The Turkish Competition Board ("Board") published the reasoned decision on the preliminary investigation against Meram Elektrik Dağıtım A.Ş. ("MEDAŞ"), the exclusive electricity distributor within Konya, Karaman, Aksaray, Nevşehir and Kırşehir, based on Göksu Enerji Elektrik Üretim ve Ticaret A.Ş.'s ("Göksu Enerji"), Saturn Power Enerji Sanayi ve Ticaret A.Ş.'s ("Saturn") and FRT-GES Enerji San. ve Tic. A.Ş., ŞFK- GES Enerji San. ve Tic. A.Ş., PAGES Enerji San. ve Tic. A.Ş., SAGES Enerji San. ve Tic. A.Ş. and SNM-GES Enerji San. ve Tic. A.Ş.'s (together "GES Companies") complaints that MEDAŞ has violated Article 6 of Law No. 4054 on the Protection of Competition ("Law No. 4054") by engaging in discriminatory behaviour while evaluating applications for unlicensed electricity production by rejecting access to network requests of the complainants in favour of the producers of its own economic entity.

In its reasoned decision, the Board firstly stated that connection to the distribution network (grid) is required in order to sell the surplus energy in scope of unlicensed electricity production. In this respect, the entry to the market for unlicensed production activities depends on the evaluation conducted by distributor companies and their approval. Therefore, while defining the relevant product market as "the market for electricity distribution services" the Board stated that the grid connection services should be regarded as a part of the distribution activities. Additionally, the Board also separately defined the relevant product market as "electricity production market" as MEDAŞ's activities subject to the allegations also produce effects on electricity production activities. Furthermore, the Board decided that the geographic scope of the abovementioned markets are limited to the cities Konya, Aksaray, Niğde, Kırşehir, Nevşehir and Karaman, where MEDAŞ provides its electricity distribution services.

With regards to the review conducted under Article 6 of Law No. 4054, the Board found that MEDAŞ is in a dominant position within the scope of the relevant geographic market. Electricity distributors in Turkey are in a dominant position in each distribution zone due to natural monopoly characteristic of the distribution networks on the local level. Furthermore, MEDAŞ is the only authorized undertaking that receives and evaluates the applications for unlicensed production, and provides the physical grid connection of the unlicensed production facilities, within the geographical market. Therefore, the Board decided that, the allegations related to MEDAŞ's discriminatory behaviour regarding allocation of limited substation capacities for the unlicensed electricity production applications should be reviewed under Article 6 of Law No. 4054, in order to determine whether MEDAŞ's conduct constitutes an abuse of dominance. The Board stated that cases where the electricity distributors decline the applicants' requests for grid connection due to objective and valid grounds and would not constitute an abuse of dominance; whereas it might constitute a discriminatory behaviour in scope of abuse of dominance if MEDAŞ has allocated grid capacity to the undertakings/persons that are within its own economic unity, while declining other applications due to non-technical reasons.

The Board reviewed every access request of the complainants separately and evaluated whether the refusal decisions to access to network have valid and objective grounds. The Board found that access requests made by the complainants have been declined based on objective reasons such as distance, capacity. Furthermore, the Board could not find any evidence showing that MEDAŞ has engaged in discriminatory behaviour in favour of the companies within its own economic entity when assessing the access requests. In light of the above, the Board refrained from initiating an in-depth investigation with a majority decision.

This article was first published in Legal Insights Quarterly by ELIG, Attorneys-at-Law in December 2016. A link to the full Legal Insight Quarterly may be found here.

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