Turkey: Definition of Abuse and the Board’s Approach

Last Updated: 13 May 2019

Definition

The Law on the Protection of Competition No. 4054 (“Competition Law”) is silent on the definition of abuse. It only contains a non-exhaustive list of specific forms of abuse in cases where the company is found to be dominant (Article 6). Theoretically, a causal link must be shown between dominance and abuse. However, the Guidelines on Evaluation of Abusive Exclusionary Conducts by Dominant Undertakings (“Guidelines”) enacted by the Turkish Competition Board (“Board”) provides a definition as follows:

Abuse of a dominant position comprises the practices which the dominant company conducts by the advantage its market power brings about and consequently result in consumer welfare decrease, directly or indirectly.

Consequently, the determining factor in assessing whether a practice amounts to an abuse is the effect on the market, regardless of the type of the conduct at hand.

Forms of Abuse

The non-exhaustive list of specific forms of abuse stated under Article 6 of the Competition Law is as follows:

  1. Practices which directly or indirectly prevents another company from entering into the market or obstructs the existing competitors’ activities in the market;
  2. Applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage,
  3. Selling a good/service on the condition of purchasing another good/service, or on the condition that the intermediary purchasers to display another good/service, or on the conditions of resale conditions maintenance,
  4. Practices which the dominant company aims distorting competitive conditions in a different market by using its financial, technological and/or commercial advantages in the market where it is dominant,
  5. Limiting output, markets or technical development to the prejudice of consumers.

Per the Guidelines there are specific forms of abuse; namely, discriminatory, exploitative and exclusionary. Exclusionary conducts comprise (i) refusal to supply, (ii) predatory pricing, (iii) margin squeeze, (iv) exclusive dealing/single branding , (v) rebates and (vi) tying/bundling.

Sanctions

In case a dominant company or a trade association are found to have abused their dominant position, it will be subject to fines of up to 10% of its Turkish turnover generated in the financial year preceding the date of the fining decision (if this is not calculable, the turnover generated in the financial year nearest to the date of the fining decision will be taken into account).

Employees or members of the executive bodies who had a determining effect on the creation of the violation are also fined up to 5% of the fine imposed on the company or trade association.

The Board determines the rate of the administrative monetary fines on the basis of the methods stated in Article 17 of the Minor Offenses Law and the Regulation on Fines to Apply in Cases of Agreements, Concerted Practices and Decisions Limiting Competition, and Abuse of Dominant Position (“Fine Regulation”).

Recent Notable Cases

In Enerjisa (08.08.2018; 18-27/461-224), the Board assessed whether Enerjisa and its subsidiaries, which operate in the electricity sector in Turkey, abused its dominant position through various practices such as concluding illegal bilateral agreements with consumers, preventing consumers from switching to the independent supply companies and impeding market transparency through incorrect meter readings in order to mislead the consumers who are already eligible to supply from independent supply companies. Further to its evaluation, the Board found that Enerjisa abused its dominant position in the market for retail sale of electricity to industrial group through various practices impeding and foreclosing free competition in the market and thus, the Board decided to impose an administrative monetary fine amounting to approximately 143 million Turkish Lira.

Moreover, in Radontek (11.10.2018; 18-38/617-298), further to an investigation launched against Radontek, a distributor of cancer diagnosis and treatment devices, the Board found that Radontek abused its dominant position in the aftermarket and spare parts by implementing excessive and discriminatory pricing on the tenders organized by hospitals. In this respect, the Board imposed an administrative monetary fine amounting to 248,548.62 Turkish Lira.

In Trakya Cam (14.12.2017; 17-41/641-280), the Board has imposed a fine in the amount of 17.5 million Turkish Lira in the investigation conducted against Trakya Cam for de facto application of the exclusive distribution agreements as of 2016, which have been determined to be in violation of the Competition Law through the Competition Board’s decision dated 2 December 2015 and numbered 15-42/704-258.

In Turkcell (24.11.2011; 11-59/1516-541) the Board launched an investigation against Turkcell İletişim Hizmetleri A.Ş. (“Turkcell”), Turkey’s largest GSM operator. Upon completion of the investigation, the Board decided that Turkcell is in a dominant position in the Turkish GSM services market. The Board found that Turkcell’s practices on standardizing the decoration, signboards and sales of dealers via vertical agreements and verbal communications resulted in exclusive dealing agreements and prevented its competitors’ sales in a considerable part of the market. Thus, the Board ruled that Turkcell abused its dominant position and imposed one of the highest fines, approximately USD 54.5 million (1.125% of its turnover in 2010).

In 2014 the the Competition Board concluded a high-profile competition law investigation against Tüpraş (17.01.2014; 14-03/60-24), Turkey’s biggest energy company and OPET, one of Turkey’s biggest fuel oil companies. Based on the outcome of this investigation, the Board found that Tüpraş abused its dominant position through abusive pricing practices and contracts. As a result, it imposed an administrative monetary fine of 412 million Turkish Lira (approximately € 148 million), the equivalent of 1 per cent of Tüpraş’s annual turnover for 2013. This is one of the highest individual fine ever levied on a single company.

This document is not intended to create an attorney-client relationship. You should not act or rely on any information in this document without first seeking legal advice. This material is intended for general information purposes only and does not constitute legal advice. If you have any specific questions on any legal matter, you should consult a professional legal services provider.

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