Availability of private enforcement regarding competition law infringements and jurisdiction

Scope for civil claims in Turkey

Under the International Private and Procedure Law No. 5718, claims regarding infringement of competition law are subject to the law of the state in which the market directly affected by the infringement is located. Therefore, all infringements directly affecting the Turkish market are subject to Turkish law; and even if infringements originate from a third country, claims can be brought against undertakings from other jurisdictions under Turkish law and in Turkish courts, provided the infringement directly affects Turkey.

The Act on the Protection of Competition No. 4054 (the “Competition Act”) states that anyone who prevents, distorts or restricts competition via practices, decisions, contracts or agreements contrary to the Competition Act, or abuses its dominant position in a particular market for goods or services, must compensate for any damages suffered by other persons. Under the Competition Act, persons engaging in restrictive arrangements or committing abuses of a dominant position are those that qualify as “undertakings,” a term defined in the Competition Act as “natural and legal persons who produce, market and sell goods or services in a market, as well as specific units which have the ability to take independent decisions and which constitute an economic whole (i.e., association of undertakings).” Claimants can be anyone who suffers losses from the actions of undertakings infringing the Competition Act. Therefore, consumers and competing undertakings can claim damages for the losses they have suffered.

In essence, private claims regarding competition law infringements are subject to the provisions set out in the Code of Obligations No. 6098, and to the provisions regulating claims regarding tortious acts. Procedural rules set out in the Civil Procedure Law No. 6100 will apply to the private enforcement of competition law. There are also several provisions of the Competition Act itself that specifically set out terms and conditions applicable for private enforcement of competition law infringements. These provisions are explained under the questions below.

Finally, Court of Appeals precedents require claimants to file a complaint to the Competition Board before filing a civil lawsuit for the damages, and civil courts are also required to await the Competition Board’s decision regarding the competition law infringement before they can render their decision in the civil lawsuit.

Applicable limitation periods

The limitation periods for civil lawsuits filed for damages regarding competition law infringements are subject to the statute of limitations applicable to tort claims regulated under the Code of Obligations. Actions should be brought within two years of the claimant knowing of the tortious act, but must be brought within 10 years of the tortious act.

Appeals

First instance civil court decisions can be appealed to the Court of Appeals under the same provisions applicable for any other civil lawsuit filed for a tortious act.

First instance court decisions can be appealed on procedural law and substantive law grounds. Lack of jurisdiction of the first instance court and the existence of a judgment of a different court on the same dispute can be given as examples of appeals that can be made on procedural law grounds. The reasons for appeal because of substantive law issues include, most importantly, incorrect application of the law and mistakes made in the legal determination of the facts of the case (e.g., erroneously determining a lawful action as unlawful and, as a result, accepting a tort claim). The Court of Appeals is also empowered to evaluate evidence and overturn the first instance court decision if it finds that the facts are incorrectly evaluated in light of the evidence, or that the evidence itself is incorrectly evaluated. The appeal procedure can be relatively long in Turkey, and it can take up to one to two years depending on the specific characteristics of the case.

Finally, regional courts of justice are expected to be established under the Civil Procedure Law No. 6100, which came into force on October 1, 2011. These regional courts of justice will serve as the first-tier appeal courts for first instance court judgments. Once these are established, the Court of Appeals will be the second-tier appeal court. Coinciding with these changes, appeal procedures and rules will be changed, and some of the duties and powers of the Court of Appeals will be assigned to the regional courts of justice.

Availability of class actions for infringement of competition law and/or damages available in Turkey

In general, there is no provision in Turkish law that regulates class actions. Some laws entitle certain groups of people to file lawsuits. The Law on the Protection of Consumers No. 4077 allows consumers’ associations to file lawsuits for infringements regarding the consumer protection law. The Competition Act, however, has no provision that entitles a specific group of people (e.g., consumers’ associations) to file civil lawsuits regarding competition law infringements.

The Civil Procedure Law No. 6100 introduced a new provision that, under certain circumstances and conditions, allows third party legal entities such as associations to file lawsuits, on behalf of themselves, but for protecting the interests of their members and associates. These lawsuits can be commenced only to remedy the illegality, which is the subject matter of the lawsuit, or to prevent the imminent violation of rights. Therefore, associations or other legal entities cannot file this type of lawsuit to claim compensation for damages suffered by their members or associates.

