Suggestions For Enhancing The Effectiveness Of Cooperation On CLP Issues At Regional Level: Lessons

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Suggestions For Enhancing The Effectiveness Of
Cooperation On CLP Issues At Regional Level
Lessons From Turkey
International Seminar on Competition Provisions
in RTAs Co-Organized By UNCTAD, Yeditepe
University and IDRC

• Yasar TEKDEMIR
• Director of International Relations
• Turkish Competition Authority
• Istanbul- 01.08.2006

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Content

• Introduction,
• Types of Cooperation on CLP Issues at
  International Level,
• - Soft Cooperation
• - Hard Cooperation
• Experience of the TCA,
• - Experience of Soft Cooperation
• - Experience of Hard Cooperation The
  examination of Seized (Pieced) Coal Market Case
• Suggestions

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1. Introduction

• No attempt to discuss the importance of
  international cooperation on CLP issues,
• Purpose To bring proposals considering the
  Turkish experience,
• The discussion to be on seized (pieced) coal
  market case.

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2. Types of Cooperation

• Soft Cooperation
• Means the cooperation which enables the CAs to
  share information on theoretical works and
  practical experience.
• Takes place in UNCTAD, OECD, ICN, WTO (!).
• Takes place via RTAs (multilateral, regional and
  bilateral).
• ATAs.

• Hard Cooperation
• Means the cooperation which enables CAs to
  cooperate in enforcement of actual cases.
• Requires CAs to exchange for data and information
  about an actual case, to conduct dawn-raids etc.
• Takes place rarely in compare to soft cooperation
  (OECD, RTAs, ATAs etc).
• Leads certain concerns for the requested CAs.

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3. Experience of Turkey

• Experience of Soft Cooperation,
• Experience of Hard Cooperation,

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3.1. Soft Cooperation Experience

• International Organisations
• OECD-Competition Committee Meetings,
• UNCTAD-IGE and Review Conference,
• WTO-WG on Competition Policy,
• ICN-WGs on Cartel, Mergers, Unilateral Conduct,
  etc.
• RTAs
• Customs Union Decision 1/95-recently in parallel
  to negotiation process
• FTAs- Only with respect EFTA,
• ATAs
• Korea and Romania.

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3.2. Hard Cooperation ExperienceThe Seized Coal
Market Case

• Facts of The Case
• Complaints regarding the sharp increases in coal
  prices.
• The preliminary investigations demonstrated that
  the increase in domestic retail prices had
  resulted from the systematic increases in the
  prices of imported coal.
• It was seen that the price increases were
  associated with the price fixing by Krutrade AG,
  Mir Trade AG, the subsidiaries of Glencore
  International AG which are Glencore Istanbul
  Madencilik Ticaret A.S. and Minerkom Mineral ve
  Kati Yakitlar Tic. A.S.
• The investigation started on 3rd of June 2004 .

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3.2. Hard Cooperation ExperienceThe Seized Coal
Market Case

• Facts About the Undertakings
• Mir Trade AG
• Based in Switzerland,
• no office when the investigation initiated,
• but opened an office during the investigation.
• Krutrade AG
• Based in Austria,
• Had office when the investigation initiated,
• Closed office during the investigation.
• Glencore Istanbul and Minerkom Mineral
  (Subsidiaries of Glencore International) Based
  in Turkey

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3.2. Hard Cooperation ExperienceThe Seized Coal
Market Case

• The Final Decision Dated 25.07.2006 (Almost more
  than 2 years later after the opening of
  investigation)
• The evidence against Mir Trade AG was not
  sufficient to conclude that it did infringe the
  Article 4 of competition act,
• Krutrade AG, Glencore Istanbul Madencilik Ticaret
  A.S. ve Minerkom Mineral ve Kati Yakitlar Ticaret
  A.S. infringe Article 4 of the competition act by
  fixing price,
• However, no final decision about Krutrade AG due
  to the fact that investigation report not to
  notified properly and officially to Krutrade AG
• Regarding Glencore Istanbul ve Minerkom Mineral.
  which are in an economic unity, on the basis of 1
  of their turnover in 2003, respectively a fine
  of 20.363,24 YTL and a fine of 823.194,91 YTL,
  are to be imposed on each firm for infringing
  Article 4 of the competition act.

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3.2. Hard Cooperation ExperienceThe Seized Coal
Market Case

• A short evaluation
• Only the companies located in Turkey could be
  imposed a fine. Despite the fact that one of
  undertakings was found guilty, the TCA could not
  impose a fine as the procedure envisaged in the
  competition law was not completed properly.

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3.2.1. The Need for Hard Cooperation

• The need for cooperation in the enforcement of
  competition law

• The need for cooperation in terms of procedure
  (notification of investigation decision and
  investigation report etc.)

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A. The need for cooperation in enforcement

• The TCA felt the need for enforcement cooperation
  with the relevant agencies of the countries where
  these undertakings are located.
• What the TCA needed was basically the provision
  of information and documents which might be a
  proof for price fixing by the investigated
  undertakings.
• Tthe TCA asked the relevant agencies to cooperate
  with the TCA by conducting on-the-spot
  investigation or by other proper means in order
  for the TCA to have access to a sufficient set of
  evidence to support its case.

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A. The need for cooperation in enforcement

• The Legal Grounds for Cooperation Requests
• The Customs Union Decision 1/95 for Krutrade AG
  located in Austria, (rules from Articles 32 to
  43)
• FTA with EFTA for Mir Trade AG located in
  Switzerland (Article 17 on competition policy
  Article 23 on sanctions).

