Answer ... The Turkish Competition Board has recently adopted a proactive approach towards the banking and fintech sectors, in order to ensure a competitive landscape. For example, in its Decision 18-19/337-167 of 12 June 2018, the board annulled an exemption granted to the card storage service of Interbank Card Center (BKM). BKM is a joint stock company incorporated through a partnership of 13 public and private Turkish banks, to provide solutions to common problems and develop rules and standards for the use of credit and debit cards in Turkey, within the card payment system. The board found that the fact that non-bank payment entities cannot integrate with banks to a similar extent as BKM is restricting competition on the relevant market. The board also noted that BKM’s BKM Express service, which had also benefited from an exemption, should be re-examined, on the grounds that competition failures in the card storage services market will also affect the digital wallet services market. On appeal, the Ankara 16th Administrative Court upheld the board’s decision, confirming that BKM had a competition advantage compared to non-bank payment entities due to its easy integration with banks. On 17 May 2019 it therefore rejected BKM’s request for an annulment. Unless the Regional Administrative Court or the High State Court reverses on further appeal, the board’s decision not to allow BKM to offer card storage services will become final.
In its Decision 19-20/291-126 of 30 May 2019, the board also revoked the exemption for the BKM Express service – a digital wallet that facilitates easy payment without disclosing the customer’s card information to the seller. The board’s reasoning was predominantly based on BKM’s:
- privileged integration with banks, as compared to its competitors;
- privileged system for customer identification cards;
- cross-subsidisation of the BKM Express wallet through revenues generated from other activities,
- excessive marketing and promotion expenses; and
- ability to access commercially sensitive information of competitors through its clearing and settlement service.
Also, through its Decision 17-28/462-201 of 7 September 2017, the board revoked the exemptions previously provided for bonus credit card programme agreements concluded between Garanti Bank and several other banks. The board found that a prohibition on the sub-licensing of bonus credit card programmes imposed on participating banks foreclosed payment entities in the market from acquiring new business.
Moreover, in a preliminary investigation concerning exclusive agreements between money remittance service providers and banks, the Turkish Competition Board ordered Western Union and MoneyGram to end such agreements based on foreclosure in the consumer-to-consumer international money remittance services market, through its Decision 18-27/442-212 of 8 August 2018.
Through these decisions, the Turkish Competition Board has referred to competitive provisions of the Second Payment Services Directive and implied that the enactment of equivalent legislation in Turkey may foster competition in Turkey’s fintech markets.
In light of the above, although the Turkish Competition Board had granted certain exemptions for the development of financial technologies and the establishment of cooperation between banks and other players, it is also closely monitoring the competitive structure of relevant markets and taking necessary measures to preserve competition and prevent the emergence of dominant undertakings in the fintech sector.