A. Introduction

This article aims to observe and analyse the approach of the competition authorities in Turkey and the European Union (“EU”) with regarding structural and behavioural commitments. First and foremost, this article will express the common characteristics and definitions of commitments within the competition law. Secondly, the effects and implementations of the remedies will be stated and then, some decisions of Competition Authorities from Turkey and EU will be expressed.

It is important that commitments or remedies have not been implemented to the cases or competition investigation at the scope of competition law. The main reason of this situation is that there are not adequate surveillance mechanisms in order to scrutiny of whole process and that’s why the effectiveness of the commitments does not reach to the optimum degree.

The core document of the commitment procedure is named as 1/2003 Council Regulation, the previous document was numbered 17/62 Regulation. Pursuant to 17/62 regulation term, when the parties did not abide commitments which were given to the others, the investigation begun from starting point and that implementation were only enforcement. On the contrary, the various and clear enforcements were issued on 1/2003 Council Regulation in order to provide the homogeneity and certainty of the investigation.

B. Competition Authority and Commitments in Turkey and European Union

Competition Authority can be defined as an organization that makes sure that there is fair competition between businesses. Competition authorities which have an obligation to enforce competition laws are charged with taking the necessary measures and implementing the necessary regulations in order to prevent practices and operations of undertakings which distort efficient competitive conditions, with a view to scale up social welfare by safeguarding the freedom of enterprise and ensuring efficiency in resource allocation. While the Competition Authority is called as a “Turkish Competition Authority” in Turkey, European Commission for Competition was assigned in order to perform competition rules to the market.

Pursuant to Article 9 of Council Regulation 1/2003 provides the Commission with the possibility to conclude cases by means of a “commitment decision”, in which the commitments offered by the undertaking are rendered binding on it. Such a decision concludes that there are no longer any grounds for action by the Commission. One of the main aim of Council Regulation 1/2003 through using commitments is to provide homogeneity within the process.

The Article 9 states that “(1) Where the Commission intends to adopt a decision requiring that an infringement be brought to an end and the undertakings concerned offer commitments to meet the concerns expressed to them by the Commission in its preliminary assessment, the Commission may by decision make those commitments binding on the undertakings. Such a decision may be adopted for a specified period and shall conclude that there are no longer grounds for action by the Commission. (2) the Commission may, upon request or on its own initiative, reopen the proceedings; (a) where there has been a material change in any of the facts on which the decision was based;(b) where the undertakings concerned act contrary to their commitments; or (c) where the decision was based on incomplete, incorrect or misleading information provided by the parties.”

C. Behavioural and Structural Commitments

According to Rigaud, structural remedies did not have a general definition in the literature, and the discussion of structural remedies has typically focused only on a subset of cases where remedies could be imposed, namely in merger control. While structural remedies include absent monitoring and enforcement, behavioural remedies, unlike structural remedies, have to contain permanent monitoring and enforcement. Nevertheless, the substantive aim of the both types of remedies is to control and limit the anticompetitive effects of the contemplated transaction and to protect the competitive structure of the market in order to maintain the effectiveness.

While behavioural remedies relate to the modification and arrangement of the transaction parties’ future market behaviours, structural remedies involve the divesture of a certain asset to a third party (another player already active in the market or a new entrant).

Pursuant to Ezrachi, structural remedies cover behavioural remedies. The permanent nature of the structural remedy and its timely implementation are commonly regarded as apt to ensuring the conditions for the emergence of a new competitive entity or for strengthening existing competitors. Behavioural remedies are considered more burdensome and less effective in addressing the competitive detriment.

At the scope of European Union Regulations, behavioural remedies have been issued within 20.01.2004 Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings and Commission Regulation (EC) No.802/2004. The certified authority is European Commission (EC). Pursuant to Turkish Law, the merger control and commitment regime are regulated under the Law on the protection of Competition, dated December 13, 1994 and Notice 2014/4.

D. The Process for Implementation of Commitments

i. Initiation of Commitment Discussions

a) State of Play Meeting

A State of Play meeting will be offered to parties which signal an interest in discussing commitments. The State of Play meeting is without prejudice to the decision of the Commissioner for Competition whether to proceed along the commitment decision track. The Commission’s competition concerns are only presented orally to the parties, the Commission’s presentation should be well-structured and allow the parties to understand exactly the theory of harm and the underlying factual evidence. The parties should also be given the opportunity to ask questions regarding the competition concern.

b) Submission of an informal commitments offer: After being confronted with the Commission’s concerns in the State of Play meeting, decide to offer commitments, they need to convince the Commission that this offer is serious and credible.

ii. Preparation of Preliminary Assessment

Article 9 of Council Regulation 1/2003 provides that the Commission must have informed the undertakings of the competition concerns by a document which is called Preliminary Assessment. The Preliminary Assessment is a Commission act adopted by the Competition Commissioner by way of empowerment. The length of a Preliminary Assessment may vary from case to case.

iii. Approval of the Preliminary Assessment

The Commissioner needs to give his/ her approval to adopt the Preliminary Assessment and to engage in formal commitment discussions with the parties. If proceedings have not been initiated before, the adoption of the Preliminary Assessment should be combined with the initiation of the proceedings.

