The Turkish Competition Authority ("TCA") frequently reviews and investigates the fast moving consumer goods industry ("FMCG") where various firms enjoy dominant positions. The approach of the TCA varies from per se approach to rule of reason analysis, whereas the firms are seeking the TCA precedent being a guide for future compliance.
FMCG industry which includes some of the world's biggest firms in Turkey contains goods varying from food to hygiene products hence the industry meets an essential part of the consumer needs on a daily basis. In an industry where competition is tough and benefits the end users, application of the competition policy of the TCA becomes stringent. In order to analyse the structure and propose required solutions, the Authority conducted a comprehensive FMCG sector inquiry of which the final findings were published in 2012. According to the report and the proposals of the TCA, there has been a switch from classic retail (small markets, artisans etc.) to organized retail. However, despite a fast growing industry, the TCA determined competition concerns posed in the FMCG industry such as the difference of economic power level between the suppliers and the distributors or increasing acquisitions resulting in weakening the market power of small scale enterprises.
As it used to be, general focus of the TCA's approach in the FMCG industry is directed to foreclosing behaviours of the dominant firms especially through exclusivity or rebate systems. In recent years, this focus has boosted initiation of new investigations or Phase-II review procedures as well as the revocation of group exemptions.
Following the TCA's revocation of block exemption previously granted to dominant firms operating in the FMCG industry, the Authority has adopted a strict approach in assessing firms' anti-competitive practices. For instance, after the withdrawal of the block exemption, Efes, the dominant brewery in Turkey, has been imposed a fine of approximately EUR 3.5 million for exclusivity related practices1. Similarly, the TCA has imposed a fine of approximately EUR 8.5 million on Frito Lay for foreclosing competitors2. The TCA also investigated allegations concerning exclusivity related practices of Coca-Cola3, whereas the Authority imposed a fine of approximately EUR 12 million on Mey İçki, the dominant alcoholic drinks manufacturer and the subsidiary of Diageo, for exclusivity related practices4.
Indeed, the TCA has conducted many remarkable investigations and preliminary inquiries during the last few years. For instance in 2016, TCA conducted an inquiry into UNMAŞ for a claim of abuse of dominance through the exclusive agreements with final sales points. Despite the TCA decided not to initiate an investigation as UNMAŞ is not considered to be dominant in the packaged bread market, it is worth mentioning that the Authority appreciated the fact that firms may contact sales points in order to increase their brands' displays as a competitive tool5.
However, due to the fact that dominant firms' behaviours are tightly controlled, strict and per se approach is observed by the recent decisions of the TCA. While the TCA evaluated some evidence, which show exclusivity constraint on sales points, as an indicator of competitive strategies in its UNMAŞ decision, the Authority did not show tolerance to rebate systems or exclusivity practices of Mey İçki, Frito Lay or Efes in its recent investigations. Although such practices of dominant firms require deeper analysis as possible anticompetitive effects are more direct, formalistic approach tend to have been used by the TCA in treating these practices of dominant firms. This is mainly because the decisions are generally criticized to be admitted e-mails displaying aggressive strategies used by the sales personnel at the local level in order to increase market share for a competitive strategy.
Moreover, it appears from recent investigations that after efforts to revoke the benefits of block exemption regulations from dominant FMCG firms, the focus of the TCA on rebate systems intensifies. Practices such as loyalty rebates and market share discounts are rapidly increase their presence in the TCA's investigations. In the future, a careful consideration of new precedents would probably reveal new highlights as the TCA is currently conducting two separate investigations on Mey İçki for its allegedly abusive behaviours through the discounts or investment supports provided to the sales points.
Recent practice of the TCA in the FMCG industry is also composed of exemption cases or preliminary inquiries based on various claims such as exclusivity or resale price maintenance. The TCA rejected complaints about Mey İçki restricting competition by applying low prices to some of its customers operating hotels6 as well as the complaints about Coca-Cola preventing sales points from selling bottled drinking waters other than Damla Su7. On the other hand, the TCA rejected complaints about Sanset Gıda regarding resale price maintenance and blocking the supply through Gimsa supermarkets8, and complaints about Şölen Gıda regarding resale price maintenance of Şölen branded products9.
