Selective pricing may lead to an abuse of dominant position within the meaning of Article 6 of Law No. 4054 on the Protection of Competition (the "Competition Law"). Selective pricing occurs when a dominant company sets different prices for the same product or service, depending on the market in which it is being sold. The dominant firm may, for instance, choose to apply lower prices for products for which it competes with others and cross-subsidize the losses through applying higher prices in products where there is no or insignificant competition. Depending on the evidence, similar practices may lead to the finding of a selective pricing violation.
Selective pricing is not explicitly defined. However, there are several decisions of the Board where the selective pricing is assessed as a form of abuse of dominance. The Board may find a selective pricing violation in cases where the dominant company (i) implements higher prices to its own regular customers than the potential customers in order to attract competitors' customers or (ii) underprices its products in a selective manner, such as lower pricing of a product in less competitive markets.
The issue of whether selective pricing is anti-competitive is a matter of controversy given that low price levels are a natural consequence of a competitive market. Adopting low standards of proof for selective pricing cases may have the unintended effect of increasing prices in competitive markets. It is therefore important to carefully distinguish whether the dominant company's below-cost selective pricing strategy aims at excluding competitors from the market. Accordingly, the Board assesses pricing behavior of a dominant company from the point of (i) the investigated company's position in the market, (ii) the competitors and their positions, and (iii) intent.
By way of an example, in Anadolu Cam/Marmara Cam (06.08.2009; 09-35/877-206), Anadolu Cam was a dominant company in the market for glass bottling products with a market share of around 97% and it lowered its prices in a public tender to a very low degree, in order to drive its only competitor Marmara Cam out of the market. To this end, the Board engaged in a selective pricing evaluation and assessed whether four conditions of selective pricing were met namely, (i) the undertaking in question should be in dominant position, (ii) the dominant undertakings should be in a position to complicate its competitors' activities through strategic behaviors that are independent from its costs (iii) there should be only one rival in the relevant market and (iv) clear evidences should indicate that the dominant undertaking has acted with exclusionary motive. In this respect, the Board found that these four conditions were met and thus, the Board imposed administrative monetary fines on Anadolu Cam on the grounds that Anadolu Cam's pricing behavior constitutes selective pricing conduct.
In Turkcell-Vodafone case (20.05.2008; 08-34/453-159) , Turkcell was a dominant company in the GSM services market and it lowered its prices for Vodafone's customers for a definite period in return for subscription to Turkcell in order to drive its biggest competitor out of the market. Since the relevant sectorial regulatory authority interfered in Turkcell's pricing behavior in question, the Board decided to close the case without further action.
In TUPRAS, TUPRAS, the dominant oil explorer and driller, lowered its prices for POAS. The Board stated that TUPRAS's pricing behavior constitutes selective pricing as it implements lower prices in more competitive markets while implementing higher prices in less competitive markets. That said, the Board concluded that TUPRAS's selective pricing behavior does not constitute an abuse, since TUPRAS's selective pricing arises from the unsteadiness of the market.