Turkey: Practices Contradictory To Competition In The Wholesale And Retail Market Of The Electricity Industry

Last Updated: 12 August 2015
Article by Güzin Civelek

The electricity distribution and retail industry have entered into a brand new period with the privatizations carried out within the scope of the restructuring and liberalization process of the Turkish electricity market. The competition among the actors of the electricity market has increased with the free consumer limits reduced by the Energy Market Regulatory Authority as a result of the privatizations, in addition to the enactment of the new Electricity Market Law.

As a result of the increasing competition, the existing market actors carry out various procedures and actions and strengthen their positions in order to reinforce their current status. The situation arising from some electricity retail companies and distribution companies operating in the market to be in the same economic integration causes these retail companies to dominate the relevant distribution area, as well as competition violations to occur.

PRACTICES CONTRADICTORY TO COMPETITION

Rejection of the request on the ground that the limit is not reached although the free consumer limit is exceeded: The requests of the free consumers, who get energy from a supplier within the scope of bilateral agreements, for changing their suppliers are being rejected by the supply companies in charge on the ground that they are below the free consumer limit determined every year by the Electricity Market Regulatory Authority. However, the non‑free consumers should have the right to conclude a bilateral agreement with the any supply company they want when they exceed the free consumer limit. These consumers can continue buying from the supply company in charge over the regulated tariffs, and they can also agree with another supply company over the prices set with bilateral agreement.

In case the consumers, who have just exceeded the free consumer limit, or the free consumers, who have a bilateral agreement with the supply company in charge, conclude a bilateral agreement with another supply company, then the consumer changeover requests made by the companies, which these consumers have reached to an agreement with, have to be approved by the supply company in charge within the scope of the periods and conditions set out in the Regulation on Electricity Market Balancing and Settlement; but the supply company in charge reject these changeover requests without suggesting realistic facts by using their dominant position, and this complicates the activities of the other retail companies operating in the market and causes a loss for them.

Preventing the conclusion of agreements with other retail sales companies by contacting the consumers through various means: Another unlawful practice seen in the market is the supply companies in charge sending notices to the consumers stating that the consumers should personally apply to the customer services center within 7 (seven) days to sign a retail sales agreement required for electricity sales and billing procedures to continue seamlessly and for subscription, otherwise power outages may occur pursuant to the customer services regulation.

As the electricity retail company in the region is able to have access to the consumer information more than the other retail companies as it is within the same economic integration with the electricity distribution company operating dominantly in the same area, such acts and procedures prevent the companies operating in the area from accessing to the customers /consumers and make it harder for them to compete, and these companies misuse their dominant position pursuant to article 6 of the Law on Protection of Competition by causing acts or relationships limiting or preventing competition in the market.

Rejection of the changeover requests due to existing agreement: According to the practice in force, the changeover requests of the consumers, who want to buy electricity for a better price and better conditions than the retail companies in the market, are being rejected suggesting that the consumer already has an agreement in force and the company abstains from presenting the agreements, which provides a basis for the rejection, due to confidentiality reasons. With the Regulation on Balancing and Settlement expected to come into force with various amendments on June 1, 2015, the companies abstaining from releasing the existing agreements that constitute a basis for the rejection procedures will be punished with portfolio entry ban for three months and the companies in question will not be able to enter any free consumer to their own portfolio during this three-month period.

ASSESSMENT IN TERMS OF THE TURKISH COMPETITION AUTHORITY'S DECISIONS

The acts contrary to the competition in the market have been subject to the complaints both by the consumers and the other actors operating in the market; however, no investigation has been initiated due to the reasons explained in detail below.

In the decision of the Authority taken on 03.12.2014, the consumer making an application stated that they have signed a bilateral agreement with the supply company for buying discounted electricity by using their right to become a free consumer, but their application was rejected as there was a bilateral agreement; but they told that they did not sign such an agreement, even if such an agreement is signed, then the signature on this agreement does not belong to them, thus they cannot get electricity with better conditions from another supplier. In the same decision, another consumer stated that they have reached to an agreement with a supplier company in March or April 2015 for buying discounted electricity and after concluding this agreement, they applied to the existing retail company with a written application telling that they will change their supplier; one week after this application, the officers from the existing retail company visited them and tried to convince them for withdrawing from changing to the other supplier, but they did not accept this; they appear to have a debt to the existing retail company as the meter was recently read on the date the changeover requested and they paid this debt, but the debt did not end as electricity was used during the time passed until the payment, and they could not complete the procedures for changing to the other supplier they concluded an agreement.

As a result of the applications made, the Authority has ruled that the distribution companies are obliged to provide distribution services to the supply companies in charge and to all supply companies competing to these supply companies in charge in a non‑discriminatory way, but the joint interest arising from the supply companies in charge and distribution companies to be within the same economical integration and the settled locations of the supply companies in charge in each distribution area may arise some competition violations within the scope of article 6 of the Law No. 4054.

The Authority has also concluded that the applications of some supply companies in charge for transferring the consumers, who are below the limit of free consumer, to their own free consumer portfolio through long term agreements with undertakings or group transfers may allow these companies to maintain and continuously increase their existing dominant position, and this may make the activities of the other supply companies difficult and the market may be closed to the competitor companies.

As a result of all on-site inspections and assessments made by the Turkish Competition Authority as mentioned above, the Authority has ruled for submitting all information and documentation in the file to EMRA for being used in the inspection carried out related to the matter, terminating any kind of application constituting an obstacle for the liberalization of the market, and consequently not initiating an investigation, considering that EMRA has authority related to the actions found arising from the legal and secondary legislation and there is still an inspection carried out by EMRA related to the matter.

CONCLUSION

Within the scope of the abovementioned practices and the attitude of the Turkish Competition Authority, it's evident that some actors in the market benefit from the current situations and misuse their dominant position in a way causing negative results both for the competitors and the consumers. The action required within this scope for the companies is not to ignore the acts clearly contrary to the competition by suggesting their own jurisdiction, but to determine the competition violations and to subject them to administrative sanction on the grounds that being subject to the regulation of a regulatory and supervisory authority of a market does not mean the activities in the market can go beyond the scope of the Law No. 4054.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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