Information Exchange in the Banking Sector in Light of Competition Board Decisions

April 2021 Mert Karamustafaoğlu
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Information exchange in the heavily regulated banking sector is frequently inspected by the Turkish Competition Authority (“Competition Authority”) pursuant to Law on the Protection of Competition No. 4054 (“Law No. 4054”). Arguably, the main reason for this is that information exchange is a gray area in terms of competition law, and the information is priced instantly, especially in banking transactions. Since information is instantly priced in these transactions, it is more likely for information exchanges between competitors to affect the market and allow competitors to position themselves accordingly, as compared to other sectors.  Taking this into account, the Competition Authority frequently subjects information exchanges in the banking sector to preliminary investigations and investigations.

Article 4 of Law No. 4054 prohibits agreements and concerted practices between undertakings, decisions, and practices of associations of undertakings that have as their object or effect, or likely effect the prevention, distortion, or restriction of competition. In this context, while the mere existence of an agreement or a conduct that causes coordination is sufficient for infringing Law No. 4054, having the object of restricting competition is also enough even if the agreement or conduct has no effect or outcome of restricting competition.

However, it is observed that the information exchange between undertakings has a more uncertain nature within this context. This is due to the fact that within the scope of the usual course of their business, many undertakings exchange information directly through agreements, or indirectly through their customers and market research firms. In addition, it can be argued that monitoring market developments and making strategic decisions especially with regards to pricing, based on the behavior of competitors, is usual and fundamentally competitive. Therefore, not all instances of exchange of information between undertakings constitute violation of competition law, and exchanges that make the entire market transparent are deemed to increase efficiency and competition in the market.

On the other hand, the exchange of highly sensitive information that distorts competition between competitors and eliminates the uncertainty they have particularly regarding each other’s actions, may result in preliminary investigation and investigation processes followed by administrative monetary fines. In this context, the point that should be considered is whether alleviating the uncertainties regarding their competitors’ position through information exchange is sufficient to demonstrate that there is coordination between undertakings. However, if the information exchange in question constitutes price fixing or customer allocation between undertakings rather than information exchange, due to the language used, it can be considered as a cartel. These, as defined in the Regulation on Fines to be Applied in Cases of Agreements, Concerted Practices and Decisions Restricting Competition, and Abuse of Dominant Position (“Regulation on Fines”) and the Regulation on Active Cooperation for Detecting Cartels (“Leniency Regulation”), are the most hazardous types of violation in competition law.

Within this scope, some decisions of the Board stand out since they establish the main principles on information exchange. To that end, the 12 Banks Decision,[1] the Forex Decision,[2] and the Syndication Decision,[3] may all be considered as detailed guides as to how the Competition Board (“Board”) examines information exchange between banks.

1. 12 Banks Decision

The Board decision that examines the information exchange in the financial sectors in the most in-depth manner within the scope of competition law, is undoubtedly the 12 Banks Decision. This decision clearly reveals the Board’s approach towards information exchange in the banking sector. In the 12 Banks Decision, the Board examined the allegation that the 12 Banks[4] operating in Turkey had violated Article 4 of Law No. 4054 through agreements, and/or concerted practices, regarding deposits, loans and credit cards. In this context, the Board initiated a full-fledged investigation, and at the end of the investigation process concluded that the 12 undertakings reached an agreement in order to determine the interest rates and fees applied for various banking services, including deposits, loans, and credit card services, together, which restricted competition. Determining that all of the undertakings have violated Article 4 of Law No. 4054, the Board decided to impose administrative fines. As in most decisions regarding exchange of information, the nature of evidence obtained and standard of proof regarding the documents relied on in relation to the nature and determination of the violation within the scope of Law No. 4054, were evaluated in detail in the 12 Banks Decision.

The Relevant Product Market

In the decision, the Board did not define the relevant product market. Evaluating the areas of activity of the undertakings subject to investigation, the Board stated that the relevant market can be defined as “banking services” in the broadest sense, and “deposit services,” “loan services,” and “credit card services” in narrow terms, based on each main service type. However, the Board also refrained from defining a relevant product market, stating that a broad or narrow definition of the relevant market would not have a positive nor a negative effect on the undertakings, and would not affect the assessment of the violation. A similar approach has also been adopted in the Syndication Decision. Therefore, in the Board’s decisions that examine information exchange in the banking sector, the Board refrains from defining the relevant product market on the basis that it will have no effect on the violation assesment.

