Trendyol, the leading online marketplace platform in Turkey, appealed against the decision 1 of the Turkish Competition Board that held that Trendyol had violated Law No. 4054 on the Protection of Competition by discriminating between sellers in its marketplace and acting with favouritism for its own retail line and thus ordered an interim measure. This decision has brought much excitement alongside serious debate as to the application of interim measures in Turkish competition law and especially in the globally hot-topic area of e-marketplaces and digital platforms. Let's take a look at how it all unfolded.

Background

Following complaints that Trendyol, which is controlled by Alibaba, had violated the law, the Board launched a preliminary investigation to assess the alleged violations. Following on-site inspections conducted within the scope of the preliminary investigation, the Board found evidence indicating that Trendyol had engaged in the following behaviour:

  • intervening with algorithms to place its own retail products at an advantage and providing next-day delivery service only for its own products;
  • using the data of sellers in the marketplace to shape its own marketing/design strategies to gain advantage in its own retail operations;
  • discriminating between vendors in the marketplace through interventions in algorithms and lack of transparency regarding sponsored products.

The Board consequently ordered Trendyol  to apply interim measures, which included terminating any discriminatory practices in the marketplace such as interventions with algorithms and coding, using algorithms to its advantage to promote its own products, using data obtained from the marketplace and other sellers to its advantage, etc. The interim measure also included measures with respect to the software used by Trendyol, including that Trendyol must keep the personal access, authorisation and supervision logs, source codes, and parametric and structural changes of the software, including older versions and ensure their undeniable accuracy, for eight years.

The court's assessment

The findings that the Board considered as evidence of violations were evaluated by the Ankara 9th Administrative Court (the court of first instance) and the findings of violation were addressed separately.2

(i) Whether Trendyol, acting as a retailer, intervened with the algorithm to place its own retail products at an advantage, and that next-day delivery service was provided only for its own products.

The court found that certain documents obtained date back to 2017, when Trendyol was not operating as a marketplace platform and holding a dominant position in the market. Furthermore, the court compared Trendyol's and the other sellers' sales operations and assessed that, contrary to the third-party sellers on its platform, Trendyol runs three different sales models, namely (1) sale of its own products, (2) resale of third-party brands, and (3) procurement of products to Trendyol's warehouse after the internet sale of the products and the resale of these products.

In this regard, the court stated that a provision prohibiting a commercial undertaking from engaging in commercial relations by using different sales methods is not regulated in Turkish legislation. Consequently, the court took the stance that the possibility of serious and irreparable damages emerging and a violation severe enough to justify the application of interim measures was not present in this case. Moreover, the court analysed whether the next-day delivery option was available to other sellers on the platform and concluded that the sellers in fact had the same delivery options as Trendyol as a retailer. Therefore, the court ruled that the said grounds were not adequate to impose an interim measure on Trendyol.

On the other hand, other documents that demonstrated that Trendyol's own brands Trendyol Man, Trendyol Milla and Trendyol Kids were not included in the normal ranking filter and were moved to higher rankings with computer coding were found to be legitimate for the application of the interim measures.

(ii) Whether Trendyol used the data of sellers in the marketplace to shape its own marketing/design strategies.

Documents showing that strategic information such as the Marketplace Trading Information Report, which includes specific information regarding the activity of the retailers in the marketplace, and that the report on the 250 most-searched words was only shared among Trendyol employees and was not available to other sellers in the marketplace in order to improve Trendyol's sales to the detriment of other sellers, were interpreted as causing the possibility of serious and irreparable damages, and thus the court held that interim measures regarding such activity was justified.

(iii) Whether Trendyol discriminated between vendors in the marketplace through interventions in the algorithm and lack of transparency regarding sponsored products.

The court indicated that the Board did not provide any evaluation regarding whether the sellers that were alleged to be discriminated against had equal status (i.e. sellers subject to equal rights and obligations), and there is no information or document in the case file that proves that the situation is in danger of causing an infringement of competition. There may be certain different applications between sellers with different status, and positive discrimination can be used with regard to sellers in order to solve technical problems. It was also claimed that support is provided to a newly opened boutique to support its orders. Such support does not have anti-competitive features; on the contrary, providing support to a newly introduced seller or product is a pro-competitive factor. Furthermore, it is not legally possible to apply a measure by making an evaluation in the form of a final decision with the interim injunction decisions that Trendyol discriminates between sellers. Moreover, the Board has not yet rendered its final decision regarding Trendyol's alleged violations, and the fact that Trendyol's conduct constitutes discrimination and that this will lead to an abuse of dominant position can only be determined in the Board's final decision regarding the allegations. Without a final decision, it is not possible to determine that Trendyol has abused its dominant position by discriminating between sellers. The court continued its assessment by explaining that it is clear that in this situation the use of interim measures as the main punishment tool exceeds its purpose and is not compatible with the principle of the rule of law.

(iv) Whether the duration of the interim measures is compatible with the law.

A striking point in the court's analysis is that the court highlights that the interim measures set for the supervision of effective compliance regarding software, which are set for eight years, is too extensive in terms of duration. Consequently, the Board emphasised that interim measures that extend beyond the final decision of the Board are not legitimate.

Conclusion

The court continued its assessment by evaluating the interim measures included in the comprehensive interim measure package one by one in order to decide whether the measures decided by the Board followed the law. Consequently, with respect to the first allegation—that Trendyol intervened with the algorithm to place its own retail products at an advantage and that the next-day delivery service was provided only for its own products—the court only partly cancelled the Board's interim measures. For the second allegation—that Trendyol used the data of the sellers in the marketplace to shape its own marketing/design strategies—interim measures could not be justified. Similarly, the court held that for the third allegation—that Trendyol discriminated between vendors in the marketplace through interventions in the algorithm and lack of transparency regarding sponsored products—the Board was unable to justify its imposition of interim measures on Trendyol and they must by cancelled.

Footnotes

1 Competition Board's Trendyol Interim Measures decision dated 30/09/2021 and numbered 21-46/669-334.

2 Ankara 9th Administrative Court's decision dated 25/05/2022 and numbered E. 2021/2069, K. 2022/1157.

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