Addressing the Finalization of the Competition Board Decisions as Preliminary Issue in Compensation Lawsuits
Introduction
Article 57 and Article 58 of Law on the Protection of Competition numbered 4054 (“Law”) permits those who suffered from competition violations to demand compensation for damages in civil courts. In this context, the judge may rule upon compensation that is three times the material damage incurred, or the profit gained, or was likely to be gained by those who caused the damage.
In compensation lawsuits filed on the basis of the Law, as generally accepted, the liability of unfair acts is taken into consideration. Accordingly, proof of the wrongful act, the damage, the causal link, and the fault, pursuant to Article 49 of Turkish Code of Obligations numbered 6098, is sought. Henceforth, the approach of the trial court to the “wrongful act” element is of importance. In most of the cases,[1] the Competition Board’s (“Board”) decisions are awaited for the determination of the wrongful act element; in other words, there is an inclination towards considering the final Board decision as a preliminary issue within the context of[2] Article 165 of Law on the Civil Procedures Law numbered 6100. Therefore, it is possible to claim that the widespread practice adopted by the courts is to seek the Board’s determination in that the Law has been violated in order to rule upon compensation for the damages arising from the restriction of competition. However, there are also exceptional court decisions in which the Board’s decision has been considered as a cause of action,[3] or a preliminary question, or the indication has been made that there is no need to wait.[4] Accordingly, it is not possible to reach a definitive conclusion about the effect of the Board’s decision regarding the subject matter violation in compensation lawsuits.
That being said, the judgment of the 13th Chamber of the Court of Cassation dated 25.09.2019 and numbered 2019/1422 E. and 2019/8836 K., which is a decision of reversal for the sake of law, constitutes an important development in this field. This article will firstly deal with the Board’s decision that is the subject of the relevant judgment of reversal for the sake of law, and then with the Court of Cassation’s judgment and its consequences.
12 Banks Decision
The Board, with its decision[5] in 2013, commonly known as the “12 banks decision,” investigated allegations regarding competition violations in the credit and credit card markets, and imposed high administrative monetary fines on Turkey’s leading banks, by concluding that Article 4 of the Law had been violated. Moreover, in addition to the fines imposed by the Board, the investigated banks faced many compensation lawsuits based on the Board’s decision.
However, the decision was brought before administrative jurisdiction[6] by the banks and, in 2019, six years after the decision, it was overturned by the Council of State during the revision of the decision. The first instance court that had declined the annulment claim rendered a decision of persistence after the Council of State’s revision decision, and the judicial process is still ongoing. It is not possible to foresee how this process will conclude at this stage, as the Board’s decision has not yet been finalized.
At this point, the impact of the Board’s decision (which has not yet been rendered) upon the compensation lawsuits that rely on this decision is important. In the lawsuits previously filed that are based on this decision, some courts ruled for compensation without awaiting the outcome of the ongoing judicial process within the administrative jurisdiction. However, six years later, the reversal of the decision before the Council of State has brought with it discussions about whether the element of wrongful acts was met in these compensation lawsuits.
In the current situation, while certain cases in which rulings have been made as to compensation, based on the Board’s decision, are at the appeal stage, others have been finalized since the amount in dispute is below the appeal threshold. In the meantime, the decision of the 13th Civil Chamber of the Court of Cassation, published in the Official Gazette dated 8 February 2020 and numbered 31033, rendered in the wake of a claim before the Consumer Arbitration Committee, is significant since it shows the Court of Cassation’s leanings towards the issue.
