Turkey: Tüpraş Decision And The Rebate Systems

Last Updated: 3 January 2017
Article by Elif Mungan

Introduction

The Competition Board ("Board") has evaluated whether Türkiye Petrol Rafinerileri A.Ş. ("Tüpraş") abused its dominant position through its turnover premium rebate system in accordance with Art. 6 of Act No. 4054 on the Protection of Competition ("Competition Act") in its decision1 dated 16.03.2016 and numbered 16-10/159-70.

Tüpraş and the Relevant Market

Tüpraş, the greatest oil refinery in Turkey, is active in regard to the procuring, exporting, importing and stocking of unprocessed petroleum, the processing of unprocessed petroleum or semi-finished petroleum, producing every type of petroleum product, by-product or side-product, and stocking, blending, exporting and launching the products produced through the processing of the unprocessed petroleum. Tüpraş has been privatized through the Board's decision dated 21.10.2005 and numbered 05-71/981-2702.

The Board determined the relevant product market as the "diesel oil whole sale market," and identified the relevant geographic market as "Turkey." Moreover, the Board stated that Tüpraş holds a dominant position in the relevant product market, and based its dominance evaluation upon its previous decisions3.

Tüpraş's Rebate System

The Board reviewed Tüpraş's "Year 2016 Fuel Sales Implementations" ("Sales Implementation") that is sent to fuel distributor companies. The Sales Implementation comprises the order notifications, revisions, compliance, maturity, payment, warrant, interest for the fuel distributor companies and other commercial conditions for other types of fuels.

The complaint primarily concerns the "turnover premium system" that is applied to the fuel types and regulated in the Sales Implementation. It is alleged that the gradual turnover premium system will strengthen the positions of the four-five distributors in the distribution sector in which the premium margins are very low. Moreover, the system will result in discrimination between the distributors and, therefore, middle and low level distributors may be excluded from the market, since there are large gaps between the tiers4.

The Board stated that the turnover premium implication can be regarded as a rebate system and can be evaluated as a breach of competition law, if the system results in anti-competitive exclusion or discrimination. Firstly, the Board decided that the rebate system cannot result in exclusionary effects, since approximately half of the diesel demand is met through imports, and Tüpraş is the only diesel producer in Turkey. Therefore, the Board evaluated whether the rebate system may, in consequence, create discrimination amongst the distributors.

According to the decision, although the rebate system is a retro-active and progressive system, it is flexible for the customers, since the tiers can be revisited if the customers exceed or cannot reach the determined amount for the tier. Moreover, the rebate system is defined as a transparent and standardized rebate system that is provided to all customers with equal conditions, and in objective amounts. The reason for the application of the rebate system is to use the increased diesel supply capacity and, following the increase, the diesel demand will continue to be met through imports, and the rebate system will not limit the distributor's import opportunities. Besides, the rebate system is likely to result advantageously for middle and low-level distributors, since the first tier starts from a reasonable level, and the system's marginal contribution gradually decreases. Moreover, 99% of Tüpraş's total diesel sales will benefit from the rebate system. The Board mentioned that the rebate system is less likely to result in anti-competitive effects in the diesel market, since the structural features or the purchasing power do not determine the diesel market's competition conditions, and there are many players in the subject matter market. The Board also considered the distributor responses concerning the rebate system that indicate that the rebate system does not result in discriminatory practices, but will have a consequence to cost benefits among importer distributors and distributors who does not have the capacity to import and reduce the differences with regard to the purchase conditions among the different-scale undertakings. Within that context, the Board decided that Tüpraş has not abused its dominant position through its rebate system in accordance with Art. 6 of the Competition Act.

Past Competition Board Decisions in Regard to the Rebate Systems

According to the secondary legislation, and the Board's past decisional practice5, the retroactive rebate schemes raise fidelity inducing effects. That being said, the retroactive rebates6 are more likely to cause anti-competitive foreclosures since competitors will be required to propose a larger discount to customers in order to persuade them to switch sellers, rendering them unable to compete with the dominant undertaking, under equal conditions for the entirety of each customer's demand. Furthermore, the personalized rebate schemes7 are prone to consequences under competition law concerns, such as exclusion of the rivals, as well as aggravating market entries. According to the decisional practice of the Board, the retroactive and personalized features of a rebate scheme have a direct effect with regard to the determination of its loyalty inducing effects. Progressive rebates8 are defined as having the potential to address a greater part of the market in comparison with fixed-ratio rebates9.

On the other hand, The Board found that Tüpraş's retroactive and progressive rebate scheme is not anti-competitive, since it is considered to be a flexible scheme. As explained above, the Board based its "flexibility" assessment upon the amendable places of the customers who exceed, or cannot reach, the determined amount for the tier. Furthermore, the Board considered the market conditions, as well as the effects and the benefits of the rebate system.

Conclusion

The Tüpraş decision is significant for the reason that it provides guidance in regard to the competition law aspects of the turnover premium rebate schemes of the dominant undertakings. Moreover, the decision shows that the Board considers the special features of the rebate scheme along with the market conditions. Therefore, it is correct to conclude that the Board has adopted a more analyzing approach, instead of a formal approach, since it examined all the features of the rebate scheme, and was not solely focused on the retroactive and progressive characteristics of the system.

Footnotes

[1] Please see. http://www.rekabet.gov.tr/File/?path=ROOT%2f1%2fDocuments%2fGerek%C3%A7eli+Kurul+Karar%C4%B1%2f16-10-159-70.pdf (Access date: 06.09.2016).

[2] Please see.
http://www.rekabet.gov.tr/File/?path=ROOT%2f1%2fDocuments%2fGerek%25c3%25a7eli%2bKurul%2bKarar%25c4%25b1%2fkarar1364.pdf (Access date: 06.09.2016).

[3] Competition Board's decision dated 21.10.2005 and numbered 05-71/981-270 ; Competition Board's decision dated 20.06.2008 and numbered 08-40/537-202; Competition Board's decision dated 04.11.2009 and numbered 09-52/1246-315.

[4] The turnover premium system includes different purchase tiers. According to the system the minimum rebate rate is provided to the purchases amounting between 10,000-100,000 tones and the maximum rebate rate is provided to the purchases amounting 1,500,000 tones and more than 1,500,000 tones.

[5] Please see Competition Board's decision dated 30.03.2011 and numbered 11-18/341-103; Competition Board's decision dated 17.03.2011 and 11-16/287-92.

[6] Rebate systems in which the customer can obtain discounts for all of its purchases from the undertaking offering the rebate within the relevant period if it hits the rebate target are called "retroactive rebates".

[7] Personalized rebate schemes include purchase targets individualized depending on the demand of each customer. If a purchase target applicable to all customers serves the same function as an individualized purchase target for a certain group of customers, the target in question is considered to be individualized for those customers.

[8] Progressive rebate schemes comprise more than one target and more than one discount rate meeting each discount target.

[9] Arıtürk, Remzi Özge, İndirim Sistemleri: AB ve ABD Uygulamaları Işığında Test Önerileri ve AB Uygulamasındaki Son Gelişmeler, Competition Journal, 2011, 12(1): 6

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.