Temporal Scope of the Exchanged Information

Another issue in the 12 Banks Decision, similar to the Syndication Decision, is the evaluation of the scope of the information exchanged between the undertakings in terms of the time frame. As a result of its examination, the Board determined that the interest rates notified to the Central Bank of the Republic of Turkey (“CBRT”) in both deposit and loan transactions as required by the legislation, differed significantly from the rates actually implemented. The Board then examined the dates of the announcements and implementation, in terms of determining and implementing interest rates. It was determined that the announced interest rates are generally announced by the branches or on the banks’ websites one day prior to the implementation, or on the implementation date. However, the branches are notified of the rates that can be implemented within the scope of the branches’ authority only on the implementation date, or after the close of business one day prior to the day of implementation. Therefore, it has been concluded that the the customers may only find out the actual rates implemented after the date of implementation, through negotiating with the branch.

The Board, examining the documents it obtained within this framework, concluded that in cases where the information exchanged between competitor undertakings is future-oriented in terms of the temporal scope, the exchange of information leads to coordination amongst the relevant undertakings. For instance, it stated that information pertaining to future interest rates were exchanged between some undertakings before the rates were announced and, thus resulted in coordination between the undertakings, causing restrictive effects on competition. In addition, following the exchange of future-oriented or undisclosed information, the fact that the undertakings have not used the the relevant information in practice, does not rule out the possibility of competition law violations. In such cases, the Board evaluates that the relevant undertakings may have abandoned their aim to use the received information, or that the relevant undertakings may still take a different position based on this information, on a following date.

However, even after the relevant information is announced and becomes public information, exchanges in the nature of queries or consensus amongst the competing undertakings regarding competitively sensitive information, such as interest, maturity, and pricing strategy, can be considered as cartel agreements, which are accepted as the most hazardous type of competition law violations.

The Opinion of the Board on the Nature of Evidence and Standard of Proof

It may be generally observed that the Board’s approach to the nature of evidence and the standard of proof is quite flexible. Stating that collusion can be proved in this context by using both primary and secondary evidence and presumptions, the Board suggests that the nature of the evidence in question is important, rather than the amount of evidence gathered which was also the approach adopted in the Syndication Decision. However, in its assesment regarding this decision, the Board stated that it also considers factors, such as whether the exchanged information constitutes confidential information, whether it is public information, whether it is the subject of future implementations of the undertakings, and whether it can be used as data for strategic decision-making of the undertakings.

In addition, the Board evaluated that it is not necessary to determine the means by which the undertakings violated Law No. 4054, but whether there is an allignment of intent regarding the violation, and that unilateral declarations of intent are sufficient for determining a violation. Referring to the T-Mobile Decision,[5] which regularly appears in decisions regarding exchanges of information, the Board once again emphasized that the existence of a single communication between competitors containing competitive information, and received by a single undertaking, may be sufficient to rule on the existence of a violation in terms of all of the undertakings that are parties to the communication, even if an express agreement cannot be determined. In its decisions regarding the sector the Board therefore, does not consider the following defenses: (i) that an insufficient number of documents were used; (ii) that documents lacking standard of proof were used, or (iii) that the relevant document was not obtained from the undertaking facing the allegation. The Board still maintains this approach today.

In this particular case, after evaluating the evidence obtained the Board, within the framework of the concept of a single and continuous violation and based on the first and last documents, determined that the agreements and/or concerted practices took place between 21.08.2007 and 22.09.2011, and were in relation to determining pricing strategies together by all 12 banks involved in the investigation regarding loans, deposits, and credit card services. Therefore, by following the approach of evaluating the evidence in a holistic manner within the framework of a single and continuous violation, it was determined that all of the undertakings were in breach of the competition law.

