UNIVERSITY OF AMSTERDAM
LLM in INTERNATIONAL AND EUROPEAN LAW: Competition Law and Regulation
NAME : RENGIN CIMSITOGLU
TITLE of THESIS : Problems in Competing Competition Law
Jurisdictions: Case Study Turkey
NAME of SUPERVISOR : THOMAS VANDAMME
A. LIST OF ABBREVIATIONS ... 3
B. INTRODUCTION ... 4
C. JURISDICTION of the EU, EU COMPETITION LAW and the COMMISSION ... 6
a. Concept of Jurisdiction ... 6
b. Territorial Jurisdiction of European Union ... 7
c. Jurisdiction of Commission in Competition Law Matters ... 7
d. Territorial Jurisdiction of EU Competition Law ... 8
i. EU - US Relationships and the Development of Extra-Territorial Application of Competition Law in US... 9
ii. Extra-territorial Application of Competition Law in EU ... 12
e. Excessive Extra-territorial Application of EU Competition Law ... 16
i. Effect on Double Sanctions ... 21
ii. Effect on Compensation Claims and Lawsuits in Third Countries ... 22
D. CASE STUDY: TURKEY ... 24
a. Turkey – EU Relations, Competition Law in Turkey and its Relevance to EU Law.... 24
b. Extra-territorial application of Competition Law under Turkish Competition Rules ... 27
c. How (or did) Board rely on the Commission’s decisions?... 28
d. How (or did) Courts rely on the Commission’s decisions? ... 29
E. CONCLUSION ... 30
A. LIST OF ABBREVIATIONS
AG : Advocate General
CRT : Cathode Ray Tubes
ECJ : The European Court of Justice
EEA : European Economic Area
EU : European Union
TEU : Treaty of European Union
TFEU : Treaty of the Functioning of the European Union
UK : United Kingdom
B. INTRODUCTION
In the era of globalization, economic changes are reaching beyond national borders, developments in certain countries effect the worldwide economy more than the others. The conducts and developments of the bodies of the European Union (“EU’) have significant effects on the worldwide level when solely the fact that it constitutes the second largest economy in the world (if treated as one country)1 is considered. As a consequence of the globalization trends around the world, the application of the competition law by the strong economic powers and their effects came into prominence.
The starting point of this thesis was to have a better understanding on the limits of the European competition law and its possible effects in third countries. In cases where the limits of the European competition law is exceeded, conflicts may stem from the state’s rights on their jurisdictions and their sovereignties which are stipulated under international law. Also, considering the fact that there may be some conflicts over the differences with respect to competition law (i.e. both in substantive law and policy), unlike in the criminal field where little substantive difference exists concerning law and policy2, so called ‘competing jurisdictions’ have the possibility to create problems with respect to undertakings subject to competition law as well. Therefore, it is crucial to find out about how or on what extend that the competition law regimes have effects across borders and how third countries can rely on EU bodies in competition law issues.
Therefore, the problem question of the thesis was “What relevance can be attributed to the competition law decisions of EU bodies in accession countries and what arrangements, if any, are in place to prevent problems with jurisdictional overlap?”. Aiming to provide a more accurate conclusion, a case study with one of the third countries, namely Turkey has been conducted. Turkey was selected as a case study mainly because of its close relationship with EU. The close relationship between Turkey and EU does not only stem from the geographical neighboring but also from Turkey’s candidate status to EU since late 1990s. Moreover,
1 Central Intelligence Agency, The World Fact Book
<https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html> accessed 10 May 2017
2 Takaaki Kojima, 'International Conflicts over the Extraterritorial Application of Competition Law in a
Borderless Economy ' (2001) <https://programs.wcfia.harvard.edu/fellows/files/kojima.pdf> accessed 7 July 2017
Turkey has the biggest economy amongst the five candidate countries3 and had the longest time to get accustomed to the possible extra-territorial effects of EU competition law.
In order to understand the effects of the decisions of the EU bodies in competing jurisdictions, firstly the jurisdiction of the EU in competition law matters was assessed. Subsequently, the principle of extra-territorial application was examined in detail. During the research, it was deduced that the legal sources such as acts, regulations or legislations lack a precise definition of the extra-territorial dimensions of competition law issues. Therefore, it was inevitable to rely on decisional practice of the Commission to have a comprehensive outcome in the extra-territoriality competition law.
The principle of extra-territorial application of competition law was firstly recognized by the courts of United States of America (“US”) as it was the only state that had the political, economic and legal power to provide norms for global competition and enforce them4. Accordingly, the principle of extra-territorial application of competition law was developed in the case law of US. Both US and EU separately constitute one of the biggest economies in the world and their competition law practice is experienced to have a global impact. Hence, before touching upon the details of the EU practice, it was chosen to start the descriptive part of the extra-territorial application of the competition law with the chronological case-law developments in US competition law and how their approach on extra-territorial application of competition laws subsequently effected EU competition law.
As the US competition law progressed and gained an imperative nature, this has raised controversies in the international sphere (and especially within EU) as wide-ranging application of American law may found to have effect of undermining the effectiveness of the other jurisdiction’s competition laws. Therefore, it is well worth mentioning that EU has developed lobbying activities to counter the so called ‘overlapping jurisdictional problems’ and tried to prevent the stronger position of US in the international sphere.
Moving on to the extra-territorial application in the EU competition law, it is seen that it was concentrated on the violations under Article 101 of Treaty of the Functioning of the European Union (“TFEU”) as it has been observed that the extra-territorial jurisdiction principle was
3 By the time of the thesis, Albania, Montenegro, Serbia and the Former Yugoslav Republic of Macedonia are
the other candidate countries.
4
David J Gerber, Global Competition Law, Markets and Globalization (1st edn, Oxford University Press 2010) 55
applied mostly in cartel cases. In the research, it was shown that EU competition law has been applied to the undertakings located in third countries as a consequence of the extra-territorial jurisdiction principle. It is determined that the case law of EU competition law as well as the decisional practice of the Commission also consist of assessments for the undertaking’s behaviours in third jurisdictions. Therefore, the EU’s jurisdictional limits, the cooperation between EU and third countries and possible effects of the possibly excessive application of extra-territoriality on third countries were in the spotlight throughout this thesis.
In the second part of the thesis, EU competition law effects on Turkey were examined as a case study. In order to do so, first the EU - Turkey relationship was elaborated. The relevance between Turkey and EU competition law and the approach of Turkish competent bodies on extra-territorial application of Turkish competition law was examined. The final section of this thesis aims to give the answers as to what relevance was attributed to EU competition law in the competent Turkish administrative competition body as well as before the Turkish courts.
The historical background of the subject and the necessity to include a case study on Turkey as a third county demands a comparative methodology. However, this thesis also includes an internal and argumentative approach on extra-territorial application especially in terms of the Commission’s use of its powers excessively in competition law issues.
In conclusion, this thesis aims to provide an answer to the question whether any relevance is attributed to EU competition law. It is concluded (especially in the case study) that EU competition law constitutes a strong guidance in accession country’s legal systems however, they do not have any evidentiary value before their competent competition bodies or competent courts.
