Turkish Competition Authority (TCA) concluded its preliminary inquiry and launched a full investigation against Sahibinden Bilgi Teknolojileri Pazarlama ve Ticareti AŞ which operates sahibinden.com, the leading online listing of real estate, goods, services and positions in Turkey. The inquiry pertains to possible violations of Article 6 of Law 4054 which prohibits abuse of dominant position in the market for real estate listings, in response to complaints of excessive pricing.
Sahibinden has been subject of a preliminary inquiry in response to allegations of excessive pricing of corporate memberships for vehicle listings in 2014, but TCA ruled on February 19, 2015 that there was no cause to pursue formal inquiries against the company. Sahibinden attempts to price discriminate between casual and professional traders on its platform based on volumes and categories of listings. Corporate memberships are bundled with monthly allocations for listings.
In their decision, TCA acknowledges that US competition authorities do not intervene in markets on grounds of excessive pricing, whereas EU authorities rarely intervene despite legal basis defined by Article 102 of Treaty on the Functioning of the European Union (TFEU). It is expected that if markets may be expected to self-correct in the short or medium-term, it is preferable that competition authorities do not intervene. On the other hand, if there are significant barriers to entry and healthy competition is not expected to be restored, intervention becomes necessary.
On the other hand, high prices motivate market entry and innovation which may be precluded by CA intervention. Further, CA may make errors in the determination of whether prices are indeed excessive.
Sahibinden argued that their new pricing policy reflected a new offering which targeted validated dealers. TCA observed that the new offering could not be readily compared with the previous offering from Sahibinden or from competitors and argued that price analyses may be misleading.
Finally, despite the presence of network effects which pose some degree of entry barriers, TCA's market studies have demonstrated that there are entries into the market and innovation and investments determine the success of undertakings. Even though Sahibinden may charge excessive prices, this may only further motivate entries as high prices may improve economic returns of investments into this market.
It may be argued that TCA's decision to launch this inquiry represents another example of TCA's tougher stance on imperfections in competition.
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