Involvement of the Competition Authority in the COVID-19 Fight

After the announcement on March 11th, 2020 regarding the first COVID-19 case in Turkey, it became evident that nothing will be the same and that we will start living in a different environment. Not only direct measures regarding public health but also new approaches and regulations/measures in the light of these approaches have become the main agenda. Rules and regulations regarding working remotely, the prohibition of employees’ agreements termination, regulations regarding groceries’ working hours, etc. could be given as examples of the direct impact of the COVID-19 fight on our new life.

During this period, public institutions and organizations are also trying to answer questions that come to mind and address the challenges of this period with the help of the instruments that they have.

Unsurprisingly, the Turkish Competition Authority (‘TCA’) has been quick to take a part in this period, publishing four announcements on its website on COVID-19. The first two announcements were on maintaining competitive markets while the last two were aiming to remind about the TCA’s filing procedure and publish the Turkish Competition Board’s (‘TCB’) decision regarding filing timeline.

Announcements on Maintaining a Competitive Market

The first public announcement of the TCA regarding COVID-19 was published on March 23rd, 2020[1]. In the announcement, the TCA explicitly warned the market players from the food sector, especially players of fresh fruits and vegetable markets about not applying excessive prices. The TCA made it clear that it is monitoring the prices and market players closely and it will be imposing severe administrative fines to all those actors, such as manufacturers, intermediaries, carriers, end sellers that engage in anti-competitive practices in the food sector, especially in fresh fruits and vegetable market.

The second announcement which was actually a press release of the president of the TCA, Mr. Birol Küle, was published two days after the first announcement, on March 25th,  2020 on the website of TCA[2]. This announcement included further details on the first announcement. Mr. Birol Küle mentioned that the price hikes in the food sector are being monitored across all layers on a daily basis, and costs (such as oil, manpower) or supply rate have not changed, therefore, an ‘artificial scarcity’ had been created. He also mentioned that the TCB will undoubtedly initiate investigations and impose administrative fines applying the maximum thresholds available (10% of the annual gross revenue of the undertaking) to those who distort the well-functioning of the market mechanism with anti-competitive behaviours especially by applying excessive prices.

In a case where there is excessive pricing in the food sector or in other sectors during the pandemic, TCB can initiate an investigation and impose administrative fines to undertakings either according to Article 4 of the Law No. 4054 (Agreements, Concerted Practices and Decisions Limiting Competition) or according to Article 6 of the Law No.4054 (abuse of dominant position). This means TCA must reveal (i) anti-competitive agreement or concerted practice, or (ii) dominant position of the undertaking(s) and abusing behaviour of this undertaking(s).

How did the TCB act against anti-competitive behaviour allegations in the food market in the past?

These two announcements of the TCA remind us of the preliminary investigation initiated ex-officio by TCB in 2018 against potato and onion traders. This preliminary investigation was initiated after the news published in the press regarding the price increases of potatoes and onions in the summer of 2018. After the preliminary investigation, the TCB concluded that there is not any information or document to show anti-competitive agreement between undertakings and the structure of the market is not suitable to create and maintain anti-competitive conducts, therefore, it was decided that investigation is not required in this market[3].

However, in 2019, the TCB initiated two investigations in the food sector; (i) investigation on 24 undertakings active in the wholesale marketing of fresh fruits and vegetables (22 March 2019)[4] and (ii) investigation concerning 23 supermarket chains (including well-known supermarket such as Migros, Carrefour, BİM) that are active in food retail in order to find out whether these supermarket chains carried out any anti-competitive conduct while determining the retail price of water and fresh fruits and vegetables (04 March 2019)[5]. These two investigations are still in progress and the TCB has not decided about these files yet. [5i]

Moreover, there were other investigations in the food sector in the past. For example, in 2009, the TCB decided that several poultry companies and their professional association distorted competition by establishing a cartel, and 9 undertakings were imposed administrative fines corresponding to 0.8% of their annual gross revenue. Additionally, Zuhal Dastan, the chairman of Pak Tavuk Gıda and the president of the Poultry Meat Producers and Breeders Association (BESD-BIR), was imposed 3% of the administrative fine imposed to Pak Tavuk Gıda for his leading role in the anti-competitive conduct[6].