C. JURISDICTION of the EU, EU COMPETITION LAW and the COMMISSION a. Concept of Jurisdiction
By its very definition, the term jurisdiction means the dictation of law, law’s speech and word5. It represents the limits of a States’ (or a union consisting of states) ability to apply
5
Costas Douzinas, The Metaphysics of Jurisdiction, in Jurisprudence of Jurisdiction 21, 22 (Shaun McVeigh ed., 2007)
laws. The concept of jurisdiction comprises of three different concepts referred as prescriptive [legislative], adjudicative and enforcement6. In brief, prescriptive jurisdiction is the authority to make law and apply them; adjudicative jurisdiction is the power to subject persons or things to judicial process and hence is generally associated with courts; and lastly enforcement jurisdiction is to ensure compliance or to punish non-compliance with the law.7 As regards the adjudicators of international law (e.g. international courts), a popular classification is the distinction of jurisdiction on the basis of certain dimensions such as; time, space, subject-matter and legal subjects. It stated by one of the international courts namely The Court’s Appeals Chamber that the notion of jurisdiction has four different facets; subject-matter jurisdiction (ratione materiae), jurisdiction over persons (ratione personae), territorial jurisdiction (ratione loci) and lastly jurisdiction ratione temporis meaning temporary jurisdiction8. For the purposes of this thesis, only territorial jurisdiction will be assessed in detail in following sections.
b. Territorial Jurisdiction of European Union
TFEU and Treaty on European Union (“TEU” and together referred as “Treaties”) draws the lines of the jurisdiction of the EU, its institutions and competences of EU institutions. When Article 1 of the TEU is read in conjunction with Article 1 of the TFEU, it is clear, in the light of these provisions, that the Treaties’ provisions have effect on the High Contracting Parties; in other words within the members of the EU9 and therefore the territorial jurisdiction of EU is limited with the Member States.
c. Jurisdiction of Commission in Competition Law Matters
The jurisdiction of Commission is stipulated under Article 17(1) TEU and it is stated that the Commission promotes general interest of the EU and take appropriate initiatives in that end.
6
Anthony J Colangelo, 'What is Extraterritorial Jurisdiction ' [2013] 99 Cornell Law Review 1309
7 Ibid 1311
8 Prosecutor v. Thomas Lubanga Dyilo, Case No. ICC-01/04-01/06-772, Judgment on Appeal against Decision
on Defense Challenge to Jurisdiction of the Court pursuant to article 19(2)(a) of the Statute of 3 October 2006, 24 (Dec. 14, 2006)
9 For the time being, the United Kingdom (“UK”) remains a full member of the EU and rights and obligations
continue to fully apply in and to the UK and EU consists of 28 member states.. List of member states can be accessed from https://europa.eu/european-union/about-eu/countries_en Access date: 08.05.2017
Even though the Article is terse about the scope of the relevant powers. details of these powers are scattered around the rest of the Treaty10 and within other EU documents.
In that regard, the powers of the Commission to enforce Articles 101 and 102 were initially stipulated in Regulation 17 of 196211. Major changes in the enforcement of Articles 101 and 102 were effected by Council Regulation 1/2003 of 16 December 2002 on implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (now Articles 101 and 102)12 (“Regulation 1/2003”), which came into force on 1 May 2004 and the relevant regulation conferred significant powers on Commission with regards to the enforcement of competition law rules and regulations. It is worth mentioning that the Regulation1/2003 does not only confer rights to Commission but Commission has a shared competence with National Competition Authorities in certain issues. It is held by the ECJ in the Tokai Carbon case that the assessment of a cartel’s application and effects within the EU falls within the scope of the Commission’s jurisdiction13.
As stated earlier, the EU has territorial jurisdiction only within the scope of its member states. Therefore, as a natural consequence its institutions also enjoy jurisdiction within such member states and also within the scope of principle of conferral14. Thereby, it is safe to conclude that EU institutions (in our case the Commission) only have jurisdiction within the territory of EU member states .
d. Territorial Jurisdiction of EU Competition Law
Article 101 TFEU prohibits, specifically, “all agreements between undertakings (…) and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal
market”. Article 101 TFEU (or indeed Article 102 TFEU) thus raises no issue of
10
Damien Chalmers and others, European Union Law (3rd edn, Cambridge 2014) 67
11
Council Regulation (EC) 17 First Regulation implementing Articles 85 and 86 of the Treaty [1962] OJ P 0204 - 0211
12 Council Regulation (EC) 1/2003 of of 16 December 2002 on implementation of the rules on competition laid
down in Articles 81 and 82 of the Treaty [2003] OJ L 1
13 Case T-236/01, T-239/01, T-244/01/ T-246/01, T-251/01 and T-252/01, Tokai Carbon and others v
Commission [2004] ECR II-1181, paragraph 143.
14
Considering the fact that the purpose of the thesis is to focus on extra-territorial effects of the Commission, principle of conferral was not examined in detail.
extra-territorial jurisdiction precisely in prima facie when solely the wording of the article(s) is examined. With assessing the wordings of the articles, it is seen that the articles are not intended to be applied in an extra-territorial manner.
Extraterritorial jurisdiction is the legal ability of a government [or an enforcement body] to exercise authority beyond its normal boundaries. Extraterritorial jurisdiction plays a significant role in regulation of transnational anti-competitive practices.
The principle of extra-territorial application of competition law was firstly established in the US since US was the only country with extensive competition law experience and hence, it was possible for US to undertake the leading role in determining the principles of extra-territorial application. Therefore, in order to have a better understanding the extra-territorial application of competition law, firstly the EU - US relations and the milestone decisions in US will be assessed.
i. EU - US Relationships and the Development of Extra-Territorial Application of Competition Law in US
The relationship between EU and US was initiated with the Transatlantic Declaration in 1990. Subsequently five years later, the New Transatlantic Agenda outlined a new framework for their relationship, and it comprised four areas for joint action. These areas were promoting peace, stability, democracy, and development; responding to global challenges; contributing to the liberalization and expansion of world trade; and improving communication and ensuring a long-term commitment to their partnership15.
With regards to competition; it is well worth mentioning that both EU and US have well-developed competition policies. Most importantly, different than any other single force, the interaction of the competition policy systems of the EU and US deeply influences the convergence process within all of the multinational and regional networks16 due to their significant presence in the worldwide economy. However, the triggering point of the competition law in two jurisdictions are different. In the EU, economic integration of the
15 Euintheusorg, 'HOW EU-US RELATIONS WORK' (Delegation of the European Union to the United
States, -) <http://www.euintheus.org/what-we-do/how-eu-us-relations-work/> accessed 8 June 2017
16 William E. Kovacic, ‘Competition Policy in the European Union and the United States: Convergence or
Divergence?’ (Bates White Fifth Annual Antitrust Conference, Washington, D.C., June 2, 2008) < https://www.ftc.gov/sites/default/files/documents/public_statements/competition-policy-european-union-and-uni ted-states-convergence-or-divergence/080602bateswhite.pdf> accessed 13 June 2017
Member States is the dominant objective of the competition policy whereas US competition policy is primarily designed to protect consumer welfare.17 On the other hand, the different objects of competition law regimes did not interfere with the development of competition law in both jurisdictions in a very similar manner. For example, both approaches’ main aims are to fight formation of cartels and they both have quite similar concentration tests, approaches to efficiencies, and tests for anticompetitive effects.