After receiving the Preliminary Assessment, the undertaking under investigation has no right to request a hearing pursuant to Article 12.

iv. Submission of a Commitment Text for the Market Test

a) After receiving the Preliminary Assessment, the undertaking under investigation will have normally one month to react and to submit a text of a commitment proposal that can be market tested.

b) the commitments should address the competition concerns identified. Commitments which are not related to the concerns or do not meet them will not be accepted by the Commission. The parties can offer commitments of a behavioural (e.g. a supply obligation) or structural nature (e.g Antitrust Manual of Procedures divestiture of a part of a company). The final commitments should be signed by the undertaking concerned

c) Duration of the commitments – review clause: the duration of commitments may be limited in time. Article 9 of Council Regulation 1/2003 refers to a “specified period”. Commitments should provide that a lasting improvement of the market structure is achieved within a foreseeable timeframe. This can vary significantly from market to market, depending on the reactivity of the markets or the investments needed for certain improvements.

v. Market Test

The Commission is obliged to publish a concise summary of the case and the main content of the commitment proposal and give third parties a chance to submit their observations before it can adopt an Article 9 decision. This is the so-called “market test.” in the market test the Commission needs to invite interested third parties to submit their observations within a fixed time-limit which may not be less than one month.

vi. Adoption of the Decision

The case team drafts a commitment decision on the basis of the Preliminary Assessment. The commitment decision should contain a summary of the facts of the case and the Commission’s legal assessment. In particular, the Commission needs to explain in its decision that it had identified competition concerns without going so far as to find an infringement.

vii. Adoption Process

The file should be closed as soon as the Decision has been sent out for the parties. See the relevant Module on Administrative closure of the file. Commitment decisions need to be published according to Article 30 (1) of Regulation 1/2003. The publication shall state the names of the parties and the main content of the decision, including any penalties imposed. It shall have regard to the legitimate interest of undertakings in the protection of their business secrets.

viii. Implementation of Commitments

The successful implementation of the commitment after the adoption of the decision is crucial for the ultimate success of the Commission’s intervention. For this reason, careful monitoring of the implementation process is essential.

E. Advantages and Disadvantages of the Commitments

Advantages of the Commitments

From a company’s perspective, faster proceedings and the absence of a finding of an infringement may be important reasons to offer commitments (Case C-441/07 P Commission v Alrosa, paragraph 48). The remedies can be discussed and are not imposed and that the procedure can give faster legal certainty may be taken into account by companies.

Disadvantages of the Commitments

Commitments may be withdrawn until the adoption of the commitment decision and since a market test may show that the commitments are not appropriate, there is always a risk that antitrust investigations are significantly delayed by (unsuccessful) commitment discussions. It is therefore crucial to ascertain the willingness of the parties to settle before engaging into an Article 9 procedure and that the commitments appear sufficiently likely to resolve the identified competition problems (this is why a Preliminary Assessment is only submitted after first commitment discussions).

Consequently, the Commission does not apply the Article 9 procedure to secret cartels that fall under the Notice on immunity from fines and reduction of fines in cartel cases.

F. Example Decisions from European Union and Turkey

i. Airbus / Safran / JV (2014)

Safran and Airbus signed a joint venture (%50 – %50) in order to transfer some technological and systematic programs for space launchers. It is noteworthy that Safran is supplier of Airbus’s launchers before the joint venture. This joint venture leads some competition concerns which can be stated as exclusion and a disclosure of competitors’ private information.

Accepted Remedies:

– the joint venture will not include some systems of Safran.

– A procurement agreement will be signed with the existing customers of Safran for some machines which are stated on the agreement.

ii. Chiquita / Fyffes (2014)

Both of the firms are producer of banana. While the head of the Chiquita located in United States of America, the Fyffes is located in Ireland. The main notion of this case is merging of the firms.

Accepted Remedies:

-The firms will not sign an agreement which contains “exclusivity for shipping” provision after 10 years from the closure of shipping.

-The cancellation of exclusivity provision which has been performed to the Maersk and the other shipping firms in order to rescue them from the restrictions of the exclusivity.

iii. Sabiha Gökçen (SGH) / THY Opet (2014):

The operating right of the fuel storage at Sabiha Gokcen Airport was assigned to the THY Opet for 5 (five) years term. THY Opet has a wide market share; there are no powerful competitors against THY Opet and THY Opet has a dominant position within the jet fuel market.

Accepted Remedies:

-Provided that THY Opet would like to give storage services to the third parties, the firm has to acquire essential licences for this process.

-To accept the offers of third parties for storage service.

-THY Opet cannot make discrimination among enterprises.

CONCLUSION

Pursuant to European Union and Turkey law system, structural commitments are more preferable than behavioural commitment because the structural remedies are direct and can be use just one time. The Competition Authorities especially perform behavioural remedies for exceptional situations. The control of behavioural remedies are more complicated than the structural remedies, but the negative effects of the behavioural remedies can be mitigated or abolished through working with independent professionals. Nevertheless, it is noteworthy that the competition commissions tend to apply behavioural in order to decrease competitive concerns.

REFERENCES

  • Ariel EZRACHI, “Under (and Over) Prescribing of Behavioural Remedies”
  • Frank P. MAIER – Rigaud, “Behavioural versus Structural Remedies in EU Competition Law”
  • Hatice ODABAŞ BUBA, “AB Rekabet Hukukunda Rekabet İhlallerine İlişkin Taahhüt Yöntemi”
  • Ioannis Lianos (2013), “Competition Law Remedies in Europe”
  • Jones, A. and B.E. Sufrin, “EU Competition Law: Text, Cases and Materials”
  • Official Journal of the European Commission, Council Regulation (EC) No 1/2003
  • OECD Policy Roundtables (2011), “Remedies in Merger Cases”