The Board published the reasoned decision on the full-fledged investigation against Türk Telekomünikasyon A.Ş. (09.06.2016, 16-20/326-146)
The Turkish Competition Board (“Board”) published the reasoned decision on the full-fledged investigation conducted against Türk Telekomünikasyon A.Ş. (“Türk Telekom”). The case arose out of the allegations that Türk Telekom has violated the Article 6 of Law No. 4054 on the Protection of Competition (“Law No. 4054”) by abusing its dominance through delaying, aggravating and obstructing facility sharing request applications made by third parties, as alleged by the complainants Vodafone Net İletişim Hizmetleri A.Ş (“VodafoneNet”), Superonline İletişim Hizmetleri A.Ş. (“Superonline”) and TurkNet İletişim Hizmetleri A.Ş (“TurkNet”). Türk Telekom, that is a privatized company subject to the provisions of Telegraph and Telephone Law No. 406 and private law, offers services related to land phones, mobile phones, data, internet and value added services in Turkey.
In its reasoned decision, the Board firstly defined the relevant product market as “physical infrastructure elements such as duct, channel, sub-duct, manhole, pole, tower and unlighted fiber market” and the downstream market as “physical infrastructure market”, which it took into account for the evaluation of refusal to supply under Article 6 of the Law No. 4054.
The Board initiated its analysis by examining the Competition Board’s authorities within the electronic communications sector and found that Türk Telekom is obliged to obtain the Information and Communication Technologies Authority’s (“ICTA”) approval regarding the duration, pricing and other procedures and principles of facility sharing services and therefore Türk Telekom’s freedom of action is restrained by ICTA; however the Board also found that the relevant arrangement does not obstruct the Competition Authority from conducting an evaluation on whether the facility sharing services give rise to competition law violations under the Law No. 4054.
Afterwards, the Board conducted an evaluation to determine whether Türk Telekom is in a dominant position within the relevant market. The Board found that due to the specific characteristics of the sector, the most convenient indicator for the determination of market shares is the length of the physical network infrastructures, since it provides an insight regarding the size of the infrastructure that the undertaking is responsible for sharing. The Board found that among other players, Türk Telekom has the most widespread infrastructure which enables access to nearly all the households. The Board also indicated that; there are various legal and economic barriers for new players who intend to enter the market, it does not seem likely for any alternative operator to have the potential to restrain Türk Telekom’s market power in short term and countervailing buyer power is relatively low within the relevant market, since the alternative undertakings need Türk Telekom’s widespread infrastructure to reach end-users and there are no such alternatives. In light of the foregoing analysis the Board determined that Türk Telekom is in a dominant position both in the market for “physical infrastructure elements such as duct, channel, sub-duct, manhole, pole, tower and unlighted fiber” and the downstream market for “physical infrastructure”.
Afterwards, the Board assessed the complainants allegations and found that Türk Telekom’s following practices within the physical infrastructure elements such as duct, channel, sub-duct, manhole, pole, tower and unlighted fiber market were anticompetitive and delay, aggravate and obstruct facility sharing:
- Providing longer survey times than reference timelines set by the ICTA;
- Requesting high fees for monthly maintenance and operation;
- Forcing the operators that procure facility sharing services to also procure maintenance and operation services from Türk Telekom,
- Granting right to Türk Telekom to unilaterally amend facility sharing agreements;
- Deeming the operators’ (who procure facility sharing services from Türk Telekom) requests, apart from the requests for increasing capacity, as new requests;
- Obligating the execution of agreements for evaluating facility sharing requests;
- The nonexistence of any service level commitments within the agreement signed between Türk Telekom and Superonline;
- Refraining from abiding by the duration foreseen by ICTA’s decision and indicating within the agreements that the infrastructure subject to facility sharing will be made ready based on the business plan.
With respect to the Board’s analysis under the Article 6 of the Law No. 4054, as per the Turkish Competition Authority’s Guidelines on the Assessment of Exclusionary Abusive Conduct by Dominant Undertakings, the refusal to supply constitutes an anti-competitive conduct if it; (i) relates to a product or service that is indispensable to be able to compete in a downstream market, (ii) is likely to lead to the elimination of effective competition in the downstream market and (iii) is likely to lead to consumer harm. In this scope, the Board assessed whether Türk Telekom’s abovementioned anticompetitive applications constitute refusal to supply under Article 6 of the Law No. 4054. With respect to the first condition, the Board found that the infrastructure components that undertakings procure from Türk Telekom in scope of the facility sharing services are indispensable for conducting activities in the downstream physical infrastructure market. With respect to the second condition, the Board found that, due to Türk Telekom’s high level of market share compared to its competitors and due to the fact that Türk Telekom is in competition with the undertakings who require the product subject to act of refusal in the downstream physical infrastructure market, Türk Telekom’s relevant applications are likely to lead to the elimination of effective competition in the downstream market. With respect to the third condition, the Board found that Türk Telekom’s refusal to supply prevents the fiber optic network from evolving and consequently releasing more innovative products to the market and that various cost efficiencies would arise without such behaviors; therefore, the Board concluded that Türk Telekom’s applications are likely to lead to consumer harm.
In addition to the foregoing conditions, the Board also assessed whether Türk Telekom’s applications subject to the evaluation, de facto or potentially give rise to anticompetitive market foreclosure. The Board found by analyzing the complainants’ facility sharing application procedures that, Türk Telekom’s refusal to supply has significantly prolonged the operators’ facility sharing application procedures and caused damages to the applicants. In addition, in order to assess if alleged practices gave rise to de facto market foreclosure, the Board reviewed route lengths in terms of facility sharing and found that levels of sharing remained highly limited. In light of the foregoing, the Board decided that the facility sharing procedures are not efficiently implemented and Türk Telekom’s applications subject to the allegations aggravate the competitors’ activities and lead to anticompetitive market foreclosure.
In light of the foregoing evaluation, the Board decided that Turk Telekom’s refusal to provide access to the infrastructural elements constitutes abusive conduct within the meaning of Law No. 4054. Therefore, the Board decided that the aforementioned eight practices obstructed competitors’ activities; anti-competitively foreclosed the market and thus, Türk Telekom abused its dominant position through refusal to supply practices. Accordingly, the Board concluded that Türk Telekom has violated Article 6 of Law No. 4054 and imposed an administrative monetary fine at 0.45 % ratio over its 2015 turnover, which corresponds to 33,983,792.76 TL (approx. EUR 8,5 million).