkish competition rules is not optional—it is a fundamental regulatory requirement.
The Turkish Competition Authority (TCA) actively enforces merger control rules, investigates cartel conduct, and imposes significant administrative fines for violations. In large-scale M&A transactions, merger clearance is often a key condition precedent before closing.
This article provides a comprehensive overview of competition law in Turkey, focusing on merger control requirements, anti-trust prohibitions, abuse of dominance rules, investigation procedures, and compliance considerations.
1. Legal Framework
Competition law in Turkey is primarily governed by:
- Law No. 4054 on the Protection of Competition
- Secondary legislation and communiqués
- Guidelines issued by the Turkish Competition Authority
The Turkish Competition Authority (Rekabet Kurumu) is the independent regulatory body responsible for enforcement.
2. Core Prohibitions Under Turkish Competition Law
The law is structured around three main pillars:
1️⃣ Prohibition of Anti-Competitive Agreements (Cartels)
2️⃣ Prohibition of Abuse of Dominant Position
3️⃣ Merger Control (Concentrations)
PART I – ANTI-COMPETITIVE AGREEMENTS
3. Cartel Prohibition
Article 4 of the Competition Law prohibits agreements between undertakings that:
- Fix prices
- Allocate markets
- Limit production
- Distort competition
Examples include:
- Price-fixing agreements
- Bid-rigging
- Customer sharing arrangements
Cartel conduct is strictly prohibited and subject to heavy fines.
4. Vertical Agreements
Certain vertical agreements (e.g., distribution agreements) may be permissible if:
- They do not significantly restrict competition
- They fall within block exemption thresholds
Exclusive distribution agreements are not automatically illegal.
Each case requires careful analysis.
5. Leniency Program
Turkey operates a leniency program for cartel participants.
Companies that:
- Self-report cartel participation
- Cooperate with investigation
May receive reduced fines or immunity.
Leniency applications must be filed promptly.
PART II – ABUSE OF DOMINANCE
6. Dominant Position Concept
An undertaking is considered dominant if it:
- Has significant market power
- Can act independently of competitors and customers
Market share is key but not sole determinant.
7. Abuse Examples
Abuse of dominance may include:
- Predatory pricing
- Refusal to supply
- Discriminatory pricing
- Tying practices
- Margin squeeze
Dominance itself is not illegal; abuse is prohibited.
PART III – MERGER CONTROL
8. What Is a Concentration?
A concentration occurs when:
- Two companies merge
- One company acquires control over another
- Joint venture is established
Control may be:
- Sole control
- Joint control
Acquisition of minority shareholding may trigger notification if control is obtained.
9. Merger Notification Thresholds
Merger notification is required if turnover thresholds are exceeded.
Notification is mandatory if:
- Combined Turkish turnover of parties exceeds specified threshold
AND - At least two parties exceed individual turnover thresholds
Thresholds are updated periodically.
Failure to notify may result in fines.
10. Suspension Obligation
Transactions requiring notification cannot be closed before approval.
This is known as:
- Standstill obligation
Closing before clearance (gun-jumping) is subject to administrative fines.
11. Review Procedure
The Competition Authority conducts:
Phase I Review
- Standard review period (usually 30 days)
- Most transactions cleared at this stage
Phase II Investigation
- Detailed review
- Applied in complex cases
- May take several months
Authority assesses:
- Market concentration
- Competitive impact
- Potential dominance
12. Remedies and Conditional Clearance
If competition concerns arise, the Authority may:
- Approve subject to conditions
- Require divestitures
- Impose behavioral commitments
Structural remedies are common in high-concentration markets.
13. Fines for Violations
Competition law violations may result in:
- Administrative fines up to 10% of annual turnover
- Individual fines for managers
- Transaction invalidity risk (in merger cases)
Cartel fines are particularly severe.
14. Dawn Raids and Investigations
The Competition Authority may conduct:
- On-site inspections (dawn raids)
- Document seizures
- Electronic data review
Obstruction of investigation may lead to additional fines.
Companies must cooperate during inspections.
15. Individual Liability
Managers and employees involved in cartel activity may face:
- Administrative fines
- Reputational consequences
Criminal liability is limited compared to some jurisdictions, but administrative exposure is significant.
16. Sector-Specific Considerations
Certain industries face heightened scrutiny:
- Banking
- Energy
- Telecommunications
- Digital markets
- FMCG
Market structure and consumer impact influence enforcement intensity.
17. Compliance Programs
Companies operating in Turkey should implement:
- Competition compliance policies
- Employee training programs
- Internal audit mechanisms
- Dawn raid protocols
Preventive compliance reduces enforcement risk.
18. Competition Law in M&A Transactions
In mergers and acquisitions:
- Competition clearance is often condition precedent.
- Due diligence must assess competition risk.
- SPA should allocate risk of regulatory rejection.
Failure to assess competition exposure may delay transaction.
19. Interaction with EU Competition Law
Although Turkey is not an EU member:
- Turkish competition law is largely aligned with EU principles.
- Case law frequently references EU jurisprudence.
However, enforcement is independent.
20. Practical Risk Areas
Foreign investors should carefully assess:
- Market share concentration
- Distribution agreements
- Pricing policies
- Exclusivity arrangements
- Joint venture structures
Pre-transaction legal assessment is critical.
Conclusion
Competition law in Turkey establishes a robust framework to prevent anti-competitive behavior and regulate mergers that may restrict market competition. With active enforcement by the Turkish Competition Authority, companies must carefully assess their agreements, market conduct, and M&A transactions for compliance risks.
Merger control approval is often a decisive element in corporate transactions, while cartel violations can lead to substantial fines and reputational damage.
For domestic and international investors alike, implementing effective competition compliance systems and conducting thorough regulatory due diligence are essential components of sustainable business operations in Turkey.
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