Assessment of the Board Regarding General Defenses of the Undertakings

In the 12 Banks Decision, the Board assessed the specific defenses of the undertakings, as well as their general defenses, especially regarding the nature of the market and the information exchanged. The technical and temporal defenses of the undertakings on the basis of particular documents are not included here due to the fact that those defenses are extremely detailed and undertaking-based; however, the Board’s evaluations regarding the banking sector and the general defenses regarding the nature of the documents obtained are discussed below.

The Defense Regarding the Board’s Lack of Authority in the Banking Sector

The Board did not accept the argument put forward by the udertakings that the Board has no authority to investigate the banking sector due to the provisions of Banking Law No. 5411, and the existence of regulatory institutions. The Board has clearly stated that all agreements and concerted practices that restrict competition in all of the goods and services markets within Turkey are within the scope of Law No. 4054 and, therefore, the acts of the banks and financial service institutions will also be evaluated within this scope. In addition, it has been stated that the inclusion of the section, “While intellectual or physical activities or activities that concern both, which are undertaken for a price or benefit are defined as service in a wide sense, then this definition also includes banking, insurance, money, credit, capital, knowledge and the other elements” in the grounds for Article 3 of Law No. 4054 is an indication that banks, and all kinds of banking transactions, are clearly covered by Law No. 4054.

The Defense that the Banking Sector is a Transparent Market and the Exchange of Information is Utilized Legally by Regulatory Authorities

The Board also rejected this defense, and claimed that the aforementioned regulations could not be considered as an incentive to act in violation of Law No. 4054, and that this was confirmed by the officials of the CBRT and the Banking Regulation and Supervision Agency (“BRSA”). In addition, the Board stated that the data the regulatory authorities request the undertakings to publish within the framework of the banking legislation is retrospective, and that there is no regulation requiring the disclosure of future data, or which may cause the banks to act in agreement. The Board also stated that each institution fulfills its supervision duty within the framework of the legislation it is obliged to implement.

The Defense Regarding the Impossibility of Engaging in Agreements and Concerted Practices Due to the Oligopolistic Structure of the Banking Sector

Stating that the existence of an oligopolistic structure in the sector is an argument that can be put forward only if there is no evidence demonstrating the restriction of competition, the Board rejected this defense as well, and considered that the argument could not be put forward due to the fact that many documents clearly demonstrating restriction of competition were obtained during the on-site inspections.

The Defense that not only Information about Competitors’ Prices but a Multivariate Calculation is taken into Consideration when Determining Lending Rates

Regarding this defense, although the Board acknowledged that there are a number of variables that affect the prices of undertakings, it also stated that competitors’ prices are included in these variables. Therefore, the Board also rejected this argument, stating that the knowledge of competitors future prices leads to coordination of competitive behavior, by reducing the uncertainty of one of the variables that affect prices.

The Defense that the Information Obtained about Competitor Banks may be Outdated at any Time Due to the Banking Sector being Affected by Instant Changes

Although the Board acknowledged that the banking sector is a dynamic market which is affected by variable parameters, it has stated that the claim that information obtained from competitor banks are out of date after a short period of time such as one day, cannot be accepted.

The Defense that Underlying Documents were not Obtained from the Related Bank and, therefore, They Do not Demonstrate Their Own Intent  

The Board also rejected this defense put forward by the undertakings. It stated that Law No. 4054 stipulated that the circumstantial evidence system was valid and, in this context, the reliability and content of the evidence was examined, rather than the source or ownership of it. In addition, it has been specified by the Board that there is no obligation to obtain evidence from all violating parties; otherwise, an undesirable outcome could arise, such as rewarding attempts that are more successful in destroying evidence.

The Defense that the Available Evidence should be Clear beyond a Reasonable Doubt and, Consequently the Standard of Proof in Question is not met

The Board has clearly stated that it does not agree with the claim put forward by the undertakings that the violation must be proven beyond doubt, and stated that the actual standard of proof constituted proof beyond a reasonable doubt, which is applied even in criminal law. In addition, it is specified that since the Competition Authority is an administrative authority, it does not have the authority to use extensive methods to obtain evidence, and that the agreements involving competition violations are confidential due to their nature. Thus, it was not necessary that each piece of evidence was equal and had the highest level of proof.

The Defense that Allegedly Exchanged Information is Obtained Through Branches by Using Undercover Customers 

As examined in detail in the section on the temporal scope, the Board emphasized that it is not possible for the non-publicized interest rate information to be found out by competitor banks through use of undercover customers, or by customers themselves before the relevant information is actually implemented, and rejected this defense.


As a result of the relevant determinations and evaluations, it has been concluded that the 12 undertakings operating in the banking sector have acted in collusion in the areas of deposits, loans, and credit card services, in violation of Article 4 of Law No. 4054. In this context, it was decided to impose administrative fines upon all of the undertakings within the scope of the “other violations” category, as determined in accordance with subparagraph 5/b of the Regulation on Fines. On the other hand, two board members voted against this imposition in that the conduct of the undertakings in question should be considered as a cartel within the scope of the Regulation on Fines, and that the basic fine should be calculated within the framework of the “cartel” category specified under sub-paragraph 5/a.

2. Forex Decision

Following the 12 Banks Decision and nearly three years thereafter, the Competition Authority examined the allegations that some of the banks[6] operating in Turkey exchanged up-to-date information, such as the amount of purchases and sales in the spot foreign exchange market, and acted in concert to affect the equilibrium exchange rate. In the relevant complaint, it was alleged that the personnel working in the treasury departments of the banks, who are responsible for buying and selling different foreign currency types, exchanged information that may be competitively sensitive with other competitor bank traders in online chat rooms accessible from Bloomberg and Reuters screens between 2009 and 2013 and, thus, violated Law No. 4054 by acting together in their foreign exchange transactions they utilized for their own portfolios and customers.

In this decision, the Board adopted a different approach than the 12 Banks Decision. The Board concluded that the documents obtained during on-site inspections were made by different traders at different times over a five-year period, and that they were not systematic and continuous within this context. However, it was specified that some traders requested to enter misleading quotations but, within this framework, it was considered that this constituted manipulation, as the exchanged information was aimed at gaining more profit from the customers from whom purchase or sales orders were received, rather than damaging the competitive process. For this reason, it has been concluded that none of the undertakings violated Law No. 4054.

3. Syndication Decision

In the Syndication Decision that was rendered after the Forex Decision, it can be suggested that the Board adopted a similar approach to the 12 Banks Decision. In this decision, the Board examined the claim that the 13 banks[7] that provided loans to corporate customers in Turkey violated Article 4 of Law No. 4054, by exchanging information on loan provisions such as interest and maturity, and competitively obtained sensitive information about other financial transactions.

The Relevant Product Market

In its decision, the Board examined in detail the corporate banking sector, the characteristics and structures of corporate loans, together with Banking Law No. 5411, as well as other secondary legislations that the banking sector is subject to. It should be noted that since this was the first examination of the Board regarding the corporate loans market; the structure and features of the market have been thoroughly investigated and examined in detail. In this context, the Board, which adopted the same approach regarding the definition of the relevant product market in the 12 Bank Decision, stated that it is possible to define the relevant market as “corporate loans market” in its narrowest form, but that the relevant market definition will not affect the assessment regarding violations. It therefore concluded that it is not necessary to define the relevant product market in terms of the current investigation.

Exchange of Information and Temporal Scope in Club and Syndicated Loans

In club and syndicated loans, exchange of information is analyzed in terms of temporal scope due to the specific characteristics of the loan structures in question. Therefore, it is important to determine at what point the information exchanged constitutes a competition law violation.

As a matter of fact, it is known that banks have to share information amongst themselves “after a certain point” due to the nature of club loans. On the other hand, unless the borrower gives explicit authorization to the relevant club members to communicate with each other regarding the conditions and, in any event until this authorization is given, the exchange of information between banks regarding the proposed commercial conditions shall constitute a violation of competition law.

