Turkey: The Board Fines Turkcell For RPM After The Council Of State Annulled Its Previous Decision On Not Finding An Article 4 Infringement

Last Updated: 24 September 2019
Article by Gönenç Gürkaynak Esq

Most Read Contributor in Turkey, September 2019

The Board has recently published its reasoned decision regarding its additional investigation on whether Turkcell İletişim Hizmetleri A.Ş. ("Turkcell") violated the Law No. 4054 through RPM[1]. This additional investigation was opened to implement the decision of the 13th Chamber of the Council of State[2] (the "Court") which annulled partially the Board's decision on June 6, 2011 ("Turkcell I")[3].

In Turkcell I, the Board investigated allegations against Turkcell concerning RPM regarding prepaid cards under Article 4 of the Law No. 4054 and de facto exclusivity obligation upon sub-dealers under Article 6.

The Board ultimately dismissed the RPM allegation and decided against an Article 4 infringement. The Board however found Turkcell dominant in the markets for "GSM services" and "the wholesale and retail sale of sim cards, credit vouchers cards and digital credit vouchers, activation and other user services". The Board also decided that Turkcell abused its dominance and imposed an administrative monetary fine on the grounds that Turkcell indeed imposed de facto exclusivity on its sub-dealers by interfering with their signboard choices, decoration and other sale practices and preventing competitors to be included in the sub-dealer channel.

One of Turkcell's sub-dealers, Doğan Dağıtım Satış Pazarlama ve Matbaacılık Ödeme Aracılık ve Tahsilat Sistemleri A.Ş, brought a legal action against the decision before the Court. The Court annulled the Board's Turkcell I decision regarding the finding that Turkcell had not violated Article 4 of the Law No. 4054 through RPM. The Court held that there was ample evidence proving that Turkcell had set the retail price of credit vouchers sold by distributors, dealers and subdealers.

In order to comply with the Court's decision, the Board initiated an additional investigation against Turkcell. The Board did not analyse whether the evidence indeed indicated an Article 4 infringement but simply referred to the Court's assessment on this evidence, such as tables prepared by Turkcell to set the profit margins for all levels of the supply chain. Accordingly, the Board unanimously decided that Turkcell had infringed Article 4 of the Law No. 4054 through RPM practices.

With regard to the fine calculation, the Board first considered recidivism as an aggravating factor since the Board had fined Turkcell for RPM also in 2005[4]. The Board also held that while the law did not provide an explicit time limit for recidivism, the general statute of limitation for competition law infringements under the Law No. 5326 on Misdemeanor, i.e., eight (8) years, should also apply to increase the fine for repeating offences. As Turkcell I was based on documents from the period between 2006 and 2008, i.e., dated after the previous RPM decision, the Board held that recidivism was applicable and increased Turkcell's base fine. The Board further increased the fine due to the duration of the infringement, which was between 1-5 years. In terms of the turnover to be taken into consideration for calculating the base fine, the Board compared Turkcell's turnover for 2010 -the amount that would have been considered if the Board had decided on a fine in Turkcell I- against its turnover for 2017. The Board decided to proceed with the fine calculation based on Turkcell's turnover for 2010, which was in Turkcell's favor.

While the Board unanimously found an Article 4 violation in this second decision, two Board members had a dissenting opinion on the fine. These Board members argued that both types of violations (i.e., RPM and exclusivity practices) committed by Turkcell serve the same purpose, namely keeping the dealers under control. Accordingly, even if these two conducts were analysed under two different provisions of the Law No. 4054, namely, Articles 4 and 6, the acts pursuing the same goal cannot be deemed separate infringements. The dissenting opinion therefore found that since the Board had already fined Turkcell in the Board's Turkcell I decision for abuse of dominance, this second fine for RPM would not comply with the law.

This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in September 2019. A link to the full Legal Insight Quarterly may be found here

[1] The Board's decision dated January 10, 2019 and numbered 19-03/23-10.

[2] The 13th Chamber of Council of State's decision dated October 16, 2017 and numbered 2011/4560 E., 2017/2573 K.

[3] The Board's Turkcell I decision dated June 6, 2011 and numbered 11-34/742-230.

[4] The Board's decision dated December 29, 2005 and numbered 05-88/1221-353.

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