Even though the EU and US have fairly similar systems with regards to their competition laws, other than the objectives of the competition policy, there are important differences in their normative and enforcement approaches as well. For example, the EU has an administrative system for the competition law enforcement whereas in the US the system is based on criminal law. This difference means that under EU law18 the undertakings are faced with monetary fines, in contrast US competition law sets forward monetary and criminal liability (which may lead up to imprisonments) both on the undertakings and the individuals. Considering the fact that the US was the only jurisdiction that could lead and determine the limits of the application of the extra-territorial jurisdiction by being the very first jurisdiction to introduce competition law rules and being the world’s most influential economic power; it was inevitable that the US law had served as an inspiration and a point of reference in the extra-territorial application of EU? competition law cases.
The extra-territorial application of competition law was firstly examined in US v. Alcoa19 (the "Alcoa Case"). This case allowed for the first time for jurisdiction over a foreign conduct, only under the condition that the economic effects of the foreign anti-competitive conducts are experienced on the domestic market. In the Alcoa Case, an international price fixing in market for aluminium producers based outside of US (namely Switzerland, Germany, and Canada) was examined. Although the activities occurred outside of the US, it is ruled by the US Court that "…any state may impose liabilities, even on persons not within its allegiance, for conduct outside its borders which has consequences within its borders”. In
17 Eleanor M Fox, 'US and EU Competition Law: A Comparison ' [1997] Global Competition Policy Chapter
10
18 It should be specifically pointed out that some of the Member States introduced penalties from competition
law infringements on the individuals. However, currently the EU law does not foresee any penalty on the individuals.
this regard, the Alcoa Case put forward two conditions for the effects test, that (i) the performance of the foreign agreement must be shown to have some effect in the US and two, that (ii) the effect must have been intended.
Within this context, conduct relating to non-import foreign commerce is accepted to be subject to US [competition] law only if it has a “direct, substantial or reasonably
foreseeable” effect on non-import trade or commerce20.
In the Timberlane21 case, the US Court put forward that “a test” needs to be applied in case a
legitimate claim wanted to be asserted of extra-territorial jurisdiction on the anti-competitive conducts. US Court used a 3-part test to decide if this is a competition law issue that the US needs to get involved with. It is said that there must be some effect - actual or intended (direct or substantial) - on America [-n jurisdiction] before the federal courts may legitimately exercise subject matter jurisdiction.
With the further cases, the test has been shaped in a more systematic manner as in US v. The Watchmakers of Switzerland Information Center22. In this decision, it was stated that there needs to be a substantial and material effect in US territory in order for US competition rules to be applied . Following in Dominicus American Bohio v. Gulf & Western Indus23, it was added that there needs to occur any effect that is not de minimis and finally in United States v. Timken Roller Bearing Co24, it was stated that there needs to be a direct and influencing effect in the US25.
At this point, it is worth to mention the case of Motorola Mobility v. AU Optronics26, a US decision which concerned a worldwide cartel. The facts and questions raised in that case were similar to a EU case (InnoLux Corp. v Commission27) and the case before the US courts
20 An Economic Analysis of Extraterritoriality, R. E. Falvey and P. J. Lloyd, Centre for Research on
Globalisation and Labour Markets, School of Economics, University of Nottingham
21
Timberlane Lumber Co. v. Bank of America, 549 F.2d 597 (9th Cir. 1976)
22 United States v. Watchmakers of Switzerland Inf. Ctr., 168 F. Supp. 904 (S.D.N.Y. 1958) 23 Dominicus Americana Bohio v. Gulf & Western, 473 F. Supp. 680 (S.D.N.Y. 1979) 24 Timken Roller Bearing Co. v. United States 341 U.S. 593 (1951)
25 International Civil Litigation in United States Courts: Commentary & Materials, Borne, Kluwer 1996. 26
Motorola Mobility v. AU Optronics [2014] 14-8003 (United States Court of Appeals for the Seventh Circuit)
mainly included the issue of extra-territorial application of American competition law. In the case; Motorola, a company established in the US was being accused to participate in an international cartel which is infringing the US competition act by way of the fixing prices of LCD panels sold to certain of its subsidiaries established outside the United States which incorporated the panels into finished products that were subsequently delivered to their parent company in the US.
Within the scope of the US case, the Belgian Competition Authority had issued a brief in favour of restrictive application of the territorial application of the US competition law, and pointed out that wide-ranging application of American law would have the effect of undermining (the effectiveness) of the application of Belgian and EU competition law and of the competition laws of the other countries. Belgian Competition Authority also pointed out that this would also have a diminishing impact on the foreign firms’ incentive to cooperate with competition authorities, in particular, in terms of leniency applications. In that particular case, the US Courts of Appeals held that the US competition act would not apply on the grounds that the effect on the US markets was not direct and that the cartel participants were not conducting sales within the US. The US Court also considered the risk of enormously increasing global reach of the US competition law.
It was highly controversial for the sovereignty of the states’ point of view that the US Courts would become the arbiters of competition law (at least virtually) for the rest of the world and as a consequence to be in a position to dictate what is acceptable and what should be considered in the worldwide markets. It is said that the other sovereign states even feared that this leading role may extend US domination of global markets28 and to prevent such consequences they had attempted to block statutes or executive orders29 of the US.
ii. Extra-territorial Application of Competition Law in EU
As for the EU competition law, although, according to the express language of Article 101, which applies to restraints "which may affect trade between Member States" and "which have as their object or effect the prevention, restriction or distortion of competition within the common market", should only be applied to anti-competitive acts affecting trade between
28 David J Gerber, Global Competition Law, Markets and Globalization (1st edn, Oxford University Press 2010)
73
Member States, EU competition law subscribes to an "effects doctrine" for determining the reach of Article 101. Consequently, the effects doctrine, has also became part of EU jurisprudence as evidenced by the court rulings in both the Dyestuffs and the Wood Pulp cases30.
Starting from the judgement of European Court of Justice (“ECJ”) in Woodpulp31 which is the first decision ever discusses the opportunity of extra-territorial application, it has been accepted that the Commission may have jurisdiction in cases where certain criteria has been fulfilled. In Wood Pulp32, a cartel conduct has been detected and the Commission held that 41 producers and two associations had engaged in concerted practices contrary to now Article 101 TFEU. It has been found that the wood pulp producers established outside the EU had concerted on the prices to be charged to their customers in the EU and sold directly or through branches, subsidiaries etc., to purchasers in the EU.