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A. The need for cooperation in enforcement

• The Responds of the Requested Agencies
• For Krutrade AG under Customs Union
• Austria Referred to the European Commission,
• The European Commission Rejected on the basis of
  
• No implementation rules for competition rules of
  the CU 1/95
• Confidentiality,
• No effect in EU market,
• Article 43 is not sufficient,
• For Mir Trade AG
• Switzerlandrejected
• No possibility of enforcing Swiss competition law
  for the case,
• OECD as a better place.

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B. The need for cooperation in Procedural Issues

• The second initiative is the need for
  cooperation in procedural issues such as
  notification of investigation decision,
  notification of investigation reports to the
  undertaking in other countries.
• The key point here is basically to inform the
  investigated undertakings officially and to get
  their defence in order to complete the procedure.
  
• As the right to defence is quite important aspect
  of procedure followed during competition cases,
  the TCA attaches great importance on respecting
  for the right to defence.

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B. The need for cooperation in Procedural Issues

• The Principles Governing the Procedure of the
  Turkish Competition Law
• The deadlines which govern the investigation,
• Access to file,
• The right to defence,
• Impossibility of exploiting any evidence as a
  ground for decision about which the investigated
  party is not informed.
• The Important Stages of Procedure
• the notification of investigation decision in 15
  days following the decision date (to inform the
  undertakings and to allow them the right to
  defence-1st written defence ),
• the notification of investigation report (to
  allow them the right to defence-2nd written
  defence),
• the notification of additional opinion (to allow
  them the right to defence-third written defence),
• the notification about oral hearing.

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B. The need for cooperation in Procedural Issues

• Notification directly to undertakings in Turkey.
• Notification indirectly (via the Ministry of
  Foreign Affairs) to undertakings not in Turkey.
• Result
• For Mir Trade The decision not to be notified,
  the report to be notified to its branch opened
  during the investigation.
• For Krutrade AG The decision to be notified to
  its branch in Turkey, the decision not to be
  notified to its base in Austria.

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B. The need for cooperation in Procedural Issues

• The Reasons for Failure to Notify
• No direct international legal framework for
  competition related issues,
• The Ministry of Foreign Affairs not Accustomed to
  competition related issues.

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B. The need for cooperation in Procedural Issues

• For Mir Trade AG
• while the Turkish Embassy did try to communicate
  the decision to Mir Trade AG, it faced certain
  problems about the address and location of the
  company. As a result, the decision could not be
  notified.
• For Krutrade AG
• The Austrian government did reject to communicate
  the investigation report arguing that there is
  not bilateral or multilateral agreement between
  the two countries which cover competition related
  administrative documents.

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C. Implications of Lack of Cooperation for the
Case

• On the Basis of the Final Decision Text
• The first implication The evidence against Mir
  Trade AG was not sufficient to conclude that it
  did infringe the Article 4 of competition act.
• This implication reminds us the importance of
  cooperation in enforcement.
• The second implication Krutrade AG, Glencore
  Istanbul and Minerkom Mineral infringe Article 4
  of the competition act by fixing price, however,
  no final decision about Krutrade AG due to the
  fact that investigation report not to notified
  properly and officially to Krutrade AG
• This implication reminds us the importance of
  cooperation in procedural issues.

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C. Implications of Lack of Cooperation for the
Case

• On the Basis of the Final Decision Text
• The third implication
• due to failure of notification to Krutrade AG,
  the investigation did last more than two years,
  and unfortunately the case was partly finalized.
• The fourth implication
• A pity fact can easily be seen from the decision
  that while companies located in Turkey are
  imposed fine the companies located in other
  countries are not imposed fine for whatever
  reason.

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4. Conclusion and Suggestions

• Soft Cooperation
• The existing soft cooperation level is quite
  satisfactory (UNCTAD, OECD, ICN, RTAs),
• No suggestion.

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4. Conclusion and Suggestions

• Conclusion
• Increasing Globalisation, Increasing
  Liberalisation, Changing Trade Patterns (use of
  ICT) altogether mean that competition issues also
  become global and international,
• Unless a proper framework for hard cooperation
  (enforcement and procedure) is in place, the life
  for CAs will be more difficult,
• It will be difficult to find evidence
  (cooperation in enforcement),
• In the absence of a proper framework for
  cooperation in procedure, the effect doctrine
  will be meaningful only on paper.
• Even if existing international legal framework is
  to cover competition related procedural issues,
  diplomatic channel is not suitable for
  competition issues,
• Competition policy requires a special framework
  for procedural issues.

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4. Conclusion and Suggestions

• Suggestions
• Hard Cooperation A desperate need for
  cooperation against cross-border competition
  issues
• First Suggestion A solution to be found for
  cooperation in enforcement in actual cases
• RTAs can be designed and the CAs can be more
  active in the design of RTAs for their needs,
• ATAs can be a convenient platform,
• UNCTAD and/or OECD could be a platfrom to design
  rules for that purpose,
• Confidentiality should be dealt with,
• However, it seems to be quite difficult.

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4. Conclusion and Suggestions

• Second Suggestion A solution to be found for
  cooperation in procedural issues
• RTAs can be designed and the CAs can be more
  active in the design of RTAs for their needs,
• ATAs seems to be quite agreeable for procedure
  purposes,
• UNCTAD as a UN institution could be a platfrom to
  design rules for that purpose,
• The framework to be agreed should be free from
  the diplomatic channels for urgency reasons.
• In compare to enforcement, an agreement on
  procedure seems to be more likely.

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Thank You for Your Attention
Contact Info Yasar TEKDEMIR Adress Rekabet
Kurumu (Competition Authority), Bilkent Plaza B3
Blok, Bilkent/ANKARA Tel [phone]
4310 E-mail ytekdemir_at_rekabet.gov.tr