In May 2017, Insurance Association of Turkey ("IAT") knocked the door of the Turkish Competition Authority ("TCA") in order to initiate a new project (OSEM standards), which aimed to reduce or at least control the damage expenses of insurance companies that originated from motor vehicle and compulsory traffic insurance. The Association set forth that both consumers and insurance companies would benefit from a standardized secure repair service at a reasonable price with the new project or OSEM standards.
OSEM, which is established by the IAT in 2015, is currently engaged in certification and training programs for automobile spare parts and repair service points. In this regard, in January 2017, IAT decided to implement OSEM or similar quality standards certificate as a minimum standard for all automobile service points including authorized and special repair services that have been working with the members of the Association after the approval of the TCA to the new project through individual exemption.
In its individual exemption application, IAT primarily pointed out that IAT is a public legal entity and both its and OSEM's activities are supervised by the Treasury. However, the TCA concluded that even if the IAT is a public legal entity, this decision of IAT annihilate the possibility for the members of the IAT to take their decisions independently. In addition, the TCA considered that this decision would affect the competition in the damage repair services market since services that do not fulfil the required certification could not work with the insurance companies with the implementation of the project. Thus, the TCA concluded that the decision of the IAT was in the scope of the Competition Act.
The TCA considered three different relevant markets in its individual exemption assessment, which are namely (i) motor vehicle and compulsory traffic insurance market, (ii) damage repair services market and (iii) standardization and certification services for damage repair services market. The TCA examined the effects of OSEM standards project for each of the three relevant markets under the four conditions of individual exemption listed in the fifth article of Competition Act. The four conditions are (i) Ensuring new developments and improvements, economic or technical development in the production or distribution of goods or services; (ii) Benefitting customer from the above-mentioned; (iii) Not eliminating competition significantly in the relevant market; (iv) Not limiting competition more than what is compulsory to achieve the goals set out in (i) and (ii).
Even if the certification obligation ensure new developments and improvements in the relevant markets, the TCA emphasized that consumers would not benefit from the new project. In addition, the TCA concluded that the certification obligation imposed by the IAT do not fulfil the other conditions of individual exception and therefore, the TCA denied the request of IAT for OSEM standards.
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