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Competition Law
Competition in practise is defined as the relationship between enterprises which sell the same type of goods or services in the same period to certain consumer groups. However, the Law on the Protection of the Competition (Rekabetin Korunmasý Hakkýndaki Kanun-hereafter will be referred to as RKHK) defines the competition as “it is a contest between undertakings in markets for goods and services to be able to freely make economic decisions.”
Competition law is a law which aims to achieve economic functionality, establish a free competition system in the goods and service markets and with the aim of protecting this to prevent violations of competition, and with the aim of removing violations of competition consists of regulating, inspecting and prohibiting norms.
The sources of competition law: The Law on the Protection of the Competition (Act no 4054), relating the subjects regulated in this law the bylaws brought out by the Competition Board, the Competition Board’s announcements and the published guides, the Competition Board’s decisions and views.
According to the Competition Law, agreements made between undertakings, decisions of associations of undertakings and competition violations made by concerted practices are accepted as illegal and are deemed to be forbidden. If their object or effect or likely effect create the prevention, distortion or restriction of the competition it is sufficient to accept the competition violations by these ways even though such an intention does not exist.
An undertaking is defined as real and legal entities as well as units which can make independent decisions and are economically as a whole and produce, market and sell goods and services in the market.
Competition contracts may be done in two ways, they may be done as horizontal or they may be done as vertical contracts. Horizontal contracts are the contracts made between enterprises which function in the same goods and services market on the same level, in other words they are the contracts made between enterprises which rival each other. Vertical contracts are the contracts made between enterprises which are present in the same goods and services market whereas they function on different levels.
Just like agreements made between enterprises concerted practices and decisions of undertakings associations are also subject to the RKHK. Along with this competition violations made by concerted practices are subjected to the sanctions of the competition law.
According to the Competition Board’s decisions for an act to be considered as concerted practices:
• There has to be at least two or more enterprises
• There must be conscious parallelism
• These parallel actions should not be able to be explained with economic and rational reasons
• Competition must have been limited
As long as one of these conditions is not present a concerted practices action do not exist.
Types of violation of competition by means of agreements between undertakings, decisions of associations of undertakings and concerted practices:
• The detection of every type of buying or selling conditions, with the components such as; the price of the goods or services, the cost value which creates the price and the profit
• By dividing the goods and services markets sharing or controlling every type of market resource or components
• The control of the amount of the supply and demand of a good or service or for them to be determined outside the market
• Making the rival undertakings activities complicated for them, limiting them or excluding them in the market by actions such as boycott or other behaviour or preventing potential new entrants to the market
• Except exclusive dealing applying different conditions for equal rights, obligations and actions to people who are of equal status
In the articles which regulate the agreements made between undertakings, decisions of undertakings associations and concerted practices which violate competition because a threshold is not shown sometimes small enterprises in some cases do agreements which violate competition but these violations may be so small that the effect on competition is seen as unimportant. In this case these contracts are not subjected to sanctions found in the competition law which are in the frame of the de minimis doctrine.
Exemptions are divided into two as individual exemptions and block exemptions. Block exemptions; when the conditions of exemption are present it is when the Competition Board by making communiqués which they will bring out according to the types of agreements for certain matters allow exemption as a block. Individual exemption is given by the Board when the conditions of exemption are present but it is left out of the frame of block exemption declaration.
On a related undertaking or associations of undertakings application, the Board may give a negative clearance document which shows that in the information at hand an agreement, decision, action or mergers and acquisitions are not contrary to RKHK’s 4,6 and 7th articles.
For one or more undertakings to become dominant in one good or service market over the whole country or in one whole of it by themselves or by making agreements with others or concerted practices by using their powers in an abusive way is against the law and prohibited. (The prohibition of abuse of the dominant position)
The most common abusive cases as follows:
• Obstructing the entry of an undertaking to the commercial activity area directly or indirectly or actions aimed at complicating the rivals activities in the market
• For purchasers which have equal status making a direct or indirect discrimination by forwarding different conditions for the same and equal right, obligation and actions
• Along with a good or service, for another good or service to be bought or for a good or service requested by purchasers which have the status of agent enterprises, bringing limitations for reselling conditions such as for other goods or services to be tied to the condition of exposure or for a good which has been sold to not be sold under a certain price.
• Limiting the production, bargaining or technical advancement at the expense of the consumer
The decisions which the Competition Board will make about competition violations:
• Decision for asking for information and inspecting on the spot
• Decision for preinspection, preinvestigation and opening of an enquiry
• Interim injunction decision
• Negative clearance decision
• Decision to refuse the request for pre investigation and opening of an enquiry
• Decision on not allowing, ending a violation
• Permission decision, conditioned permission decision
• Administrative money penalties
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