Turkey: The Competition Board Concluded Its Preliminary Investigation Concerning Excessive Pricing Allegations and Did Not Find It Necessary to Initiate a Full-Fledged Investigation Against Soda Sanayii A.Ş.

The Turkish Competition Board ("Board") published its reasoned decision1 on the preliminary investigation concerning allegations that Soda Sanayii A.Ş. ("Soda") violated (i) Article 6 of the Law on the Protection of Competition ("Law No. 4054") by abusing its dominant position in the basic chromium sulphate market by way of excessive pricing, and (ii) Article 4 of the Law No. 4054 by engaging in vertical restrictive agreements. 

Soda, incorporated under the Şişecam Group, is a leading global manufacturer of sodium bichromate and basic chromium sulphate. In determining the relevant product market, the Board held that basic chromium sulphate differs from other chemical substances, as (i) it is used as an ingredient in leather manufacturing, and (ii) the quality of the chemical improves the results of the graining and dressing of leather and affects the quality and value of the product. In this respect, the Board defined a separate relevant product market for basic chromium sulphate.

The Board initially assessed the allegations against Soda from the abuse of dominance perspective. In its assessment, the Board first evaluated whether Soda held a dominant position in the relevant product market, before moving on to its substantive assessment under Article 6 of the Law No. 4054. Considering Soda's market shares for the previous years, the Board found Soda to be a global and European leader in terms of the chromium chemicals industry, which includes basic chromium sulphate. Within this framework, the Board assumed that Soda held a dominant position in the relevant product market and proceeded to analyse whether there had been an abuse of dominant position by way of excessive pricing at Soda's end, based on this assumption.

The Board defined "excessive price" as "the price determined consistently and significantly above the competitive level as a result of the undertaking's market power." The Board also discussed the concept of excessive pricing through conceptual and practical aspects, indicating that —from a conceptual perspective—prohibiting excessive pricing may restrict the ability of undertakings (with a certain level of market power) to determine prices for the purposes of profit maximization. Also, from a practical perspective, it held that competition authorities may be unable to efficiently analyze whether the relevant undertakings' prices are determined consistently and significantly above the competitive level.

The Board then examined the US antitrust practice and the EU competition law approach regarding excessive pricing and found that, in both jurisdictions, competition authorities tend not to interfere with excessive prices in cases where the market is expected to recover on its own in the short or medium term. However, the need for interference is expected to rise in several certain markets where there are major barriers to entry and a competitive structure is not expected to be established in the long term. In this regard, the Board concluded that market conditions, such as market shares and concentration levels within the relevant markets, barriers to entry and expansion, and buying power, should also be assessed in order to determine the merit of allegations regarding the abuse of dominant position through excessive pricing.

Furthermore, the Board referred to its previous decisions and indicated that the Board interferes with excessive prices only under limited circumstances, since such interference may have a negative effect on the market's ordinary course of business and that there is a risk of misjudgement with respect to competition authorities' assessment and interference methods.

In excessive pricing cases, echoing the practice of the European Commission, the Board evaluates the relationship between the economic value and the price of a product and applies a two-step test comprising (i) a price/cost comparison, and (ii) a comparison between the undertaking's own prices along with (iii) a comparison with the prices of competitors. Accordingly, the Board conducted a price comparison of Soda's (i) basic chromium sulphate products and those of its competitors, (ii) domestic sales prices and export prices, (iii) domestic sales prices and the consequent profit margin ratios, and (iv) export sales prices and

The Board found that Soda's products generally cost more than those of its competitors, and that Soda generally has a high profit margin with respect to its domestic and export sales. Further, the Board determined that Soda's domestic prices and the consequent profits were higher than its export prices and profits and held that this was due to the fact that (i) Soda focused its sales and marketing strategy mainly on exports, and (ii) the purchase price of the foreign manufacturers would be higher than the purchase price of the domestic manufacturers due to transportation costs and other costs which domestic manufacturers do not have to bear. The Board also stated that, even though there were no barriers to entry to the basic chromium sulphate market, Soda has been maintaining its market power throughout the years.

The Board also evaluated the allegation that Soda had violated Article 4 of the Law No. 4054 by determining its distributors' resale prices. No evidence was found that Soda had engaged in practices that lead to resale price maintenance. On the contrary, several authorized Soda distributors indicated that they were completely independent in determining their own sales terms and conditions.

In sum, the Board concluded that there were no legal grounds to initiate a full-fledged investigation of the allegation that Soda had abused its dominant position by way of excessive pricing, as Soda's prices in question can be related to and sufficiently explained by the quality and indispensability of Soda's products.

As for the Board's reasoning in constructing its decision, due to the fact that its assessment of the framework of excessive pricing is in line with its previous case law, the present decision can be considered to conform to the Board's well-established decisional practice concerning excessive pricing.

(1)The Board's reasoned decision numbered 16-14/205-89 and dated April 20, 2016.


This article was first published in Legal Insights Quarterly by ELIG, Attorneys-at-Law in June 2017. A link to the full Legal Insight Quarterly may be found here.


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
Similar Articles
Relevancy Powered by MondaqAI
ELIG Gürkaynak Attorneys-at-Law
Erdem & Erdem Law
 
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”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
ELIG Gürkaynak Attorneys-at-Law
Erdem & Erdem Law
Related Articles
 
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions