Turkish Competition Authority ("TCA") has accepted the second commitment package submitted by Yemek Sepeti, pertaining to the investigation initiated with its decision dated 04.06.2020 and numbered 20-27/336-M, and decided to cease the investigation with its decision dated 28.01.2021 and numbered 21-05/64-28. The decision has been published on TCA's official website on 04.08.2021. What is new about this investigation is that TCA published a short video on its official website on 01.06.2022, regarding the underlying reasons of this investigation to explain what the relevant decision of TCA means for the consumers, restaurants, and other stakeholders such as other competing platforms.
Background
TCA has initiated an investigation against Yemek Sepeti, the online food delivery platform with its decision dated 04.06.2020 and numbered 20-27/336-M. The investigation aimed to assess whether Yemek Sepeti has violated the Articles 4 and 6 of the Competition Law No. 4054 (the "Law") through;
- applying a "narrow" most-favoured customer clause,
- forcing restaurants to apply mandatory discounts (the application of the well-known Yemek Sepeti campaign called "Joker")
- dictating the minimum purchase prices to restaurants
- cost pricing of the "Yemek Sepeti Vale" business model.
While the investigation process was ongoing, Yemek Sepeti submitted its commitment package on 02.11.2020. However, TCA found the commitments insufficient to resolve the competition concerns and rejected the application. Afterward, Yemek Sepeti requested permission for another application and accordingly submitted a second commitment package on 22.01.2021. TCA found this commitment package sufficient to correspond to the competition concerns and ceased the investigation.
Before analyzing TCA's competition concerns and relevant commitments of Yemek Sepeti, we find it beneficial to highlight the business model of the Yemek Sepeti platform. Yemek Sepeti has a multilateral business model, which consists of customers ordering food ("Orderers") and the food provider restaurants ("Restaurants"). While Yemek Sepeti does not request an additional service fee from the Orderers using its platform, the Restaurants pay a proportion of the order value as a commission fee to Yemek Sepeti. The Orderers pay for their food online or through cash-on-delivery. The delivery service is principally provided by the Restaurants, however, when required, the delivery is performed by Yemek Sepeti(Yemek Sepeti Vale)in return of an additional service fee requested from the Orderers.
What were the competition concerns?
- The Most-Favored-Customer Clause:
The MFC requirement basically requires the seller or supplier to guarantee its customer that it will not provide more advantageous conditions to another customer. The MFC can be applied in a wide and narrow scope. Narrow MFC ensures that the sale conditions (pricing and other sale conditions) of the member Restaurants provided in the Yemek Sepeti platform will not be more disadvantageous than the sale conditions applied on the member Restaurants' own platforms. While wide MFC also ensures similar protection, it also covers all other competitor platforms and/or other offline channels such as telephone and direct face-to-face sales.
In the course of the investigation, TCA detected that; Yemek Sepeti, on the grounds of the Narrow MFC clause, monitored the conditions applied by the Restaurants at their direct sales, and Yemek Sepeti thereupon equalized the conditions on their platform with the conditions applied at direct sales; which ended up with Restaurants increasing their prices to compensate the commission fee they are liable for, which consequently affected the Orderers negatively.
While Narrow MFC practice may prevent Restaurants from developing their own channels, it further strengthens the user network of Yemek Sepeti and further increases the Restaurant's current dependence on Yemek Sepeti. On the other hand, the disadvantageous position of competing platforms against Yemek Sepeti is preserved, considering its wide Orderer and Restaurant network, along with the comparative weakness of competitive platforms, when it comes to forcing the Restaurants to apply the discounts applied at their own sales channels.
In this respect, the Narrow MFC application is a competitive advantage for Yemek Sepeti, while it is disadvantageous for Orderers and market blockage for competitive platforms.
- The Mandatory Discount Practice (Known as TheJokerPractice):
Joker offers a discount to the Orderer, provided that certain conditions are met. The conditions require that the Orderer must have never ordered from the Restaurant or have not ordered from that Restaurant at least for the last 120 days, and the Restaurant must be delivering orders to the neighborhood of the Orderer.
In the course of the investigation, TCA detected that Yemek Sepeti was obliging the single branch Restaurants to be included in Joker. Even though some Restaurants were willing to be included in Joker, there were many others complaining about this practice, since they were not receiving any positive feedback from their Orderers or they were being exposed to abuse due to this practice through multiple fake user accounts created by the same Orderer. On the other hand, the Restaurants were not able to provide the same discounts on other online platforms due to the costs. Consequently, while Yemek Sepeti was providing benefit through being able to serve more Orderers by obliging Restaurants to make discounts to Orderers, it was also putting other competitive platforms not strong enough to oblige Restaurants to apply a similar discount, in a disadvantageous position. TCA decided that, even though mandatory Joker was only being applied to a limited number of Restaurants, these Restaurants were mostly the non-chain Restaurants which constitute the essential target for the competitors entering this online-platform market, therefore the mandatory Joker causes Restaurants to be dependent on Yemek Sepeti through forcing them to use their limited resources to comply with mandatory discount policy thereof, and it has an exclusionary effect for the new competitors in the market.
- Dictating The Minimum Purchase Price:
The minimum purchase price practice basically obliges the non-chain Restaurants to apply the minimum purchase price as set by Yemek Sepeti. The vast majority of the Restaurants obliged to comply with this minimum purchase price state that they would determine a higher minimum purchase price due to their expenses arising from the delivery costs regarding low-priced orders (such as minimum amounts of water, soft drinks, etc.) unless they were bound with this requirement. Additionally, the Restaurants rejecting such orders receive warnings from Yemek Sepeti which result in a decrease in their Restaurant ratings, as well as negative scores and comments.
On the other hand, since these non-chain Restaurants are dependent on Yemek Sepeti, they are forced to accept the low-priced orders dictated by Yemek Sepeti, instead of the higher-priced orders they receive from other platforms in rush hours; which results in an increase in the costs of Restaurants, which has a negative reflection on Orderers as an increase in the menu prices, and again, a disadvantageous position of competitive platforms.
- The Courier Service Practice (Yemek Sepeti Vale):
Yemek Sepeti provides two different services; a platform for food orders and the delivery thereof for the Restaurants unable to perform the delivery. In such a model, any customer who receives the platform service from Yemek Sepeti is also obliged to receive the delivery service from Yemek Sepeti as well, which is called "bundling" in competition law terminology.
Considering the dominant position of Yemek Sepeti in the market, TCA evaluated that the sub-cost pricing of delivery services of Yemek Sepeti through "Yemek Sepeti Vale" may distort competition, which may be exclusionary for its competitors in the market both in the short and long term.
What were the commitments provided by Yemek Sepeti?
Yemek Sepeti committed that;
- the MFC practice will be terminated within six months of the receipt of the reasoned decision,
- the Joker practice will be terminated within six to nine months following the receipt of the reasoned decision,
- the minimum purchase price practice will be redesigned for the price to be determined by the Restaurants within one week following receipt of the reasoned decision,
- The pricing of Yemek Sepeti Vale business model is amended as covering the couriers' expenses, such as their salaries, meals, communication expenses, and fuel in June 2020, and will be maintained accordingly.
- Yemek Sepeti will inform TCA regarding the fulfillment of its commitments at the end of every three-month period.
TCA evaluated and decided that these commitments were sufficient to eliminate the competition concerns and decided to cease the investigation by approving and acknowledging the commitments as binding.
Conclusion
By reminding its Yemek Sepeti decision, TCA represented its effort and sensitive stance to protect competition in the online platform market. There are essential takeaways from TCA's Yemek Sepeti decision as to which undertakings must be taken into consideration while determining business strategies.
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.
