Last week we have witnessed a rarely used procedural mechanism, revision of decision, yielded a positive outcome for ING Bank Turkey in its appeal against a decision of the Turkish Competition Authority ("TCA") in which it was sentenced to approximately EUR 2 million for participation to a cartel with 11 other Turkish banks. The decision which sets a precedent for the scope of "single continuous infringement" and the standard of proof in horizontal cases is remarkable since the Council of State refused to annul the decision of the TCA when it first reviewed the case back in 2015.
What happened?
The whole story begins with the decision of the TCA in 2013 where it found a cartel among 12 banks in Turkey to fix interest rates for deposits, credits and credit cards. The evidences in the file were mostly correspondences among certain banks but there was no evidence that concerns all of the investigated parties at the same time and all of the investigated markets. That said, the TCA concluded that the grand picture drawn by various correspondences among different combinations of investigated banks suggest a single continuous infringement among investigated banks to fix interest rates for deposits, credits and credit cards.
Parties appealed the decision but both the court of first instance and the council of state refused the appeal applications in 2014 and 2015 respectively. After the decision of the Council of State, ING Bank Turkey applied for correction of the decision of the Council of State which is seldom used since correction is requested from the very same court that already decided on the appeal and thus is unlikely to provide a different outcome.
That said, to everyone's surprise, last week, the Council of State revised its decision and annulled the decision of court of first instance and send the file back to the court of first instance for reconsideration.
The reasoning...
In its decision the Council of State provides explanations on the concept of "single and continuous infringement" which was first introduced by the European Commission in its Polypropylene decision dated 1986. In this context, various actions extended over a period of time constitute one single violation if such actions were taken in the framework of a common plan and were aimed at the same economic objective. Therefore according to the Council of State adopting this approach requires identification of the presence of a framework agreement, or a common plan, its scope and limitations and the undertakings involved in such agreement.
However, these framework agreements can be applied in various products and/or markets. Council of State indicates that an undertaking shall be liable for violations conducted in different products and/or markets if there is sufficient evidence proving that the undertaking either knew or was in a position to know the violations in question. In case the undertaking cannot be expected to know about these violations, it can only be liable for violations in which it was actively involved.
After providing this theoretical background the Council of State concludes that the TCA failed to show beyond a reasonable doubt that all 12 banks have acted under a general framework agreement or a common plan to coordinate their behaviors in deposits, credits and credit cards. The Council of States states that the evidence in the file proves certain violations have been committed between different groups of undertakings within these 12 banks but it falls short of proving a link or a coordinative effort between different violations and thus it does not prove that all 12 banks were involved in a single continuous infringement and they need to be liable for all infringements in deposits, credits and credit cards. Finally, the court concludes that a separate evaluation needs to be made for each bank for each of deposits, credits and credit cards markets.
Significance of the Decision
This decision sets an important precedent in Turkey competition law enforcement about the scope of single continuous infringement. More importantly, it reinforces the standard of proof in horizontal cases as "beyond a reasonable doubt" and signals that in horizontal cases the courts will scrutinize the assessment of the TCA with regards to standard of proof. After this decision, TCA will be under more pressure to satisfy the burden of proof in horizontal cases.
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