In Turkish civil procedure law, it is also possible to voluntarily bundle individual claims by way of assignment. In these cases, the claims of the different claimants will still continue to exist as individual claims if such claims depend on common factual circumstances. In the event these individual claims are bundled, such claims can be litigated together. The courts can also request the mandatory bundling of individual claims if a specific right arising from substantive law is exercised by more than one claimant.

Conduct of proceedings and costs

Burden of proof

This is a tort claim, which has the same rules governing civil tort litigations. There are, however, certain provisions in the Competition Act that provide exceptions to the general rules for civil litigation. In civil litigation, claimants bear the burden of proof for all relevant facts of the case and, in particular, claimants must prove that all mandatory elements of a tortious act existed in any given case. In proving the existence of these mandatory elements, claimants must establish that there exists an unlawful action by the defendant, damage, causation between the unlawful action and the damage, and a default by the defendant while acting unlawfully.

When establishing if there is an unlawful action by the defendant and a default by the defendant while acting unlawfully, claimants rely on the decisions of the Competition Board. A Competition Board decision is a prerequisite for filing an action in civil courts under the precedents of the Court of Appeals. Civil courts are not bound by the decisions of the Competition Board. These decisions, however, have influence on civil courts and it is likely that civil courts will rely on Competition Board findings while evaluating their case. The legal status of Competition Board decisions is further strengthened in the draft Competition Act, which has been circulated to the public and is in the consultation phase. In the draft Competition Act, civil courts can refer to the Competition Board as an expert designated by the law if there is a legal action whereby an analysis should be carried out to identify whether the Competition Act was infringed.

Another mandatory element that claimants must prove in civil litigation is the causation between the tortious act and the damage suffered. Although this is also the case for the private enforcement of competition law, the Competition Act provides a legal presumption, which reverses the burden of proof in favor of claimants in certain events. Defendants will bear the burden of proof if the claimants submit evidence giving the impression there is an agreement restricting competition or a distortion of competition in the market, such as evidence demonstrating that markets are partitioned, a stability has been observed in market prices for a long period, or prices increase within close intervals by undertakings operating in the market.

In addition, claimants, as a general rule, must also prove they suffered damages because of the tortious act and the exact damage they suffered. If the clamant cannot establish the exact amount, courts can estimate the damage provided the claimant submits sufficient evidence for a reasonable estimation (see also section 13 regarding the quantification of damages).

Joint and several liability of cartel participants

Under the Competition Act, undertakings that have jointly caused a particular damage will be jointly liable to claimants for that damage. Therefore, for example, one cartelist can be sued for all damages caused by all the cartel participants. The cartelist can then seek a contribution towards the damages by way of recourse or settlement with the co-conspirators.

Documents and evidence claimants can use (for example, investigation evidence) and legal privilege

The Competition Act states specifically that claimants can prove the existence of agreements, decisions and practices restricting competition by all types of evidence. In accordance with the Civil Procedure Law No. 6100, holders of certain types of evidentiary documents may be held responsible by the court to submit the documents to the court to the extent these documents pertain to the case.

Regarding legal privilege, there are no specific laws in Turkey. However, it is accepted that the documents exchanged between attorneys and clients, which are related to their professional relationship, would benefit from legal privilege.

Pre-action disclosure

Unlike Anglo-Saxon legal systems, Turkish law has no fully fledged pre-action disclosure system. There are, however, some provisions of the Civil Procedure Law that provide for certain pre-action disclosure and discovery opportunities within the scope of perpetuation of evidence. These provisions aim to facilitate the collection and preservation of some evidence prior to the commencement of the action. For this purpose, the courts may decide to obtain evidence from parties who have allegedly violated the law, to have expert opinions, and to hear witnesses. These can be ruled by the courts only if evidence is in imminent danger of being destroyed or it would not be submitted to courts unless these actions are taken in the pre-action stage.

Other than the above, if the case is not pending in a court, a party can only obtain information based on specific information rights, such as those arising in connection with a contractual right or with its status as a shareholder of the infringing party.

Average length of time from issue of claim to judgment in Turkey

In essence, private enforcements regarding competition law infringements in Turkish law qualify as tort litigations and have the same procedural rules. In Turkey, civil lawsuits take around one to three years.

Due to the characteristics and complexities of competition litigation, however, and in particular the expert economic analysis that may be required for relatively complex cases, and the possibility of further difficulties that may arise in proving the actual damage the claimant suffered, these lawsuits may take longer to become finalized than other tort lawsuits would.

