Türkiye's settlement rules trade a cartel admission for a lower fine

Türkiye's Competition Board can cut a cartel fine by 10 to 25 per cent for a company that admits the infringement and gives up its right to challenge the fine in court, under the Settlement Regulation the Competition Authority published in July 2021.

Six of the seven wood-panel makers whose fines the Authority announced on 26 October, for coordinating bids in state timber tenders took that route, and the seventh, Yıldız Entegre Ağaç Sanayi ve Ticaret AŞ, did not, the Authority's announcement shows. The case is a working example of a choice that every company under a Turkish cartel investigation faces: how much it gives up by settling, and by when it must decide.

The window and the deadlines

Settlement can begin only after the Board has opened a full investigation, at a party's request or on the Board's own initiative, and the Board may settle with parties that accept the existence and scope of the infringement until the investigation report is notified to them, Article 4 of the Settlement Regulation says. The regulation appeared in the Official Gazette of 15 July 2021, issue 31542, and its first article applies it to investigations under both Article 4 of Law No. 4054, on agreements between undertakings, and Article 6, on abuse of dominance.

Opening talks is not an admission: Article 6 says that starting settlement negotiations does not mean the parties accept the infringement, and a party may withdraw until it submits its settlement text. Once the Board's interim decision sets the terms, the party has a firm deadline of no more than 15 days to send that text, under Article 7, and if the text has missing elements, the Board tells the party, once only, to correct them within seven days, under Article 8.

What a settling company signs

The settlement text must contain an explicit statement that the company accepts the existence and the scope of the infringement, and that it accepts the rate and amount of the maximum fine it faces, Article 8 says. The reduction for settling is between 10 and 25 per cent of the fine, under Article 4. Where a company has also applied for leniency, the two reductions are added together and applied jointly, Article 7 provides.

The price of the discount is the court route. Under Article 4, once a settlement is concluded, the parties to it cannot take the administrative fine or the matters in the settlement text to court. The Board also keeps a way out: before its final decision it may end the settlement process for all or some of the parties, on grounds the same article lists, among them the absence of a common view on the infringement and a risk that evidence will be destroyed.

How the timber tender case used it

In the timber case the Board's settlement decisions are dated 30 April for Kastamonu Entegre Ağaç Sanayi ve Ticaret AŞ and Kronospan Orman Ürünleri Sanayi ve Ticaret AŞ, 14 May for three more producers and 21 May for Vezirköprü Orman Ürünleri ve Kâğıt Sanayi AŞ, according to the announcement as reproduced by Alomaliye. Their six fines add up to about TL 860m.

Yıldız Entegre went through the ordinary procedure, and the Board fined it TL 469,894,576.63 under Article 16(3) of Law No. 4054 on 15 October.

A further reduction can follow at the payment stage. Çamsan Entegre Ağaç Sanayi ve Ticaret AŞ, one of the six, disclosed on 27 August that it planned to pay its TL 57,489,281.12 fine early with the 25 per cent reduction the legislation allows, which brought the payment to TL 43,116,961, Endeks24 reported.

Settlement is distinct from commitments, the other negotiated exit under Turkish competition law, which closes a case when the Board makes a company's undertakings binding, as it did with EssilorLuxottica, set out in our piece on that decision. Commitments cannot be accepted for hard-core cartels such as price fixing between competitors, as our Adkoturk report explains, and in the timber case the Authority's announcement records settlement, not commitments, as the route the six companies took. The ten caterers now under investigation over public meal tenders, reported in our piece of 29 October, have the same choice until their investigation report is notified.