In Woodpulp the application of territorial jurisdiction was extended in a way that the practices have been accepted to have capacity of restricting EU competition law if they are related to the direct sales of the relevant products to the purchasers within the EU. In other words, the ECJ considered the existence of a direct sales within the EU sufficient to apply the EU competition rules. The ECJ has reached this conclusion after analysing Article 101 and further, included in its assessment that “…accordingly the Community’s jurisdiction to apply its competition rules to such conduct is covered by the territoriality principle as universally recognized in public international law33”
The Commission argued that the breach of Article 101 TFEU raised from the effects on prices announced and/or charged to customers and on re-sale of pulp within the Community resulting from concentration between these producers. Advocate General Marco Darmon in
Wood Pulp opinion34 supported the adaptation of the effects doctrine where the effect has to
30 Extraterritoriality in Competition Law and Globalization: Square Peg in a Round Hole?, David M. Gomez,
University of Northumbria, August 2005.
31 Joined cases 89, 104, 114, 116, 117 and 125 to 129/85 Wood Pulp [1988] ECR 1988 -05193 Para 11 et seq. 32 Ahlström Osakeyhtiö and others v Commission .[1998]
33
Ibid para 18
be direct, immediate, reasonably foreseeable and substantial35. Accordingly, the Commission justified the Community’s jurisdiction on the ground that “the effect of the agreements and practices announced and/or charged to customers and on resale of pulp within the EEC was therefore not only substantial but intended, and was the primary and direct result of the agreements and practices36.”
The Commission established the necessary "substantial" and "intended" economic effect from the fact that the agreements and practices appear to have applied the vast majority of sales of wood pulp by the parties to and in the EU during the relevant periods37.
On the other hand the Commission, in Dyestuffs38 imposed fines on a price-fixing agreement
of ten leading producers of dyes, among companies from Switzerland and the United Kingdom (which was not an EU Member State in those days)39 on the basis of effects40. Advocate General Mayras in his opinion41 stated that the Commission's decision should be upheld on the basis of the effects doctrine. In his opinion; he said that the conditions necessary for taking extraterritorial jurisdiction were that the agreement or concerted practice must create a direct, immediate restriction of competition, that the effect of the conduct must be reasonably foreseeable and that the effect produced on the territory must be substantial. The ECJ upheld the Commission's decision on the basis of what has become known as the single economic entity doctrine. In this case, the ECJ relied on this doctrine to impute the conduct of the subsidiary to the parent. The ECJ held that the subsidiary did not have real autonomy but acted on its parent's instruction such that the infringing conduct in the EU could be treated as having been committed by the subsidiary as an agent of the parent.
35 The EU's Evolving Stance on the International Dimensions of Competition Policy, A Critical Commentary,
Davison & Johnson, Intereconomics, 2002.
36 Woodpulp (Decision IV/29.725) [1984] OJ 1985, L 85, p . 1 37
Extraterritoriality, the Effects Doctrine and Enforcement Cooperation Through Bilateral Agreements with regards to Antitrust Law, Knott, University of Johannesburg, 2010.
38 Joined cases 89, 104, 114, 116, 117 and 125 to 129/85 Dyestuffs [1993] ECR 1993 I-01307
39 Conflicts and conflict resolution in International Competition, Klodt, Henning, Kiel Working Papers, 2000 40 The Multinational Enterprise and Legal Control: Host State Sovereignty in an Era of Economic Globalization,
Wallace, Kluwer Law International, 2002
41
Joined cases 89, 104, 114, 116, 117 and 125 to 129/85 Dyestuffs [1988] ECR 1988 -05193, Opinion of AG Darmon
Further in Gencor42, the ECJ applied the three criteria of the doctrine; immediate, substantial, and foreseeable effect as well as the effects doctrine and it applied for the justification of jurisdiction under public international law.
According to an EU law interpretation, under the "effects test" applied in EU, the following conditions must be satisfied;
i. the effects produced must be substantial,
ii. the effect must be direct;
iii. it must be foreseeable that the agreement or performance of such agreement will have
effects in the territory of the state ,
iv. it is not necessary that the parties intended to have effects on the territory, except where
the object of contract is anti-competitiveness (irrespective of its eventual effects),
it is not necessary that the agreement or the performance of such agreement be held invalid by the jurisdiction in which it was entered into or performed43.
The effects doctrine holds that a state has jurisdiction to prohibit restraints of competition committed by the parties located outside its territory if the restraint causes anti-competitive effects within its territory. Parallel to extraterritorial jurisdiction, the effects doctrine is justified under public international law when it is foreseeable that a proposed activity or concentration will have an immediate and substantial adverse effect in the relevant territory44. This idea is based on the approach to regulate conduct on ones territory on by authorizing [a state] or itself that occurs outside its territory but of which has particular effects within45. Although it is not stated in EU legislation explicitly, the Commission has derived the effects doctrine from the territoriality principle of customary international law that permits every nation to subject to its jurisdiction conduct which bears a sufficient relationship to its territory,
42 Case T-102/96 Gencor Ltd v Commission of the European Communities [1999] ECR 1999 II-00753 43 European Community Law for the New Economy, Bergkamp, Hart Publishing, 2003
44 Effects Doctrine & Competition Regulators: A Comparative Study, Yadav, International Journal of
Commerce, Business and Management, 2014
45
David J Gerber, Global Competition Law, Markets and Globalization (1st edn, Oxford University Press 2010) 60
i.e. when it is foreseeable that it has an immediate and substantial effect within the EU. This
idea is based on the approach to regulate conduct on ones territory on by authorizing [a state] or itself that occurs outside its territory but of which has particular effects within46.
It is therefore should be highlighted and pointed out specifically that all the decisions regarding the extra-territorial application of the EU law have something in common. They all, in the end, assess the effects of the practices outside of EU within the EU itself. This assessment is in line with the literal (grammatical) interpretation of the Article(s) 101 (and 102) TFEU which specifically covers practices to may effect trade between Member States. For the sake of clarity, this thesis does not aim in any way to argue against the extra-territorial application of EU competition rules and/or Commission’s extra-territorial application to investigate the undertakings’ behaviour within its territorial jurisdiction. On the contrary, it aims to understand the limits of the Commission (especially in competition law issues) to identify an infringement that does not only covers the Member States but also comprises the third countries. Further on this subject will be evaluated in the following Section.
e. Excessive Extra-territorial Application of EU Competition Law
As stated in detail above, the Commission has jurisdiction on the anti-competitive conducts so long they have an effect on the trade between Member States, its territorial jurisdiction is limited with the borders of the Member States. However, it is seen that the Commission has in multiple cases concluded that the relevant geographical market of the infringement is in fact larger than the EU member states or it referred to a cartel as a worldwide one.
