Turkey: Turkish Competition Authority Initiates Exposition And Trade Fairs Sector Study

Last Updated: 13 June 2017
Article by Dr. Eren Gunay

Turkish Competition Authority ("TCA") has decided to launch a study on the exposition and trade fairs sector in Turkey in an attempt to identify whether any competition failures in the industry may be attributed to behavioral or structural issues and to identify reliable metrics and indicators to be utilized for future determination of dominant positions and abuses conduct. As precondition to the proper application of Articles 4, 6 and 7 of Law No: 4054 on the Protection of Competition ("Competition Law"), the market needs to be properly defined, therefore the study will also attempt to determine the relevant product / service markets and geographical markets for the exposition industry. TCA has called on stakeholders to contribute their opinions and suggestions.

Principal actors in the industry are venue operators, exposition organizers and exposition participants i.e. exhibitors. Further stakeholders may include service providers, industry associations, public institutions and visitors. Past investigations of TCA have concerned agreements and relations between venue operators and organizers, between organizers and exhibitors and between service providers and venue operators or organizers.

In Turkey, under Articles 12 (v) and 34 (l) of Law No: 5174 on The Union of Chambers and Commodity Exchanges of Turkey ("TOBB"), chambers and commodity exchanges are tasked with evaluating applications for expositions and make propositions to the Union and under Article 56 (g) TOBB is authorized to decide those applications and grant permits to organize expositions. As part of its duties, TOBB also verifies that venues are required meet their suitability conditions and standards. An exposition may only be held at an approved venue and organized by a permit holder. These requirements may lead to dominant positions in the markets for operation of venues and organization of expositions. Thus, TCA's inquiries within this sector with respect to Article 6 concerning abuse of dominant position usually involve organizers being denied venues or exhibitors being denied participation in such expositions. Therefore, the sector study will encompass in-depth analysis of market placement of sector participants within the markets for operations of venues and organizations of expositions. Thus, the report will determine reliable parameters to identify market dominance and indications of abuse of dominance.

Non-compete clauses imposed on organizers or exhibitors, exclusive dealing obligations imposed on venue operators, and various obligations imposed by trade associations representing exhibitors on their members may be considered violations of Article 4 concerning agreements, concerted practices and decisions limiting competition. In contrast, said obligations may benefit from block exemptions outlined in Article 5, conditional on meeting all requisite conditions. The purpose of this sector study is to demonstrate the effect on the competitiveness of the market of contracts and behavior, which fall under the scope of Article 4 and determine under what conditions they should benefit from Article 5 exemptions.

Another concern for the study is the concentration of market power in the operation of venues through actions not subject to regulatory approval under Article 7. In order to develop solutions to possible market competition failures, the study will aim to chart the market position of sector players in the venue operation and exposition organization markets separately.

In addition to the behavioral and structural problems outlined above, TCA informs that the study will consider the effectiveness of regulation and overseeing institutions (presumably referring to TOBB) on market competition in the sector.

A Look Back At Decade-Long Disputes

TCA has repeatedly investigated CNR Uluslararası Fuarcılık ve Ticaret AŞ (CNR) upon complaints by NTSR Fuar ve Gösteri Hizmetleri Limited Şirketi (NTSR). NTSR initially alleged in 2007 that CNR was abusing its dominant position in violation of Article 6 through imposition of unacceptable terms in its rental agreement rendering NTSR unable to operate in the market. NTSR held its exhibition at CNR between 1993 and 2006, but CNR significantly raised rents in 2007. Since 2007, CNR has been organizing its own boat exhibition "Eurasia Boat Show". TCA determined that CNR indeed significantly raised rates in its 2007 offer to NTSR, but further determined that in previous years, CNR charged NTSR rental rates significantly below those charged to other organizers.

In September 2007, TCA decided that CNR had dominant positions in the market for venues suitable for boating and water sports exhibitions in Istanbul and in the downstream market for boating and water sports exhibitions, but there was not sufficient evidence of abuse of dominant position, including the rent increase that led NTSR to its original complaint. TCA further noted that CNR was obligated to deal with NTSR.

In 2008, NTSR repeatedly complained that CNR refused to deal with NTSR on exhibition grounds for its "International Istanbul Boat Show", failing to meet the obligation to deal noted by TCA in its September 2007 decision and repeated in its February 2008 decision.

In October 2009, TCA again decided that CNR had dominant position in the market for venues suitable for boating and water sports exhibitions in Istanbul and in the downstream market for boating and water sports exhibitions, but there was no conclusive evidence for abuse of dominant position. CNR was fined 0.1% of its 2008 gross income (32,892.79 TRY) for incorrect and misleading declarations during the preliminary investigation, including fabrication of a backdated reservation request from another organizer to create basis to deny NTSR's request. TCA also found that other dates subject to reservation demands were claimed to be previously reserved by exhibition organized by companies within the same economic entity as CNR.

In March 2014, the Council of State annulled Article 2 of TCA's 2009 decision, finding CNR's conduct abusive pursuant to Article 6 of Law No: 4054. Pursuant to Law No: 2577 on Procedure of Administrative Justice, TCA reopened its investigation against CNR in response to Council of State annulment of its March 2017, CNR lost its appeal of the Council of State decision.

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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