Similarly, in syndication loans, banks exhanging their intention to bid in order to become the mandated lead arranger bank, the conditions they will offer, or the conditions under which the participating banks will join the syndication, leads to a violation of competition law. Therefore, the exchange of price information, maturity, and contract terms between competitors in order to become a mandated lead arranger bank, or to join the syndication, constitutes a violation of competition law. On the other hand, following the selection of the mandated lead arranger bank by the customer, negotiating the terms of the banks that will join the syndication is an authority given by the customer to the mandated lead arranger bank, and is specific to the loan structure. However, even after the appointment of the mandated lead arranger bank, exchange of information between participating banks may be subject to violation.

The reason for this is that due to the nature of syndicated loans, the mandated lead arranger bank authorized by the customer to create and use the loan assumes a different role and begins to act as a bridge between the participants and the customer who wish to use the loan. In order for the customer to select the banks participating in the syndication, the mandated lead arranger bank must find out the terms and conditions of the participating banks. On the other hand, the participating banks continue to compete with each other at every stage of the loan, and exchanging the maturity, interest, and contract terms they plan to offer with each other may cause the customer to use a loan under more unfavorable conditions due to the agreement between the competitors. Therefore, in the exchange of information within the scope of club and syndication loans, the time and content of the communications, and whether the customer has information concerning these communications are significant criteria in the evaluation of violation assessment.

Single and Continuous Violation Approach

Similar to the 12 Banks Decision of the Board, single and continuous violation approach was once again evaluated in this decision as well. Since it is difficult for the competition authorities to obtain evidence regarding the entire period between the beginning and the end of the violation, in the presence of objective and consistent evidence, and on presumption that the violation continues even through the periods when there is no evidence, the violation is assumed to continue uninterruptedly, and is described as a “single and continuous violation.” In order for a violation to be qualified as a single and continuous violation, it is necessary that the agreements/concerted practices are aimed at the same economic purpose, the undertakings are aware of the general framework of this purpose, and it should be proven that the conduct in question continued uninterruptedly between the two dates. Within this scope, the Board concluded in this case that there was only violation between BTMU and ING which lasted for about two years.

General Defenses of Undertakings

Similar to the 12 Banks Decision, the undertakings provided defenses of a general nature, such that the Board is unauthorized against the existence of the banking legislation and the BRSA, that the exchanged information is not competitively sensitive and does not restrict competition, that the exchange of information in the corporate banking sector has efficiency-enhancing effects, and that the information exchanges cannot be considered as per se violations, which were not accepted by the Board. Within this framework, the Board, once again, refused to accept these defenses, emphasizing that the banking sector, being a regulated sector, does not eliminate the jurisdiction of the Competition Authority, that information such, as price, maturity, and rate, are considered sensitive to competition and, therefore, their exchange between competitors causes the market to become more transparent, allowing the competitors to take positions relative to each other, and that such is supported by documents.

The Defense that Telephone Call Records are Considered to be Evidence

In the relevant decision, it is observed that some undertakings provided a defense stating that phone calls were used as evidence and that the Board therefore relied on documents which are obtained unlawfully. It should be noted that the Board rejected this defense, stating that the persons whose phone records were obtained were bank employees, confirmation letters were received from them prior to their recruitmen and, thus, they had consent to such a procedure. In addition, the Board also underlined that the people who called bank employees from the outside were cautioned that the conversations might be recorded, and concluded that the consent factor in the process of recording phone calls in the banking sector was accepted by the sector. 

The Defense that Transactions which do not Affect the Turkish Market are Beyond Turkish Jurisdiction

Some undertakings argued in the decision that the effect doctrine was analyzed incorrectly, the jurisdiction of the Competition Authority was limited within the borders of Turkey, and some of the examined transactions are not associated with Turkey. With respect to this issue, the Board concluded that the transcations are related to Turkish companies that are established in Turkey, or their subsidiaries and in this context, it did not matter where the agreements or services that are subject to the alleged violations take place geographically.

The Defense that it is Unlawful not to Inform the Parties Regarding the Existence of the Leniency Application

The Board did not accept the undertakings’ defense that the existence of a leniency application should have been disclosed to them prior to the investigation report. Underlining that there is no legislative provision in this regard, the Board stated that Article 6 of the Leniency Regulation stipulated that the application is kept confidential until the investigation report is released, unless otherwise specified by the relevant unit of the Competition Authority.


