Selective pricing may lead to an abuse of dominant position within the meaning of Article 6 of Law No. 4054 on the Protection of Competition (the "Competition Law"). While it is not explicitly defined under Article 6 of the Competition Law, selective pricing occurs when a dominant undertaking sets a low price level between customers or products independently from its costs, and thereby leads to exclusion of its rivals. The dominant firm may, for instance, choose to apply lower prices for products for which it competes with others and cross-subsidize the losses through applying higher prices in products where there is no or insignificant competition. Depending on the evidence, similar practices may lead to the finding of a selective pricing violation.
The issue of whether selective pricing is anti-competitive is a matter of controversy given that low price levels are a natural consequence of a competitive market. Adopting low standards of proof for selective pricing cases may have the unintended effect of increasing prices in competitive markets. It is therefore important to carefully distinguish whether the dominant company's below-cost selective pricing strategy aims at excluding competitors from the market. Accordingly, the Board assesses pricing behavior of a dominant company from the point of (i) the investigated company's position in the market, (ii) the competitors and their positions, and (iii) intent.
In Turkcell-Vodafone decision (20.05.2008; 08-34/453-159), Turkcell was a dominant company in the GSM services market and it lowered its prices for Vodafone's customers for a definite period in return for subscription to Turkcell in order to drive its biggest competitor out of the market. Since the relevant sectorial regulatory authority interfered in Turkcell's pricing behavior in question, the Board decided to close the case without further action. The High State Court ordered the stay of execution of the Turkcell-Vodafone decision on 25 June 2009 (E. 2009/152). Nevertheless, the Board rendered its second decision on the issue in the same vein (8 October 2009, 09-45/1136-286).
In Tupras (16.04.2002; 02-24/244-99), the dominant oil explorer and driller lowered its prices for POAS. The Board stated that Tupras's pricing behavior constitutes selective pricing as it implements lower prices in more competitive markets while implementing higher prices in less competitive markets. That said, the Board concluded that Tupras's selective pricing behavior does not constitute an abuse, since Tupras's selective pricing arises from the unsteadiness of the market.
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