The first significant decision of the Commission regarding the worldwide cartels is the infamous Vitamin case47, where the Commission discovered a cartel lasted between 1989-1990 with the participation of three European and several Japanese major vitamin producers. The Commission has fined a record and a total of € 855.22 million for participating in eight distinct secret market-sharing and price-fixing cartels affecting vitamin
46 David J Gerber, Global Competition Law, Markets and Globalization (1st edn, Oxford University Press 2010)
60
47
products. In decision, the Commission decided that some of the cartels [for certain product markets] are in a worldwide level48.
In 2007, the Commission investigated 20 legal entities (belonging to 10 undertakings) in the Gas Insulated Switchgear industry and concluded that they have infringed Article 101 TFEU by participating single continues infringement between 1988 and 200449. Remarkable and highly contestant part of this decision is that the Commission has concluded that “the cartel
was worldwide in scope, although certain territories were excluded, and lasted from 15 April 1988 until 11 May 2004.50”
Similarly in 2009, the Commission decided on a cartel case on marine hoses industry51. The investigation was initiated by an leniency application of one of the cartel members (namely Yokohama) and in the end, it was discovered that the undertakings within the scope of the investigation (Bridgestone Corporation and Bridgestone Industrial Ltd; the Yokohama Rubber Company Limited; Dunlop Oil & Marine Limited, ContiTech AG, and Continental AG; Trelleborg Industrie SAS and Trelleborg AB, Parker ITR Srl and Parker Hannifin Corporation; Manuli Rubber Industries SpA) were in anti-competitive agreements which include allocating tenders, fixing prices, fixing quotas, fixing sales conditions etc. Within the scope of the decision, it is stated that the cartel was a “worldwide cartel’. Moreover, the Commission took into account of the “global character” of the cartel within its decision and further stated that the object of the cartel was, inter alia, to allocate markets on a worldwide level.
In 2012, the Commission has investigated an alleged cartel on TV and computer monitor tubes52. The Commission adopted a decision relating to two separate infringements of Article 101 TFEU and Article 53 of the EEA Agreement in cathode ray tubes (“CRT”) sector. By these infringements, the addressees of the decision colluded on prices, market shares,
48
Ibid para 73
49 Gas Insulated Switchgear (Case 38.899) COMP/F/38.899 [2007] unpublished (Summary decision OJ C 5,
10.1.2008, p. 7–10 )
50 Gas Insulated Switchgear (Case 38.899) COMP/F/38.899 [2007] unpublished (Summary decision OJ C 5,
10.1.2008, p. 7–10 )
51 Marine hoses (COMP/39406) Commission Decision 2009/C 168/05 [2009] [summary decision published OJ
C 168/6]
customers and output as well as exchanged confidential information and monitored implementation of the collusive arrangements.53 Within the decision, the Commission observed that the cartel meetings were in a worldwide level covering the assessment of the supply and the evidence in the file shows that the cartels involved global discussions and thus were worldwide in scope.
Besides the fact that they all concern a cartel agreement which can be considered within the scope of Article 101 TFEU, the above-mentioned decisions include one more thing in common. The Commission does not only have a conclusion about the EEA but also have determinations in the worldwide scope. When the decisions are assessed, it is seen that the Commission does not get into contact with any foreign authority in order to collect evidence with regards to the territory outside of the EEA area. Therefore, the Commission did not have any substantial cooperation from the third countries before deciding on a worldwide cartel. As stated out the Commission does only have a jurisdiction within EEA, in other words in order to use its investigating powers under Article 20 Regulation 1/2003, the undertaking should have a presence within the territory of EEA. Even though, in the current globalized world, it is highly possible for most of the companies operating within the EEA to have subsidiaries in the region, this does not legitimize the excessive behaviour of the Commission.
On the other hand, the Commission enhances effective enforcement of competition rules through international cooperation, bilateral or multilateral agreements with third country authorities. Such cooperation may include sharing experience, coordination of enforcement actions and exchange of information to facilitate enforcement activities54. If the content of the agreement allows to do so, a state may be authorized to acquire information located on foreign territory that it would not otherwise have legal means of acquiring55. The
53 Summary of Commission Decision of 5 December 2012 relating to a proceeding under Article 101 of the
Treaty on the Functioning of the European Union and Article 53 of the EEA Agreement (Case COMP/39.437 — TV and computer monitor tubes) OJ C 303/13
54 Commission Staff Working Paper Accompanying the Communication from the Commission to the European
Parliament and Council Report on the Functioning of Regulation 1/2003 < http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52009SC0574&from=EN> access 25.05.2017
55
David J Gerber, Global Competition Law, Markets and Globalization (1st edn, Oxford University Press 2010) 108
Commission may ask different national competition authorities to issue an information request to gather further information or evidence with regards to the alleged violation of EU competition law or vice versa. For example, Decision No 1/9556 (which is the main document stipulating the relationship between Turkey and EU in terms of competition law issues) provides that Turkish authorities and/or EU authorities will exchange information taking into account of limitations imposed by the requirements of professional and business secrecy. For example, in one of the Turkish Competition Board (“Board”) decisions57, it is seen that the Board has excluded one of the undertakings from its investigation because it was located in Italy and has informed the Commission for conducts of the undertaking as they might raise competition law issues within EEA.
However, with regards to the information exchange, the Commission is reluctant to cooperate in the sense of issuing information requests or conducting dawn raids when it is requested from the third party authorities. This is again apparent in one of the Board decisions58. In the decision, the Board was investigating whether or not undertakings importing coal to Turkey have conducted anti-competitive behaviour within Turkish market. Two of the undertakings did not have any presence (not even with their subsidiaries) within Turkish borders and therefore, the Board had faced some difficulties with sending the notices to such undertakings. For the similar reasons, the Board was unable to conduct dawn raids in those two undertakings. Referring to the Decision No 1/95 and its provisions regarding the co-operation between two parties, the Board took the matter before the Commission and asked for the Commission to conduct dawn raids in the premises of the undertakings and inform the Turkish authorities about the documents that only concerns the Turkish markets. The Commission in its answer stated that i) it was not possible for the Commission to share any information regarding the undertakings or their activities with a third country (which is not within the scope of its territorial jurisdiction), ii) this arises from the protection of the professional secrecy, iii) on the other hand, even though the Board’s request is rightful the undertakings reacts to such investigations of the Commission when it concerns possible high fines and that they are sensitive, legally prepared and aggressive on the matter therefore, they need to have solid legal substantial grounds in order to conduct such investigation iv) and that
56 Decision No 1/95 of the EC-Turkey Association Council of 22 December 1995 on implementing the final
phase of the Customs Union [1995] OJ L 035 p. 1
57
Board decision dated 18.9.2008 numbered 08-54/852-340
they also face similar difficulties but whereas they cannot procure documents from the third countries when they asked to provide so.
Even though the documents assessed within the scope of the cartel allegations include countries other than Member States, the Commission in most of the cases does not make a substantial analysis about the “other countries” even though there might be such bilateral or multilateral agreements explicitly authorizing it do do so. As understood from the Commission’s answer to the Board, it is not very common or probable practice to ask for the support of a third country authority while conducting an investigation . Therefore, it is possible to conclude that hypothetically even though the Commission wanted to co-operate for obtaining documents/evidences for alleged infringements, it is likely that it would not find a support in the international sphere.
