Spotlight on restrictive agreements and dominance in Turkey
All the questions
Antitrust: restrictive agreements and dominant position
Article 4 of the Competition Law sets out the main rules governing horizontal and vertical relations between companies and prohibits any agreement, decision and practice preventing, distorting or restricting competition in the relevant markets.
Restrictive agreements may be exempted from the application of Article 4 of the Competition Act. TCB has issued block exemption notices covering vertical restraints, research and development agreements, specialization agreements and technology transfer agreements. In addition, the automotive and insurance sectors have sector block exemption releases. Restrictive agreements that do not benefit from block exemption releases may be exempted from the application of Article 4 of the Competition Act, provided that they:
- ensure new economic or technical developments or improvements in the production or distribution of goods and in the provision of services;
- benefit the consumer;
- do not eliminate competition in a significant part of the relevant market; and
- do not restrict competition more than necessary to achieve the objectives set out in points (a) and (b).
A dominant position means that one or more companies in a particular market have the power to determine economic parameters such as price, supply and volume of production and distribution, acting independently of their competitors and customers. The fact that a company holds a dominant position is not in itself an offense and companies are allowed to become more competitive through their internal efficiencies. However, Section 6 of the Competition Act prohibits any practice that may harm consumer welfare by dominant firms exploiting the advantages of their market power. In this regard, dominant firms are considered to have a “special responsibility” not to allow their behavior to restrict competition.
Section 6 of the Competition Act provides that the abuse by one or more undertakings of a dominant position in a market for goods or services in the whole or part of the country, alone or through agreements with others or concerted practices, is illegal and prohibited. Abuse of dominance is also considered a violation in terms of fine methodology. Although not appropriate under section 6 of the Competition Act, excessive pricing is a theory of harm in ATT practice akin to section 102(a) of the TFEU.
It should be recalled that the legislation on restrictive agreements and abuse of dominant position is in line with EU competition law.
i Significant cases
In terms of restrictive horizontal agreements, in January 2021, the TCB fined 34 companies operating in the wheat flour market for a total of 25 million liras following an investigation carried out on the grounds that they “raised prices together”, thus violating Article 4 of the Competition Code. Law.
In addition, the TCB maintained its firmness against the maintenance of resale prices and imposed a record fine on fuel distributors. The TCA claimed that certain documents and findings obtained during the on-the-spot checks carried out at the premises of the companies concerned had raised the suspicion that these companies determined the selling prices at the pumps of their dealers. Furthermore, when (1) the ceiling prices communicated to the Energy Market Regulatory Authority and their concessionaires by the companies concerned and (2) the minimum prices applied by their concessionaires are compared, it was determined that the selling prices at the dealers’ pump were equal to the recommended prices set by the companies concerned. As a result, in March 2020, the TCB imposed a heavy fine totaling around 1.5 billion lira on four companies operating in the fuel distribution sector, namely BP, OPET, PO and Shell . However, in January 2021, the Administrative Court of Ankara canceled the fine imposed on OPET for lack of concrete evidence.
During an investigation of Henkel, correspondence was obtained and the investigation committee determined that a determination of violation could not be made based on this correspondence. However, TCB disagreed and ruled that the match constituted a breach of resale price maintenance, breaching Section 4 of the Competition Act. This decision was upheld by the administrative courts. The company therefore appealed to the Council of State. In July 2021, the Council of State overturned the decision, stating that the allegation that the company had violated Article 4 by determining the resale price of its products could not be proven within the framework of data and evidence. clear and concrete assessments, hence the TCB decision was not in accordance with the law.
Investigations into vertical restraints were carried out separately in Groupe SEB and DYO. It was decided that by fixing the resale prices in the final points of sale and by restricting the sales carried out on the Internet sites, Groupe SEB had infringed article 4 of the law on competition and was therefore impose an administrative fine. As for the DYO case, the TCB decided that by determining the resale prices and restricting customers and regions, DYO had also violated Article 4 and the company received an administrative fine of 21 million liras .