The Board, which also examined the defenses of the undertakings in terms of particular documents decided that ING, RBS and BTMU, violated Article 4 of Law No. 4054, and imposed administrative fines within the scope of the “other violations” category specified in sub-paragraph 5/b of the Regulation on Fines. It was decided that there is no need to impose administrative fines on BTMU pursuant to Article 16/6 of Law No. 4054. On the other hand, the theoretical accuracy of the Board’s application of administrative fines under the category of “other violations”in the presence of the application made by the BTMU within the scope of the Leniency Regulation, which “regulates the procedures and principles in terms of non-imposition and reduction of fines mentioned in Article 16 of Law No. 4054 with regard to undertakings and their managers and employees actively cooperation with the Competition Authority for the purposes of detecting cartels that are prohibited under Article 4 of the same Law,” is still a matter of debate today.

As can be observed, the Board frequently examines the exchange of information between competitors in the banking sector. Within this context, the evaluation of the temporal scope of the information exchanged, and the single and continuous violation approach in the two most important decisions specific to the banking sector emerge as a common feature. The Board’s approach to the undertakings’ defenses is also similar in both decisions. Namely, the Board imposed administrative fines on undertakings, and pays no heed to the defenses pertaining to the banking sector, in that the Board is not unauthorized in light of the existence of the BRSA, that the transactions related to the Turkish markets are outside of its jurisdiction, that violations cannot be determined based on a single document, and that the information cannot be deemed competitvely sensitive due to the structure of the banking sector. It should be noted that in both of the aforementioned decisions, fines were imposed under the category of “other violations” upon violating undertakings. However, considering the opposing votes of the Board members in the 12 Banks Decision, it is also possible for information exchange between undertakings to qualify as cartel if they go beyond information exchange to constitute agreement or concerted practices, such as price fixing or customer allocation.

  • The Decison of the Board dated 08.03.2013 and numbered 13-31/198-100.
  • The Decison of the Board dated 24.11.2016 and numbered 16-41/667-300.
  • The Decison of the Board dated 28.11.2017 and numbered 17-39/636-276.
  • Akbank T.A.Ş., Denizbank A.Ş., Finans Bank A.Ş., HSBC A.Ş., ING Bank A.Ş., Türk Ekonomi Bankası A.Ş., Halk Bankası A.Ş., Türkiye İş Bankası A.Ş., Türkiye Vakıflar Bankası T.A.O, Yapı ve Kredi Bankası A.Ş., T.C. Ziraat Bankası A.Ş., Türkiye Garanti Bankası A.Ş., Garanti Ödeme Sistemleri A.Ş., and Garanti Konut Finansmanı Danışmanlık A.Ş.
  • Case C-8/08, T-Mobile Netherlands, [2009] ECR I-4529.
  • HSBC Bank A.Ş., Barclays Bank PLC, Deutsche Bank A.Ş., Goldman Sachs TK Danışmanlık A.Ş., Credit Suisse İstanbul Menkul Değerler A.Ş., Standard Chartered Yatırım Bankası Türk A.Ş., Citibank A.Ş., Ünlü Menkul Değerler A.Ş., Royal Banks of Scotland PLC Edincurgh, Istanbul Branch, Société Générale S.A. Paris France, Turkey Istanbul Main Branch, Merrill Lynch Yatırım Bankası A.Ş., Odeabank A.Ş., Akbank T.A.Ş and Şekerbank T.A.Ş.
  • Bank of Tokyo Mitsubishi UFJ Turkey A.Ş. (“BTMU”), Citibank A.Ş, Deutsche Bank A.Ş., HSBC Bank A.Ş., ING Bank A.Ş. (“ING”), JPMorgan Chase Bank N.A. Columbus Ohio, Turkey Istanbul Branch, Merrill Lynch, Yatırım Bank A.Ş., Société Générale S.A. Paris France, Turkey Istanbul Main Branch, Standard Chartered Yatırım Bankası Türk A.Ş., Sumitomo Mitsui Banking Corporation, The Royal Bank of Scotland Plc. Edinburgh, Istanbul Main Branch (“RBS”), Türk Ekonomi Bankası A.Ş. and UBS AG.

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