The Judgment of the 13th Civil Chamber of the Court of Cassation
The dispute that is subject to reversal for the sake of law before the Tekirdağ 2nd Civil Court of First Instance’s judgment dated 19.07.2018 and numbered 2018/182 E., 2018/391 K, by the judgment of the 13th Civil Chamber of the Court of Cassation, dated 25.09.2019 and numbered 2019/1422 E., 2019/8836 K., is as follows:
- The Board has decided that 12 financial institutions, including the defendant, acted together to form a cartel with respect to deposits, credit and credit card services;
- The Consumer claimed that since she/he benefited from a consumer loan from a cartel (of which Türkiye Vakıflar Bankası T.A.O. was a part) the interest rate caused her/his damage, and has requested the determination of her/his loss, and compensation of her/his triple the damages from the Tekirdağ / Süleymanpaşa Consumer Arbitration Committee;
- The Consumer Arbitration Committee has rejected the consumers’ request;
- Therefore, the Claimant has filed a lawsuit before the Tekirdağ Civil Court of First Instance in order to revoke the decision of the Consumer Arbitration Committee;
- The Tekirdağ Civil Court of First Instance has partially accepted the decision of the Consumer Arbitration Committee, and decided that compensation is to be paid to the claimant; and
- The final judgment (as to the amount in dispute is below the appeal threshold) was appealed by the Court of Cassation Chief Public Prosecutor"s Office with the request for reversal for the sake of the law.
The 13th Civil Chamber of the Court of Cassation determined that in the case at hand, the existence of the wrongful act of the defendant bank, the damages suffered, and the causal link between these is based on the said decision of the Board by the Tekirdağ Civil Court of First Instance.
However, the 13th Civil Chamber stated that as the annulment lawsuits filed against the subject matter Competition Board decision have not yet been finalized, therefore, there is no final judgment upon which the claimant could base its claims. Thus, the court ruled that deciding on the merits of the case without awaiting the finalization of the annulment lawsuit filed against the Competition Board"s decision, is contrary to the law since the court should have considered the situation as a “preliminary issue,” and should have ruled after the decision of the annulment lawsuit was rendered. As this was not the case, The Court of Cassation reversed the judgment of the Tekirdağ 2nd Civil Court of First Instance for the sake of the law.
Conclusion
Pursuant to the recent decision of the 13th Civil Chamber of the Court of Cassation, in cases where the claim for compensation is based on the Board’s decision, courts should consider the lawsuits filed before the administrative jurisdiction as a “preliminary issue,” and decide after the Board’s decision has been rendered.
It should also be noted that the decision of the 13th Civil Chamber in question is a dismissal ruling for the sake of the law. This situation reveals that the approach of awaiting the finalization of the Board decision in compensation cases to be filed against Board decisions is gaining strength.
Although currently there is no unification of case-law regarding the subject matter, the first-instance courts will most likely consider the Board"s decision as a preliminary issue, and render their rulings thereafter.
[1] Example: Decision of the 11th Chamber of the Court of Cassation dated 08.03.2016 and numbered 2015/5134 E. and 2016/2543 K.; Decision of the 19th Chamber of the Court of Cassation dated 29.11.2002 and numbered 2005/3755 E. and 2006/7408 K.; Decision of the 19th Chamber of the Court of Cassation dated 29.11.2007 and numbered 2007/3229 E. and 2007/10677 K.; Decision of the 11th Chamber of the Court of Cassation dated 05.10.2009 and numbered 2008/5575 E. and 2009/10045 K.
[2] Pursuant to Article 165/1 of the Turkish Code of Civil Procedure, “If the judgment in a case is partially or completely dependent upon the judgment in another case, to the determination of the administrative authority or to the legal relationship concerning the subject matter of the case, then the proceedings may be held upon the conclusion of the judgment or upon the decision of the administrative authority.”
[3] Decision of the Adana 5th Consumer Court dated 13.06.2017 and numbered 3623/2750 and Decision of the Ankara 7th Commercial Court of First Instance dated 25.10.2017 and numbered 2016/955 E. and 729 K.
[4] Decision of the İstanbul 12th Consumer Court dated 9.5.2017 and numbered 152/172; Decision of the Adana 4th Consumer Court dated 27.9.2012 and numbered 27/2112; Decision of the Marmara 1st Civil Court of First Instance dated 14.11.2017 and numbered 2017/17 E. and 494 K.
[5] Decision of the Competition Board dated 08.03.2013 and numbered 13-13/198-100.
[6] Example: file numbered 2014/313 E. and 2015/128 K.
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