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TURKEY: An Introduction to Competition/Antitrust

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The relevant legislation establishing competition law principles in Turkey is Law No. 4054 on Protection of Competition of 13 December 1994 (‘Law No. 4054’). This legislation is reinforced by various regulations, communiqués and guidelines, which are adopted in parallel to secondary legislation of EU competition law. The national competition agency enforcing competition law rules is the Turkish Competition Authority (the ‘Authority’), a legal entity with administrative and financial autonomy.

As for the Turkish Competition Board’s (the ‘Board’) recent decisions where it imposed an administrative monetary fine due to restrictive agreements or concerted practices (Article 4 of Law No. 4054), the Board has recently levied an administrative monetary fine within the investigation launched against Trakya Cam. In the Trakya Cam decision (14 December 2017, 17-41/641-280), the Board assessed whether by way of de facto application of the distribution agreements as of 2016, which have been determined to be in violation of Articles 4 and 6 of Law No. 4054 through the Board’s decision (2 December 2015, 15-42/704-258) and revoked the individual exemption granted to Trakya Cam’s “Industrial Customer Purchasing Agreement” signed between Trakya Cam and industrialist customers. Trakya Cam was fined TRY17,497,141.63, and it was decided that eighteen of its distributors would be given written notices stating there is no regional exclusivity and therefore, they may conduct active sales throughout Turkey.

In May 2017, the Board launched an investigation against Sahibinden Bilgi Teknolojileri Pazarlama ve Ticaret A.Ş. (‘Sahibinden.com’). The investigation aimed at exploring the validity of allegations of abuse of dominance by excessive pricing in terms of online platform services for real estate sales and rentals for commercial customers. After sixteen months of investigation, the Board resolved that Sahibinden.com is in a dominant position in Turkey in terms of the markets for (i) online platform services for real estate sales and rentals and (ii) online platform services for vehicle sales. Furthermore, the Board concluded that Sahibinden.com abused its dominant position through applying excessive prices in these markets and imposed a monetary fine against Sahibinden.com in the amount of TRY10,680,425.98 (1 January 2018, 17-01/12-4).

In May 2018, the Board conditionally approved the transaction concerning the acquisition of sole control over Monsanto Company (‘Monsanto’) by Bayer Aktiengesellschaft (‘Bayer’) (8 May 2018, 18-14/261-126). The Board considered that the transaction may result in a creation or strengthening of Bayer’s dominant position and thus, may significantly impede effective competition in the relevant market and thus decided to take the transaction into a Phase II review through its decision of 15 May 2017. Bayer’s commitment to divest its global cotton seeds business and vegetable seeds business was submitted before the Authority during the Phase II period. The Board has conditionally approved the transaction based on the commitments submitted to the European Commission due to the fact that the transaction does not result in the creation or strengthening of a dominant position and does not significantly impede competition since the commitments submitted to the European Commission by Bayer with regards to the vegetable seeds, cotton seeds, corn seeds and insecticide seed dressings for corn subject to the investigation eliminate horizontal and vertical overlaps occurring in the relevant markets in Turkey.

Additionally, in October 2018, the merger transaction whereby Delfin, the controlling shareholder of Luxottica Group S.p.A. (‘Luxottica’), and Essilor International (Compagnie Générale d’Optique) S.A. (‘Essilor’) aim to consolidate the activities of Essilor and Luxottica and to create EssilorLuxottica, a joint holding company, has been conditionally approved by the Board (1 October 2018, 18-36/585-286). There were competitive concerns with respect to the conglomerate effects that could arise from the integrated portfolio that the combined entity would have when the horizontal overlap within the markets for the wholesale of branded sunglasses and the wholesale of branded optical frames as well as the ophthalmic lenses are taken into consideration and thus the Authority initiated a Phase II review on 10 October 2017. Some structural and behavioural remedies were proposed in order to address the horizontal and conglomerate effects of the transaction through the commitments submitted to the Board during the Phase II period.