In this regard, the recent UK High Court judgement59 concerning the CRT cartel and Commission’s approach on the territorial jurisdiction should also be mentioned. This judgement includes interesting and highly controversial determinations. Firstly, the judgement indicates that the Commission in fact was not authorized to have a determination on CRT cartel since it was outside of its territorial jurisdiction. On the other hand, the judgement stresses that the Commission determined a “worldwide cartel” and found a (and therefore an infringement in respect of) tubes sold outside Europe (in Asia), made into monitors which were then sold outside Europe (in Asia, again) and which were then sold into Europe by non-cartelists. Therefore, it is apparent that the excessive extra-territorial application of the Commission is a controversial issue even within the member states of the EU.
The wording of the decisions where the Commission excessively decides on a “worldwide cartel” can have serious implications both on the undertakings that have been found to constitute a cartel as well as it may give rise to controversy between National Competition Authorities of third countries and the Commission. Indeed, the wording of Articles 101 TFEU and 102 TFEU shows that the application of those articles exclusively relate to practices which restrict competition within the EU, rather than outside the EU boundaries.60
59 Iiyama Benelux BV & Ors v Schott AG & Ors [2016] EWHC 1207 (Ch) (23 May 2016) 60
Case C-231/14 P InnoLux Corp. v European Commission [2015] ECR, Opinion of Advocate General Wathelet, para
However, as the recent UK decision shows, the Commission’s violation decision and a court decision may have different approaches on the interpretation of such Articles.
In the following sections of the thesis, the possible consequences of such excessive application will be assessed in detail.
i. Effect on Double Sanctions
Ne bis in idem principal is one of the most important principles within the EU law and it is
affirmed in Charter of Fundamental Rights of the EU (“Charter”)61. When the principle is translated literally from Latin, it means “not twice in the same”. In its essence this principle sets forward that “no one shall be liable to be tried or punished again in criminal proceedings for an offence for which he or she has already been finally acquitted or convicted within the Union in accordance with the law62”. Even though the principle itself is firstly aimed to protect the duplicated criminal sanctions, in recent decades, it has place within other sanctions of law (such as administrative) as well. It is worth mentioning again that although competition law matters mainly accepted under administrative law in most of the countries, some of the major jurisdictions such as the US considers competition law violations not only in administrative but also criminal manner. The reason of the expansion of the principle’s application arose from the fact that the gravity and the wide scope of the administrative sanctions.
In Aalbort63, the ECJ put forward the application of ne bis in idem principle in competition law matters. The ECJ reserved that with regards to the observance of the principle that the application is subject to a threefold condition relating to the facts. Such principle therefore would apply only to the same persons, for a single unlawful course of conduct which is designed to protect the same legal asset.
Also, the importance of ne bis in idem principle in competition law issues was reflected in
SGL Carbon judgement64. The ECJ concluded in the decision that in cases where a
61 Charter of Fundamental Rights of the European Union [2000] OJ 1 364/1 62 Article 50 of the Charter
63 Joined Cases C-204/00 P, C-205/00 P, C-211/00 P, C-213/00 P, C-217/00 P and C-219/00 P Aalborg
Portland and Others v Commission [2004] ECR 2004 I-00123 I-403
competition authority exceeds its territorial jurisdiction, that would give rise to concurrent penalties on the undertakings that is under the investigation and which are being found to be in an anti-competitive agreement.
In particular, in case the Commission imposes a fine on the undertaking with respect of a certain practice and claims that such practices have a “worldwide effect” without actually assessing every other jurisdiction in the world, the undertakings may face fines in different jurisdictions other than the Commission’s scope of authority: The first time by the Commission and the second time country that is not a contracting party to the EEA (or vice
versa).
ii. Effect on Compensation Claims and Lawsuits in Third Countries
The next issue that may arise from the excessive application of territorial application by the Commission can be the unpredictable damage claims in the third counties.
As is known. infringements of the competition rules (Articles 101 and 102 TFEU) by the undertakings, such as cartels or abuse of a dominant position in the relevant market, are not only influential on the economy or the market conditions but they also cause concrete harm (e.g. higher prices, lost profits) for example infringer’s direct and indirect customers, infringer's competitors and their customers)65.
The ECJ has established that any citizen or business has a right to full compensation for the harm caused to them by an infringement of the EU antitrust rules. The private enforcement is aimed to facilitate public enforcement by allowing those who have suffered from a competition law infringement to bring a legal action before the court66. Moreover, with the considerably newly adopted Directive67 which was to be implemented by the Member States until 27 December 2016, the Commission aimed to remove the obstacles between the private enforcement of the competition law infringements and also have a single consistent application of the compensation claims.
65 Commission website on Towards more effective antitrust damages actions in Europe
<http://ec.europa.eu/competition/antitrust/actionsdamages/#steps> access date 10 May 2017
66 Commission Staff Working Paper Annex to the Green Paper Damages Actions for Breach of the EC Antitrust
Rules SEC (2005) 1732, para 1
67 European Parliament and of the Council Directive 2014/104/EU Directive on certain rules governing actions
for damages under national law for infringements of the competition law provisions of the Member States and of the European Union Text with EEA relevance 26 November 2014 OJ L 349/1
Similar approaches have been adopted in third countries as well however, some of them are stricter than the others. Organisation for Economic Co-operation and Development (“OECD”) has published a study in 2002 about the differences in available sanctions for hard core cartel claims between OECD members68 and it is known that as the importance of the competition law is established, more countries explicitly regulates the damage claims of the cartel victims. In some countries such as US69 and Turkey70, the law regime actually allows the sufferer to compensate (up to) three times of their damages. Therefore, it is possible to conclude that the possible consequences of the competition law infringements in terms of private enforcement differs significantly.
On the other hand, with regards to the damage claims the impossibility to access relevant information bears importance to establish the right to fair trail. This righthas been established as a fundamental right in most of the jurisdictions in the world and also with multiple European documents but mainly in Article 47 of the Charter . An important obstacle in private anti-trust enforcement in most competition law systems is lack of procedural tools necessary to gather all relevant information to prove [or to disprove] the competition law conclusions71.
When the Commission renders an infringement decision stating that the cartel participants had formed a “worldwide cartel”, the sufferers in third countries may try to use Commission decision as an evidence to seek for compensation claims (where available) in third country courts. Decisions having extensive economic, legal and factual analysis on the EEA area albeit determining a “worldwide” cartel put together with the inability to access the relevant fundamental basis information on the Commission’s documents, this may increase a significant risk on the right to fair trial of the undertakings. Firstly, because the undertakings have been punished on a “worldwide” level without having a proper analysis, secondly due to the fact that they did not defended themselves for the conducts outside of the EEA territory throughout and thirdly because of the fact that their right of defence has been violated once
68 OECD Report on the Nature and Impact o Hard Core Cartels and Sanctions Against Cartels Under National
Competition Laws Directorate For Financial, Fiscal And Enterprise Affairs Competition Committee 09 April 2002 Annex B
69 Section 4 of the Clayton Act, 15 U.S.C.S. § 15 70 Article 57 of the Act No. 4054
71
HoracioVedia Jerez, Competition Law Enforcement and Compliance across the World: A Comparative Review (Kluwer Law International 2015) 416
again when the trial is conducted in a third territory where the courts are not even able to access the Commission’s documents.
