“De Minimis” Principle in Competition Law

Whereas, prepared in accordance with the second paragraph of Article 41 of the Competition Law, the Competition Authority published the Communiqué on Agreements, Concerted Practices, and Decisions of Associations of Undertakings that Do Not Appreciably Restrict Competition numbered 2021/3 (the “Communiqué”) on the date of 18 February 2021. The Communiqué was published in the Official Gazette dated 16 March 2021 numbered 31425 and entered into force as of its publication date.

The aim of the Communiqué is to introduce the clear rules of the "de minimis" mechanism into Competition Law.

What Does the Rule Of “De Minimis” Mean?
The term “de minimis” literally means that “the law does not care for small things”. This is a legal principle which allows some matters that has insufficient importance to be exempted from a rule or requirement. From the Competition Law perspective, “de minimis” may be defined as some agreements limiting competition which would be subject to examination under normal circumstances but are not taken into account in the application of Competition Law rules, since their effects on the market are insignificant.

It is crucial to state that, “de minimis” does not eliminate the illegality, it only indicates that the relevant agreement will not be subject to investigation by the competition authorities.

Pursuant to the Turkish Competition Legislation, the agreements between the undertakings which would normally be considered as a restriction of competition will be exempted if:

a) horizontal agreements among competitors where the combined market share of the undertakings does not exceed 10% in any affected market and,

b) vertical agreements among non-competitors (i.e., undertakings at different stages of the supply chain) where the market share of each undertaking does not exceed 15%.

Exceeding the thresholds listed above do not automatically constitute a “restriction of competition”, as this is determined on a case-by-case basis. In the meantime, there is no guarantee that the agreements that fall within the relevant thresholds will be exempted from investigation. The Competition Authority has the right to investigate all agreements if it deems necessary.

It is possible to conclude that, there are 2 (two) circumstances of “de minimis” application:

1) Agreements at the above market share thresholds take advantage from this rule.

2) “De minimis” principle will not be applied to agreements containing evident and severe violations, even if the market share thresholds are not exceeded.

Another important outcome of the Communiqué is the definition of evident and severe violations. Accordingly, evident and severe violations are defined as:

• Horizontal evident and severe violations: Pricing among competing undertakings, restricting the supply of customers, providers, regions or sharing a trade channel or setting quotas, false deals in tenders, prices to be planned and implemented in the future, sharing competitive sensitive information such as production or sales volume.
• Vertical evident and severe violations: Determination of buyer's fixed or minimum selling price relationship between undertakings operating at different levels of the production or distribution chain.

How Are Agreements and Decisions That Do Not Restrict Competition Interpreted?
Relevant market share thresholds were mentioned above. In accordance with the Communiqué, except for evident and severe violations, the board may in some cases choose not to initiate an investigation. Whereas;

• The aggregate market share of competing or non-competing undertakings is below 5%, in the case of parallel networks composed by vertical restrictions covering more than 50% of the affected market.
• In addition to the above, if the shares of the parties of the agreement or the members of the association of undertakings in the relevant markets affected by the agreement or decision do not exceed the above-mentioned thresholds by more than two percent (2%) during two consecutive calendar years during the agreement or decision period, the competition in the market is recorded. It is regulated that it will not restrict the value.

Exceeding the above thresholds does not mean that the agreement or decision in question directly restricts or appreciably restricts competition in the market.

It is crucial to state that, the Board may not conduct an investigation into the agreements and decisions do not appreciably restrict competition or in cases where market shares cannot be fully determined, it may conclude the investigation if it is understood that the total market shares do not exceed the relevant thresholds.

The English version of the Communiqué may be accessed from here.

Nur Duygu Bozkurt Kadirhan, Senior Associate
Doruk Köklü, Trainee Lawyer