Another highlighting example was the TCA's decision on Doğadan, which determined that CCI and TCCC belonged to the same economic unit given the mutual interest existing in the relationship between TCCC, CCI and Anadolu Group and the relationship was left outside the scope of the Competition Act. This decision was treated as precedent setting given no such evaluation had been previously made by the TCA10.
New and modern players have rapidly growing into the FMCG industry and as indicated in the sector report of the TCA, the industry has progressed a lot enlargement in recent years through mergers or acquisitions. For instance, the Blendax brand belonging P&G was acquired by Henkel11, whereas global products of P&G consisting hair care products and perfumes were acquired by Coty12. On the other hand, the TCA cleared the acquisition of 26 supermarkets belonging to İsmar by Carrefour since the relevant transaction would not create a dominant position or strengthen an existing dominant position13. The TCA also reviewed the acquisition of Kiler by Carrefour14 and the acquisition of Real, which is fully owned by Metro AG, by Hacı Duran Beğendik15.
Another point to mention while evaluating the TCA's merger control in the FMCG industry is the Migros case. The TCA evaluated the transaction concerning acquisition of Migros by Anadolu Holding under Phase II investigation and cleared the Transaction subject to commitments16. The Transaction was both vertical and horizontal in nature and within the scope of the Transaction competition concerns, such as customer foreclosure concerns in relation to the beer market and coordination effects, were evaluated. Accordingly, the parties offered behavioural remedies especially in relation to the beer market in order to eliminate concerns of the TCA. Despite the re-evaluation request of Pepsico, arguing that Migros was one of the most significant players in the organized retail market especially for carbonated beverages and thus the transaction would lead to customer foreclosure, the TCA upheld the evaluations it made in its previous decision and remarked that the beer market and the cola based beverages market had different characteristics and the transaction did not have a customer foreclosure effect in the cola based beverages market17.
For dominant firms, the current approach of the TCA is difficult for the firms to draw the line between legitimate conduct and the prohibited abuse of a dominant market position through competitive strategies such as exclusivity or rebate systems. Thus it makes compliance efforts a challenging task for dominant firms as the case law generally indicates that any use of direct exclusivity or aggressive correspondences by dominant firms may unlikely to be justified.
On the other hand, Turkey remains an attractive market for retailers and domestic players have benefited from the growing efficiency strategies in the market. Thus concentrations in the retail market are increasing through small-sized acquisitions. However, as the TCA remarked in its sector report, buyer-power induced anti-competitive effects can be seen even below dominance market share levels and the TCA's assessment may narrow geographic market definitions. Therefore, it seems the TCA may deepen its reviews into transactions which require well-organized economic analysis or possible commitment suggestions in order to eliminate competition concerns.
1. TCA's Efes Decision dated 13.07.2011 and numbered 11-42/911-281.
2. TCA's Frito Lay Decision dated 29.08.2013 and numbered 13-49/711-300. The TCA reassessed its previous decision which was annulled by the 6th Administrative Court of Ankara. Upon its review, the TCA decided to impose fine on Frito Lay.
3. TCA's Coca-Cola Decision dated 05.03.2015 and numbered 15-10/148-65.
4. TCA's Mey İçki Decision dated 12.06.2014 and numbered 14-21/410-178.
5. TCA's Unmaş Decision dated 02.03.2016 and numbered 16-07/136-61.
6. TCA's Mey İçki Decision dated 20.05.2014 and numbered 14-18/337-147.
7. TCA's Coca-Cola Decision dated 26.02.2014 and numbered 14-08/159-69.
8. TCA's Sanset Gıda Decision dated 03.11.2015 and numbered 15-39/644-224.
9. TCA's Şölen Gıda Decision dated 16.01.2014 and numbered 14-02/35-14.
10. TCA's Doğadan Decision dated 24.09.2014 and numbered 14-35/687-304.
11. TCA's Henkel Decision dated 03.05.2016 numbered 16-15/244-106.
12. TCA's Coty Decision dated 10.02.2016 and numbered 16-04/83-37.
13. TCA's Carrefour Decision dated 19.02.2015 and numbered 15-08/101-39.
14. TCA's Carrefour Decision dated 30.06.2015 and numbered 15-27/297-82.
 TCA's Real Decision dated 16.07.201 and numbered 14-24/484-21.
 TCA's Migros Decision dated 09.07.2015 and numbered 15-29/420-117.
 TCA's Pepsico Decision dated 20.04.2016 and numbered 16-14/233-97.
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