When these facts are considered with possible compensation claims in the third countries initiated by the sufferers of the so-called worldwide cartels, it can be deducted that the alleged cartel participants can face serious breaches of their fundamental rights.
Concerning the first stages of the competition infringements (e.g. investigation process) the leniency applications have a very important role. It is significant to have a reliable leniency programmes to provide the undertakings a relatively secure system. When the excessive territorial application is considered together with the different regulations for the action damages of the sufferers this would give rise to unpredictable consequences especially concerning the leniency applicants. For example, seeking leniency and being prepared for possible consequences (such as damage claims) within the EEA and acknowledging the infringement were to expose the foreign firm to the consequence of civil suits in the U.S. courts, such infringer would have little incentive to enter into amnesty programs.72
These concerns were also raised by the Belgian Competition Authority in Motorola Mobility v. AU Optronics. The Authority has raised the issue that it has a substantial interest in ensuring that companies acting within Belgium and the EU comply with Belgian and EU competition laws, and ensuring that U.S. antitrust laws and the availability of civil damages actions in U.S. courts do not interfere with Belgian and EU enforcement efforts.
D. CASE STUDY: TURKEY
a. Turkey – EU Relations, Competition Law in Turkey and its Relevance to EU Law
Turkey and the EU has a very long history of which has started in 1959 when Turkey first applied to join the (then) European Economic Community. The historic relationships even start from the earlier times dating back to the Ottoman Empire. In terms of its significance for the EU, Turkey is said to stand on equal terms with Russia in the neighbourhood [especially considering the geographical stance], and a step down after the United States and China on
72
Motion of the Belgian Competition Authority for Leave to File Brief as Amicus Curiae in Support of Appellees’ Position Seeking Affirmation of the District Court’s Order (Case: 14-8003 Document: 109 2014)
the global scene73. As a result of EU’s policy with the developing countries to insist on competition chapters74, competition policy entered Turkey’s agenda with the establishment of the customs union75 when the Agreement Creating an Association Between the Republic of Turkey and the European Economic Community (the "Ankara Agreement") was signed on 12 September 1963. Article 16 of the Ankara Agreement reads as follows: “The Contracting Parties recognize that the principles laid down in the provisions on competition, taxation and the approximation of laws contained in Title I of Part III of the Treaty establishing the Community must be made applicable in their relations within the Association.” Pursuant to the same Article, principles mentioned in the provisions of the Treaty of Rome76 concerning competition, taxation and the approximation of laws must be made applicable in the association relationship.
In that regard, Decision No 1/9577 which puts forward the cooperation between Turkey and EU with its Article 43 stipulates the cooperation obligation. The relevant article is as follows:
“If the Community or Turkey believes that anti-competitive activities carried out on the territory of the other Party are adversely affecting its interests or the interests of its undertakings, the first Party may notify the other Party and may request that the other Party's competition authority initiate appropriate enforcement action. The notification shall be as specific as possible about the nature of the anti-competitive activities and their effects on the interests of the notifying Party, and shall include an offer for such further information and other cooperation as the notifying Party is able to provide.
Upon receipt of a notification under paragraph 1 and after such other discussion between the Parties as may be appropriate and useful in the circumstances, the competition authority of the notified Party will consider whether or not to initiate enforcement action,
73 Natalie Tocci, Turkey and the European Union A Journey in the Unknown (Number 5 edn, Turkey Project
Policy Paper 2014) p 1
74
David J Gerber, Global Competition Law, Markets and Globalization (1st edn, Oxford University Press 2010) 109
75 Sinan Ulgen and Yiannis Zahariadis, 'The Future of Turkish-EU Trade Relations Deepening vs Widening '
[2004] August(5) EU-Turkey Working Papers
76 International Agreement that creates the common market between 6 countries: Belgium, Germany, France,
Italy, Luxembourg and the Netherlands based on the free movement of goods, people, services, capital.
77
Decision No 1/95 of the EC-Turkey Association Council of 22 December 1995 on implementing the final phase of the Customs Union [1995] OJ L 035 p. 1
with respect to the anti-competitive activities identified in the notification. The notified Party will advise the notifying Party of its decision. If enforcement action is initiated, the notified Party will advise the notifying Party of its outcome and, to the extent possible, of significant interim developments.
Nothing in this Article limits the discretion of the notified Party under its competition laws and enforcement policies as to whether or not to undertake enforcement action with respect to the notified anti-competitive activities, or precludes the notifying Party from undertaking enforcement action with respect to such anti-competitive activities.”
Ensuring a free competition in the market is actually a duty of the government set out within the Turkish Constitution78. Article 167 of Turkish Constitution puts forward that the State has to take measures to ensure and promote the sound and orderly functioning of the markets and prevent the formation of monopolies and cartels in the markets, emerged in practice or by agreement. The Act numbered 4054 on Protection of the Competition (“Act no. 4054”)79 was adopted and put into force at the end of 1994, however, the studies for the introduction of a legal regulation on the subject may be said to have a longer history80. Following the Ankara Agreement, Turkish legislator has basically built the Turkish competition law on the bases of Articles 81 and 82 of Treaty of Rome (Articles 101 and 102 TFEU). It is not entirely incorrect to say that the basis provisions on Act no. 4054 that stipulates the foundation of the protection of competition are translated directly from their EU equivalents. Competition law has also established ex ante control mechanism for mergers above certain turnover thresholds, in line with the EU Merger Regulation. Moreover, currently an amendment bill is in process for the Act no. 4054 and such amendment aims to make both rules more in line especially with introducing de minimis to Turkish competition rules. This conclusion is also applicable for the implementing legislations (secondary legislations) issued by the Turkish Competition Board (“Board”) including the principles of leniency applications. In short, the legislative framework of Turkish competition law is completely modelled after EU competition law.
78 English version of the constitution is accessible in <https://global.tbmm.gov.tr/docs/constitution_en.pdf>
accessed 29 May 2017
79 English version of the act is accessible in <http://www.rekabet.gov.tr/en-US/Pages/Act-No-4054> accessed
15 April 2017
80
Turkish Competition Authority , 'European Union Process' <http://www.ab.gov.tr/46224_en.html> accessed 17 May 2017
Regarding the institutional framework, Turkish Competition Authority which is attached to Ministry of Customs and Trade is operational-wise largely independent body. Its remit is very similar to the Commission. It has the authority to give clearance to mergers, to grant and refuse individual exemptions and to undertake dawn raid in undertaking’s premises. It can launch investigations on its own initiative, upon complaints or leniency applications. Moreover, there is an appeal process to the Board’s decisions before the administrative courts.