As for abusive practices, in March 2021, following allegations against Unilever that it had created de facto exclusivity by preventing the sale of competing products in its end-sales outlets, resulting in the violation of Articles 4 and 6 of the competition law, a fine of approximately 480 million lire was imposed. Unilever has a dominant position in the markets for industrial ice cream, impulse buy ice cream and take-out ice cream. Unilever was found to have abused its dominant position by using a rebate scheme, imposing a non-compete obligation previously prohibited by the TCA and imposing an exclusivity clause in its loan contracts regarding the use Unilever freezers.
The TCA concluded two investigations into Google as a business unit. In the first, the TCB decided that Google breached Section 6 of the Competition Act by disadvantaging competitors offering comparison shopping services, making it difficult for competing firms to operate and distorting competition in the marketplace. shopping comparison services. The TCB therefore imposed a fine of 98 million lire. On July 29, Google announced that starting August 10, it would remove Shopping ads (or the “Shopping” unit) from its search pages in Turkey. According to the tech giant, the decision was made due to uncertainties about the prospects of the remedial package it had proposed to comply with the TCB ruling.
In the second case, the TCB fined Google 196.7 million lira after finding that Google was abusing its dominant position in the market for general search services. The main allegations in the ruling were that Google interfered with the operations of other companies by abusing its dominant position through its updates to general search services and by using AdWords unfairly. The TCB ruled that Google had placed paid advertisements at the top of search results that did not clearly convey the characteristics of the advertisements. In addition to the monetary fine, Google was required to submit remedies to end its anti-competitive behavior and ensure fair competition within six months and must continue to submit compliance measures and annual reports for five years.
In addition, conventional markets such as port management services have also been studied by the TCA. After the investigation, the TCB decided that the operator of the port of Antalya had abused its dominant position by charging excessive prices in the container handling market. Consequently, the TCB imposed a fine of around 12 million lira on him.
ii Trends, developments and strategies
Regarding the Block Exemption Regime, in November 2021, the TCA published its Notice No. 2021/4 amending the Block Exemption Notice on Vertical Agreements, narrowing the scope of the Vertical Block Exemption . The vertical block exemption regime exempts certain vertical agreements from the scope of Article 4 of the competition law, depending on (1) the absence of hardcore restrictions and (2) the market share of the supplier or buyer. The previous version of the Vertical Block Exemption was conditional on the supplier’s market share not exceeding 40 per cent of the relevant market in which it sells the goods or services. This 40 percent limit has been lowered to 30 percent. Apart from this, for vertical agreements that include exclusive supply obligations, the exemption will apply as long as the market share held by the buyer does not exceed 30% of the relevant market in which he buys the goods or services. contractual. To the extent that under this amendment undertakings with a market share of between 30 and 40% in the relevant market will be deprived of the security provided by the previous legislation, the ACT will grant such undertakings a period of six-month transition.
The TCA’s enforcement of restrictive agreements covers a variety of services, with no obvious specific priority for the authority. However, the TCA appears to have taken a stricter approach to vertical restraints, in particular resale price maintenance.
Clearly, the TCA’s investigations have shown that digital markets are its priority in terms of abusive practices and that it has been much quicker to investigate alleged abusive practices of digital platforms than the European Commission. This indicates that the TCA wants to be seen as a reputable competition authority in the area of digital market enforcement.
There are certainly unresolved issues on the ACT agenda. For example, the TCA found that the information, documents and findings obtained during the preliminary investigation of Sahibinden.com were sufficient and serious enough to initiate an investigation to determine whether there was abuse of dominance by preventing transfers of data for the services of the online platform. In addition, the TCA opened an investigation into EssilorLuxottica alleging that its behavior complicated and excluded the activities of its competitors in the optical markets and thus violated competition law.
Additionally, the TCA’s investigation of Facebook and WhatsApp reveals that it prioritizes data-related practices. In September 2021, the TCA opened an investigation into Trendyol, an allegedly dominant online marketplace in Turkey, and imposed interim measures to end its use of algorithms to leverage buying units under its control.
In areas other than the digital sector, the TCA is also examining possible exclusivity practices undertaken by Diageo’s subsidiary, Mey İçki, following allegations that it abused its dominant position.