Introduction

The Turkish Competition Authority (“Authority”) is preparing itself to regulate the new era of competition law, mostly concerning the digital markets. The efforts of the Authority in this respect can be significantly observed not only from the recent decisions of the Turkish Competition Board (“Board”), but also from the public speeches and other resources published by the Authority. One of the most significant products of the Authority’s efforts targeting the digital markets is the E-marketplace Platforms Preliminary Sector Inquiry Report (“Report”). Many findings of the Authority’s Report reveal that commercial data obtained by the e-marketplace platforms raise competitive concerns to a large extent. It is likely that the final version of the report will radically change the practices of e-marketplace platforms and will bring brand new approaches, especially regarding data-driven competitive concerns.

1. Fundamental Competition Concerns as per the Report

The Report handled fundamental competition concerns from three aspects: (i) cross platform competition, (ii) intra-platform competition, and (iii) consumers.

By means of cross platform competition, it is underlined that due to network effects in the relevant market, the gatekeeper undertakings can easily push their competitors out of the market. The Report also sets forth that the Most Favored Customer Clauses (“MFC”), exclusivity conditions, and the prevention of data portability are the main practices that can harm cross-platform competition. The Report also finds that there is no efficiency gain to justify the broad MFC clause implementation by gatekeepers. Also, the Report emphasizes that there should be no technical or behavioral barriers for the transfer of the vendor and consumer data held by the gatekeepers, since data provides significant market power to platforms.

By means of intra-platform competition, the Report raises awareness to the fact that e-marketplaces may also operate as vendors in their own platforms. This provides asymmetrical advantage to e-marketplaces, which is technically called “self-preferencing”. Self-preferencing includes practices such as prioritizing their own products in rankings and obtaining unfair advantage in sales by using vendors’ data. To prevent self-preferencing, the Report suggests that the listing, ranking, and related service usage conditions should be determined “objectively” and shared with the vendors in a “clear,” “understandable” language, in a “transparent” and “easily accessible” way. In addition, the Report underlines that the commercial terms between vendors and e-marketplaces are mostly determined unilaterally by the platforms due to their high bargaining power. Thus, the Report states that it is important to establish a business environment that will operate in line with the principles of “objectivity,” “transparency,” “clarity” and “predictability.”

Moreover, the Report sets forth fundamental concerns for consumers. Primarily, the Report states that the main concern for consumers is the fallacy of free service and data exploitation. Consumers, just like in other platform economies, actually pay with their data for services that they think are free. The Report states that the data collected from consumers make them vulnerable to manipulation and exploitation. In order to prevent this situation, the Report states that e-marketplaces’ should adopt policies that are “clear,” “transparent,” “easily accessible” and “adaptable to preferences”.

2. Policy Recommendations

The Report offers three policy recommendations as a solution, which are listed below:

  • strengthening of secondary legislation in the area of competition law,
  • implementation of a platform code of conduct regulation,
  • implementation of a gatekeeper regulation.

These radical suggestions aim to prohibit e-marketplaces from imposing MFC clauses on vendors, using non-public data obtained from the activities of the vendors in platforms’ own products in competition with the products of these vendors. Similarly, the recommendations include prohibiting undertakings or companies belonging to their group from granting advantages to their own products in the rankings on their own platforms, or creating technical or behavioral obstacles to the transfer of the data provided by their vendors or consumers to other platforms. The most important suggestion to the Board is the notification of all acquisitions of undertakings that are classified as gatekeepers, regardless of the notification thresholds included in the Communiqué No. 2010/4 on Mergers and Acquisitions Calling for the Authorization of the Competition Board.

Conclusion

The final version of the Report is expected to be a game changer, as it clearly sets forth the competition concerns detected by the Authority. By means of cross platform competition, the Report names two primary concerns; network effects and MFC clauses. For intra-platform competition concerns, the Report addresses to the fact that e-marketplaces may also operate as vendors in their own platforms. The last competitive concern is fallacy of free service and data exploitation of the consumers. The policy recommendations of the Report include strengthening of secondary legislation in the area of competition law, implementation of a platform code of conduct and a gatekeeper regulation.