The Authority published revised Guidelines on Vertical Agreements (‘Guidelines’) on 30 March 2018. The Guidelines include newly introduced provisions and amendments with regard to online sales and most favoured nation (MFN) clauses. These changes are aimed at aligning the secondary legislation in Turkey with current European Union laws in order to meet the needs and challenges posed by evolving market conditions in a modern economy. The revised Guidelines provide valuable guidance on the assessment of two important commercial practices, namely (i) internet sales and (ii) MFN clauses, under the Turkish competition law regime. The new text added to the Guidelines brings more legal certainty and clarity to the Turkish legal system, as it incorporates the principles already set forth by the Board’s decisional practice and promises further compliance and increased harmony with European Union law.

In relation to online sales, the Authority’s main objective in revising its Guidelines was to take into consideration the necessity of providing specific provisions under the Turkish competition law regime and to harmonise the current legislative framework with the approach adopted by the European Commission’s Guidelines on Vertical Restraints. In its announcement, the Authority stated that the emergence of the internet platform as a new distribution channel provides consumers with the opportunity to (i) easily access large amounts of information, (ii) compare prices, and (iii) reach more products and more sellers without difficulty. It also enables suppliers to market and promote their products to wider geographical markets at lower costs. For these reasons, and due to the rapid growth of online sales in Turkey, it is apparent that a regulation regarding internet sales has become necessary.

The Authority further added that these amendments seek to maintain a balance between (i) re-evaluating competition law rules with respect to online sales and thereby ensuring the preservation of the internet’s contributions and benefits to consumers and resellers, and (ii) the protection of the commercial interests of suppliers. In view of these objectives, a couple of new paragraphs have been added to the Guidelines, and the regulatory changes entailed by these new paragraphs can be categorised as follows: (i) description of certain restrictions with regard to online sales which would exclude the relevant agreement from the benefit of the block exemption (i.e. hard-core restrictions for online sales), (ii) conditions that suppliers may impose on internet distribution channels—which must be objective, fair and acceptable (“principle of equivalence”), and (iii) provisions regarding online sales in selective distribution systems.

These amendments include expanded descriptions and specific examples of the types of online sales that would be categorised as active or passive sales or that would be considered to fall within or outside of the protective cloak of the block exemption. For instance, examples of hard-core restrictions include (i) restrictions on sales requested through the distributor’s website from a particular region or customer group in exclusive distribution systems, (ii) rules about terminating an exclusive distributor’s transaction after realising that the customer is not located in its exclusive region, (iii) restrictions regarding the share of online sales in the total amount of sales, and (iv) restrictions about a supplier’s application of different prices to its distributors for online sales. The Guidelines also state that the prohibition of active sales of exclusive distributors may benefit from the protective cloak of the block exemption. As for selective distribution systems, it is asserted that if a distributor launches a website for reselling through the internet, this will not be deemed as a new physical sales point.

In terms of MFN clauses, the Guidelines introduce new provisions that assess MFN clauses under the “rule of reason” approach. The Guidelines indicate that MFN clauses should be evaluated on a case-by-case basis, and that this analysis should be based on a number of factors, such as (i) the position of the parties and their competitors within the relevant market, (ii) the purpose of the MFN clause, and (iii) the specific characteristics of the relevant market and the MFN clause in question. An MFN clause may benefit from the block exemption, provided that the market share of the beneficiary of the relevant MFN clause does not exceed 40%, together with other conditions as set forth under Communiqué No. 2002/2. If the market share threshold is exceeded, an individual exemption assessment should be conducted by taking into consideration the pro-competitive and anti-competitive effects of the relevant MFN clause. For instance, if the parties to an MFN clause possess market power, the risk of market foreclosure or the exclusion of competitors that are not party to the MFN clause cannot be eliminated or overlooked. Moreover, if MFN clauses are applied in concentrated markets and in a cumulative manner, certain anti-competitive effects may arise, such as the difficulty for other market players to find alternative suppliers or the cumulative restrictive effects in the relevant market.