Turkey: The Board published the reasoned decision on the full-fledged investigation against six cement companies operating in the Aegean region

Last Updated: 12 July 2016
Practice Guide by ELIG, Attorneys-at-Law

The Board published the reasoned decision on the full-fledged investigation against six cement companies operating in the Aegean region (14.01.2016, 16-02/44-14)

The Turkish Competition Board (“Board”) published the reasoned decision on the full-fledged investigation conducted against six cement companies operating in the Aegean region of Turkey, based on the allegations that the relevant companies have violated Article 4 of Law No. 4054 on the Protection of Competition (“Law No. 4054”) by allocating regions and increasing resale prices in collusion in the Aegean region. The allegations subject to the application indicate that cement producers operating in Denizli, Muğla and İzmir were in an agreement with each other, significantly raised the cement prices, allocated customers and regions with respect to the locations of cement factories, prevented their dealers from selling other cement brands on the basis of cement factories. The six cement companies subject to investigations are; As Çimento Sanayi ve Ticaret A.Ş. (“As Çimento”), Batıçim Batı Anadolu Çimento Sanayii A.Ş. (“Batıçim”), Batısöke Söke Çimento Sanayi T.A.Ş. (“Batisöke”), Çimentaş İzmir Çimento Fabrikası Türk A.Ş. (“Çimentaş”), Denizli Çimento Sanayii Ticaret A.Ş. (“Denizli Çimento”) and Göltaş Göller Bölgesi Çimento Sanayi ve Ticaret A.Ş. (“Göltaş”). ELIG has represented Çimentaş and Denizli Çimento for the case at hand. 

In its reasoned decision the Board firstly defined the relevant product market as “the market for grey cement” and determined the relevant geographical market as the area consisting of the cities of “İzmir, Aydın, Muğla, Manisa, Denizli, Burdur, Uşak and Isparta”, where the relevant undertakings conduct their activities. 

In an effort to clearly explain its findings, the Board categorized the documents and information obtained within the scope of the investigation under three different periods, that are; (i) before the period of January-March 2013 (first quarter of the year 2013) in a manner that shows the background of the actions subject to allegation (“First Period”), (ii) the period from the beginning of the actions subject to allegation to the last quarter of the year 2014 (the period of January-March 2013 (first quarter of the year 2013) – October-December 2014 (fourth quarter of the year 2014)) (“Second Period”) and (iii) the period of October-December 2014 (fourth quarter of the year 2014) (“Third Period”).

With regards to the First Period, the Board found that it is evident that a high level of price increase occurred in the internal market in the year 2013 despite the expectations to the contrary considering the increased competition and excess supply. With regards to the Second Period, the Board found the meetings held between the relevant undertakings, which include the period subject to allegations and take place every three months, certain information that are sensitive and inconvenient to share in terms of competition law has been shared between competitors. The Board decided that the meetings in question and shared information are of the nature that can lead to compliance between competing undertakings’ activities and strategies for the future and added that, overall; the most important conclusion reached from the documents is that there have been price increases in the period subject to allegations. With regards to the Third Period, the Board found that as of last quarter of the year 2014 both the sales conducted to the region by Limak Group and OYAK Group evoked the competitive power in the market and horizontal and even downward movement at the price levels was being observed.

The Board determined that while the cement prices and costs were parallel before the period of May 2012, the ongoing difference between cost-price decreased due to the fall of the cement prices in the period of May 2012-January 2013, and after January 2013 the cement prices went above prices observed in previous years and the relevant increase in price movements continued throughout the year 2014.

As a result of its assessment, the Board has concluded that, in the period starting from January-March 2013 and ending in October-December 2014, investigated undertakings’ behaviors and market’s performance data were similar to those markets where competition is prevented, distorted or restricted. Price increases during the relevant period could not have been based on rational and reasonable reasons such as cost or demand increases. The Board noted that the periods of price increases for different cities were similar. In this respect, the Board has determined that undertakings subject to the investigation have allocated locations and increased prices through concerted practices beginning from January-March 2013 until October-December and violated Article 4 of the Law No. 4054.

Ultimately the Board imposed an administrative monetary fine of 3% percent of the annual turnover generated at the end of the financial year of 2014 to As Çimento (TL 15,512,902.29), Batıçim (TL 11,438,135.21), Batısöke (TL 4,533,260.95), Çimentaş (TL 12,810,487.72); 4.5% of the annual turnover generated at the end of the financial year of 2014 to Denizli Çimento (TL 12,088,042.39) and Göltaş (TL 14,532,699.42) pursuant to aggregating recidivism provision.

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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