Every year, the EU publishes a progress report on the Turkey’s progression for its accession in the EU81. Competition policy especially in terms of approximation or harmonisation of legislations [between Turkey and the EU] stand out as a major success. For example in the most recent progress report, it has been said that legislation on antitrust rules is largely aligned with the acquis. However, it has been pointed out that the gap in alignment in legislation with regards to the staid aid principles is yet to be closed. Interestingly, the progress reports do not include any determination with regards to the developments in cooperation between Turkish Competition Authority and Commission.
b. Extra-territorial application of Competition Law under Turkish Competition Rules
Before discussing the relevance of the Commission decisions in Turkish competition law practice or in the general practice of law, the Board’s approach on the extra-territoriality will be examined in detail.
Article 2 entitled “Scope” of the Act no. 4054 states that, "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 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". Within the scope of the official reasoning of the decision, the legislator pointed out that the “effect theory” is adopted within the Act and therefore, those undertakings whose
81
Republic of Turkey Ministry for EU Affairs , 'Regular Progress Reports' <http://www.ab.gov.tr/46224_en.html> accessed 17 May 2017
headquarters are out of the borders of the Republic of Turkey but who operate in Turkey also considered to fall within the scope82.
In the case-law of the Board, the effects doctrine was discussed with its general terms in
Glencore & Minerkom as well as Isdemir83. Recently, in Cargo Train Operators84, the Board assessed the territorial application of Turkish competition law in detail.
In Isdemir case; the Board stated that "The behaviours of the foreign companies which offered the same prices in the relevant tender has to be assessed within the scope of competition law. Article 2 […]. This relevant provision regulates that the foreign companies' behaviours that has effect in Turkish markets should be regarded within the scope of the Law No. 4054. On the other hand, it is revealed that the foreign companies offer the tenders in Republic of Turkey through their representatives. Consequently, foreign companies A.M.C.I., Newco and Nova Coal's behaviours has to be assessed within the scope of the Law".
In Glencore & Minerkom decision, the Board referred to the Wood Pulp case of the Commission and the related decision of the ECJ underlying the implementation theory. Finally, in Cargo Train Operators, the Board has concluded, in light with the legislation and the Board’s approach on the decisions, in case a practice of an undertaking has an effect on Turkish markets Act no. 4054 is applicable irrespective of whether or not such undertaking has a legal presence in Turkey. However, considering the fact that there is no precise regulation how to assess the effects of the foreign undertaking’s allegedly anti-competitive practices, the “direct, significant and foreseeable” effect doctrine as it is applied in US law is taken into account.
c. How (or did) Board rely on the Commission’s decisions?
In this part of the thesis, it is examined as to whether or how did the Board has rely on Commission decisions. When the overall online database of the Turkish Competition Authority’s website is scanned, it is safe to say that the Board has used the Commission decisions as a guidance before rendering its decision on the matter not only in the economic
82 English version of the Grounds of the Articles of Act no. 4054 can be found in
http://www.rekabet.gov.tr/en-US/Pages/Grounds-for-the-Articles accessed 20.05.2017
83
Board decision dated 15.12.1999 and numbered 99-59/639-406.
part of the decisions but also in the legal substance. For example, Board refers to Commission decisions while determining the relevant product and/or geographical markets85. On the other hand, the Board also make use of Commission’s decisional practice in its legal assessment in violation decisions. For example in one case86 before evaluating the parties’ defences regarding the concerted practice and that the evidences against the undertakings are relating to a product market that the parties are not active, the Board stated that US and EU principles and case law should be assessed primarily. Also similarly, in a decision where extra-territorial application of competition law is being examined, the Board explained the US and Commission decisions in detail and then concluded its stance on the subject.
At one hand, it is not surprising that the Board refers to the Commission’s decisions when it is faced with a new subject, when there is a lack of jurisprudence or to stronger its approach since Turkish competition law is completely modelled after EU competition law. On the other hand, it is an indicator that Commission decisions do not have any binding effects on the Board but only has instructive nature.
d. How (or did) Courts rely on the Commission’s decisions?
Decisions of the Courts of First Instance is not publicly accessible (at least through online means) in Turkish legal system. However, it is possible to access an extensive jurisprudence of appeal courts (all decisions concerning administrative, criminal or private law issues). Therefore, the research to understand whether the Turkish Courts rely on the Commission decisions was conducted in appeal courts level.
When the Turkish Courts’ decisions are examined, there is no single decision (not only in competition law issues but also in different subjects) that the Courts rely on a previous Commission decision on the matter. With regards to the damage claims arising from competition law violations which is regulated under Article 57 of Act No. 4054, the Turkish Supreme Court has a strong position to seek for a finalized Board decision which clearly puts forward a competition law violation even though there is no express legislative provision stating that the competent court must wait for the Board’s decision.
85 For example Board decisions dated 25.12.2014 and numbered 14-54/932-420 and decision dated 18.02.2016
and numbered 16-05/118-53
Turkish Supreme Court consistently reverses the judgements of the Courts of First Instances in which damage claims are accepted without questioning as to whether the plaintiff has applied before Board and obtained a decision which reveals the competition law infringement. For example, in a triple damage claim arising from the alleged dominant position behaviour, the Supreme Court stated that the first stage of the compensation claim is for the Board to determine as to whether an abuse of dominant position occurred87. Following, the Supreme Court found that it is not accurate to render a decision without investigating as to whether it [Plaintiff] has applied before Turkish Competition Authority within the scope of the relevant legislation. Turkish Supreme Court decided that in the case there has not been such an application, the issue will be classified as a ‘prejudicial question’ and the Supreme Court will decide on the matter after the Board has evaluated the conduct.
In a very similar case88, the Turkish Supreme Court rendered that the Board decision is not sufficient but it is also important to seek as to whether there had been an appeal with regards to the Board’s infringement decision and understand if such decision is finalized89. In case there is a claim, Turkish Supreme Court stated that it is necessary to wait for the outcome of such appeal case to be evaluated before Council of State. For the sake of completeness, a finalized Board decision is a decision which has not been challenged with an annulment case within the relevant time period or a decision which has completed all administrative procedures and cannot be challenged further.
Accordingly, as can be understood from the extracts above, the Supreme Court is consistent with requiring a (finalized) Board decision revealing a competition violation before rendering a decision regarding compensation claims. A contrario it can be concluded that the Commission decision is not sufficient to seek for damages before Turkish courts.
E. CONCLUSION
The objective within the scope of this thesis was to put forward what relevance (if any) could be attributed to the competition law decisions of EU bodies in accession countries and what
87 19th Civil Law Chamber of Supreme Court 01.11.1999 and file number 1999/3350 and decision number
1999/6364
88 19th Civil Law Chamber of Supreme Court 29.11.2007 file number 2007/3229 and decision number
2007/10677 (Turk Telecom Case)
89
19th Civil Law Chamber of Supreme Court, 06.11.2006, file number 2006/2809 and decision number 2006/10346