The preliminary investigation on potato and onion traders, as well as other preliminary investigations/investigations in the food sector, clearly show that this sector, especially fresh fruits and vegetables market is being strictly scrutinized by the TCA and it is obvious that it will keep being monitoring in the near future.

Announcement on the Filing Procedure of the TCA

The third public announcement was published on April 6th, 2020 on the website of the TCA[7]. Although this announcement was also related to COVID-19, it was totally different from the first two announcements and related to the filing procedure of the TCA. In this announcement, it is reminded that all applications, petitions, and information-document submission procedures can be handled through the Internet, using the Government’s online portal (e-Devlet). This means that all applications and documents must be duly filed online on time as the systems are available and functioning during the pandemic. In that respect, for example, M&A transactions that are subject to the TCB’s approval must be filed and approval of the TCB must be obtained before the closing as foreseen in the Law on the Protection of Competition No. 4054 (‘Law No. 4054’) as usual. This announcement explicitly reveals that there is no excuse to fail to fulfill obligations under Law No. 4054.

The fourth public announcement was published on April 17th, 2020 on the website of the TCA[8]. TCA tried to reduce concerns and answer questions regarding filing timelines and deadlines with this announcement. It was mentioned that the timelines about ongoing examinations, preliminary investigations, and investigations are still valid and applied in accordance with Law No. 4054. However, the TCB took a decision (i) to accept the request to extend the period to handle the second and third written defenses (additional 30 days) if the parties submit written application until 30 April 2020 and (ii) during the investigation period, to accept the issues that are intended to be presented in addition to the written defense but cannot be raised within the specified period. Moreover, in the announcement, it was reminded that there is an opportunity for the undertakings to state their defenses, which they could not submit within the second written defense, in the third written defense. This announcement and the decision of the TCB was very important for the parties not to lose their rights as it is explicitly stated in Article 45 of the Law that ‘the pleas of the parties that are not submitted within due period shall not be taken into account’. 

Conclusion

The overriding message of the TCA is that provisions of the Law No. 4054 and other competition legislations continue to be applied even during the pandemic times.  

Considering the approach of the TCA, undertakings must be more careful than ever while communicating or entering business relations (including association meetings) with their competitors, even if they aim to meet public health concerns, and while determining market behaviours like pricing, especially those which are in dominant positions in the mentioned markets.

Do not forget:

• Any applications that must be filed with the TCA can be duly completed through online systems and would not be excused if not done on time,
• If the parties of an investigation would like to have an extension for their second or third written defenses, they have to apply until 30 April 2020.
• The TCA will keep monitoring the food sector’s players and prices in this sector,
• Price hikes in the different sectors may strictly be scrutinised as well,
• The TCB has vast powers going beyond any complaints or subject of investigations. This means that the TCB may extend the scope of its investigation and may impose administrative fines because of the anti-competitive behaviours that were not subject to its earlier investigation.

Thus, it is essential for undertakings, especially for those which are active in the food sector, to comply with all competition rules and to complete/maintain a full competition compliance programme in their corporation.

[1] Please refer to the English version of the announcement here.

[2] Please refer to the Turkish version of the announcement here (there is no English version available as of the date of publishing this article)

[3] TCB decision dated 08.08.2018 and numbered 18-27/440-210

[4] Please refer English version of the investigation announcement here.

[5] Please refer English version of the investigation announcement here.

[5i] It is known that the oral hearing of the investigation on 24 undertakings active in the wholesale marketing of fresh fruits and vegetables was conducted in 10 January 2020, however, there is no announcement regarding the decision of TCB as of the publication date of this blog post.

[6] TCB decision dated 25.11.2009 and numbered 09-57/1393-362.

[7] Please refer the Turkish version of the announcement here (there is no English version on the website as of the date of publishing this article).

[8] Please refer the Turkish version of the announcement here (there is no English version on the website as of the date of publishing this article).