Turkish Constitutional Court Decision on the Settlement Procedure in Competition Law

The Turkish Constitutional Court (“AYM”) recently ruled that provision under the Law No. 4054 on the Protection of Competition (“Turkish Competition Law”) governing the waiver from judicial review of settlement decisions of the Turkish Competition Authority (“TCA”) is not contrary to the Constitution, and has unanimously decided to DISMISS the application for annulment referred to AYM by Ankara 9^th Administrative Court. Such waiver from judicial review has been a subject to numerous debates both in practice and in administrative courts based on constitutional protection on the right to legal remedies.

Legal Framework

Article 43 of the Turkish Competition Law regulates commitment and settlement procedures as alternative resolution mechanisms in preliminary inquiry and investigation processes conducted with respect to competition law infringements.

In this regard, pursuant to the settlement procedure, the TCA may, upon the request of the parties concerned or ex officio, initiate the settlement procedure after the commencement of an investigation by taking into account the procedural benefits arising from the expeditious conclusion of the investigation process and the differences of opinion regarding the existence or scope of the infringement. The Board may settle with undertakings or associations of undertakings against whom an investigation has been initiated and who accept the existence and scope of the infringement until the official service of the investigation report (corresponding to the statement of objections under the EU law).

The challenged legislative provision stipulates that, in the event the process is concluded by settlement, the administrative fine and the matters set forth in the settlement agreement may not be challenged before the administrative courts by the parties to the settlement even in cases where the TCA finds no infringement at the end of the investigation.

Grounds for Objection

In the preliminary ruling application of Ankara 9^th Administrative Court, it was argued that, the mandatory waiver from judicial review against the administrative fine and the issues set forth in the settlement agreement may unconstitutionally restrict the right of access to court of the settling party due to the fact that the allegation of a competition infringement constitutes an administrative act of a criminal nature. Therefore, according to the applicant court, although the settlement mechanism is to be applied by the will of the parties, the party to the settlement agreement may accept the settlement in order to be immediately relieved from the allegations, the pressure of investigation, and its legal burden by taking into account the potential commercial damages. Accordingly, it was argued that the provision in question is contrary to Article 2 of the Constitution governing the rule of law, Article 13 governing the restriction of fundamental rights and freedoms, Article 36 governing the right to legal remedies, and Article 125 governing the right to judicial review of administrative acts and actions.

Assessment of AYM

AYM assessed the challenged provision within the framework of the general regime concerning the restriction of fundamental rights and freedoms regulated under Article 13 of the Constitution and the freedom to seek for legal remedies and the right of access to court guaranteed under Article 36 of the Constitution. Accordingly;

Legality: The AYM stated that the mere formal existence of a statutory regulation restricting the right of access to court is not sufficient. The rules restricting the right of access to the court must be certain, accessible, and foreseeable in a manner that does not allow arbitrariness. In this framework, it was concluded that the administrative fine subject to settlement is proportionally limited in relation to the annual gross revenue; the type and nature of the allegations are duly notified to the parties concerned; and the fact that the settlement agreements and the TCA’s settlement decision cannot be challenged before the administrative courts are foreseeable.

Legitimacy: AYM recalled that, although Article 36 of the Constitution does not prescribe any ground for restriction regarding the right of access to court, in accordance with its settled case law, certain inherent limitations arising from the nature of the right and freedom do exist. It was determined that the provision pursues a legitimate aim, noting that alternative dispute resolution methods such as settlement, arbitration, and mediation serve the protection of public resources, the swift and definitive conclusion of competition investigations, and the reduction of the courts’ workload.

Proportionality: AYM assessed the principle of proportionality within the framework of the sub-principles of adequacy, necessity, and proportionality:

• Adequacy: It was assessed that the provision governing the mandatory waiver from judicial review against the TCA’s settlement decisions constitutes a suitable means insofar as it contributes to the resolution of proceedings concerning conducts infringing competition law rules with fewer resources and more expeditiously, and to alleviating the workload of the courts.
• Necessity: It was stated that it is possible to envisage restrictions resulting in a waiver of the right of access to court with respect to certain acts and actions of the administration based on settlement, but that the least restrictive means to the said right must be preferred in order to achieve the public benefit to be obtained through such restriction. In this respect, it was concluded that the provision is necessary for achieving the said aim.
• Proportionality: By taking into account that the settlement process commences after the initiation of investigation, AYM concluded that the parties are in a position to have knowledge on the conducts for which they are being investigated and that they will have no right to seek for legal remedies. Further, AYM took into consideration that settlement mechanism is not mandatory for the investigated parties as they can always prefer to defend their position during the investigation and furthermore that a reduction of up to twenty-five percent may be applied to the administrative fine in case of settlement and that this reduction does not preclude the additional reduction granted for cash payment of the administrative monetary fine. Therefore, AYM found that the provision does not impose an excessive burden on individuals and does not constitute a disproportionate interference with the right of access to court.

AYM further emphasized that neither Article 36 governing the freedom to claim rights nor any other article of the Constitution contains a provision expressly prohibiting the waiver of the right of access to court; that for the validity of the waiver, the intention to waive must be explicit, its consequences must be reasonably foreseeable for the individual, and the minimum guarantees relating to the right to a fair trial must be ensured; and that there must be no overriding public interest that would render the waiver illegitimate. AYM considered that in the imposition of administrative fines on individuals as a result of settlement, the voluntary consent of the individuals is present.

Conclusion

AYM has ruled, for the reasons set forth above, that the provision of the Competition Law, governing the waiver of the right to bring an action against a settlement decision, is not contrary to the Constitution.