Another factor that prolongs the time for judgments is, as explained above, the requirement to file a complaint to the Competition Board before filing a civil lawsuit, and to wait for the Competition Board’s decision.

Average cost from issue of claim to judgment in Turkey

In essence, private enforcements regarding competition law infringements in Turkish law qualify as tort litigations and have the same procedural rules. The defeated party must bear all costs arising from trial, including the court costs and attorney fees. It should be noted that there is a tariff setting a cap on the attorney fees, which is annually issued by the Union of Turkish Bar Associations, and the defeated parties are not responsible to cover any attorney fees above the tariff.

According to the latest World Bank research, court costs, attorney fees, enforcement costs, in average, make up around 25-30% of the claims; and court costs and attorney fees make up around 18% of the claims.

Third-party funding/alternative funding

Under Turkish civil procedure law, only those people whose interests are violated can file an action to claim a remedy for the violated interest. Third parties may be allowed in a few circumstances that are specifically provided by the law, to file an action regarding violation of an interest belonging to a third party. Since it is not specifically provided in any law, violating interests arising from competition law does not entitle an unrelated party to file an action instead of the person whose interests are violated. However, claimants can receive funding from third parties if the third parties do not participate in the lawsuit as claimants (see also section 4 above).

Alternative methods of dispute resolution

Under Turkish law, arbitration can be used to resolve disputes if the subject matter of a dispute is eligible for arbitration, there is a legally valid arbitration agreement between the parties, and the legal relationship under which the dispute arises is determinable. The subject matter of the dispute’s eligibility for arbitration is one of the most important conditions in determining whether competition law infringements can be subject to arbitration. Before, it was generally not accepted that disputes arising from legal areas such as intellectual property and competition could be eligible for arbitration. Lately, however, there is an inclination towards accepting that disputes relating to private enforcement of competition law would be eligible. Also, the fact that private competition litigation is, in general, based on the same rules governing tort litigation, and tort claims can be eligible for arbitration, further strengthens the argument that civil law consequences of competition disputes would be eligible for arbitration.

Relief

Availability of damages and quantification

Under the Competition Act, in private enforcement regarding competition law infringements, claimants can claim as damage the difference between the actual loss they incurred because of the infringement and the loss they would have incurred if competition law had not been infringed. In quantifying the damage, all profits the claimants expected to gain should also be calculated by considering the balance sheets of the preceding years. Accordingly, it is generally considered that the type of damage, which is suffered as a result of competition law infringements, should be defined as loss of profit.

Despite the above, the Competition Act provides no method for quantification of damages. It is expected these methods will develop through case law. Since there have been no published court decisions whereby damages suffered as a result of competition law infringement are quantified, it is not quite possible to envisage how the courts’ approach will develop in this matter. The methods will be subject to the same rules applicable for civil tort litigations as explained above.

Punitive and exemplary damages

The Competition Act provides a treble damages remedy for claimants. If a person has incurred damages because of an agreement, a decision of undertakings or gross negligence of an undertaking, the court can, upon the request of the claimant, award three times the loss incurred by the claimant as compensation.

Availability of interim or final injunctions regarding an alleged competition law infringement

Civil procedure rules are governed by the Civil Procedure Law No. 6100, which provides for several interim remedies, including injunctions, perpetuation of evidence and charging orders, all of which may be granted by the courts depending on the facts of the case. The courts can grant interim injunctions if acquisition of a right, which is the subject matter of the dispute, becomes difficult or impossible and/or there is a risk that would result in substantial damages unless an interim injunction is granted. The courts can grant any type of injunction to remove the risks or prevent the damages.

The claimant asking the court for an interim injunction must provide a security for any possible damage that may be caused to the defendant because of the injunction. However, if the claim is made on the basis of an official document, courts cannot require the claimants to provide security. It is likely the courts would consider any Competition Board decision an official document. Also considering that a Competition Board decision is a prerequisite for any civil law claim under Turkish case law, in cases of competition litigation, courts cannot require claimants to provide security.

Emerging Trends

There is a new draft law expected to repeal and replace the Competition Act currently in force. This draft law has been circulated to the public and the consultation process is continuing. Certain changes are proposed under this draft law regarding competition litigation which aim to facilitate competition litigation in Turkey.

For the time being, there are no published case decisions on competition litigation and it is an area yet to develop. However, there is an increasing amount of interest in competition litigation, supported by several academic and professional articles recently published on this topic.