Introduction
Decisions on predatory pricing
Other competition violations


Introduction

In Turkey, the unilateral conduct of a dominant undertaking is restricted by Article 6 of the Law on the Protection of Competition (4054), which provides that:

"any abuse on the part of one or more undertakings, individually or through joint venture agreements or practices, of a dominant position in a market for goods or services within the whole or part of the country is unlawful and prohibited."

Although Article 6 does not define what constitutes 'abuse' per se, it provides five examples of forbidden abusive behaviour. The examples, detailed in a non-exhaustive list, fall to some extent in line with Article 102 of the Treaty on the Functioning of the European Union (TFEU) and include the following:

  • directly or indirectly preventing entries to the market or hindering competitor activity in the market;
  • directly or indirectly engaging in discriminatory behaviour by applying dissimilar conditions to equivalent transactions with similar trading parties;
  • making the conclusion of contracts subject to acceptance by the counterparties of restrictions concerning resale conditions - such as the purchase of other goods and services, acceptance by intermediary purchasers of displaying other goods and services or maintenance of a minimum resale price;
  • distorting competition in other markets by taking advantage of financial, technological and commercial superiorities in the dominated market; and
  • limiting production, markets or technical development to the prejudice of consumers.

It is been apparent that, similar to principles adopted under the TFEU, both exploitative and exclusionary abuses fall within the prohibitions provided under Article 6, despite the fact that the wording of the provision contains no specific reference to this concept.

Decisions on predatory pricing

Although the Competition Board has never condemned an undertaking on the basis of predatory pricing, as evidenced by many precedents (apart from the Turk Telekom decision,(1) which concerned margin squeeze rather than straightforward predatory pricing), the board is considered fairly familiar with the elements of predatory pricing.(2) That said, arguably complaints filed on this basis are also frequently dismissed due to the authority's reluctance to micro-manage pricing behaviour. Therefore, uncertainty remains as to the conditions under which pricing behaviour can be deemed as predatory.

Airline sector
At the end of 2011 the board issued a decision concerning predatory pricing in the airline sector, which appears to be quite promising in terms of setting a precedent in relation to predatory pricing (for further details please see "Competition Board withdraws predatory pricing allegation"). In a unanimous ruling, the board decided that Turkish Airlines did not abuse its dominant position by engaging in exclusionary practices against Pegasus (the competing undertaking), within the scope of Article 6, in terms of domestic and international flights departing from Istanbul. For this reason, an administrative monetary fine could not be imposed.

Until the reasoned decision on this case has been published, it is not possible to envisage how the balance between the allegations and defences resulted in a conclusion that there was no infringement. However, the board's decision is expected to include insightful analysis of:

  • whether airports located in cities can be automatically substitutable with each other in the airline and passenger transportation industries;
  • which points of interest must be laid out when making predatory pricing analyses; and
  • how sensitivity must be shown when intervening with those markets that are currently competitive.

Transport sector
In addition to the above case, and in line with its clearly observed recent interest in pricing behaviour, the board also conducted a preliminary investigation concerning excessive pricing through dynamic pricing.(3) The investigation was conducted against Istanbul Deniz Otobüsleri (an undertaking active in ferry operations in Istanbul) following various complaints alleging that it had been conducting excessive pricing by using a recently launched dynamic pricing system and applying different prices through different sales channels. After careful examination,(4) the board dismissed the complaint and decided that there was no need to conduct a full investigation of the matter. While the reasoned decision is not yet available, the surrounding discussions and conclusions in relation to the case are expected to shed light on the controversial excessive pricing issue, or at least provide some useful clues on the matter.

Other competition violations

The board recently concluded additional investigations into competition in the airline, cement and sodium sulphate and raw salt sectors.

Airline sector
The board commenced an investigation against Günes Ekspres Havacilik AS and Condor Flugdienst GmbH in June 2010 to determine whether the investigated undertakings violated Law 4054 by engaging in certain practices that restricted competition regarding flights between Germany and Turkey through various agreements. The investigation was triggered by a leniency application made by Günes Ekspres. Although the board decided that the parties had indeed violated the law, Günes Ekspres was granted total immunity from the administrative monetary fines. In contrast, an administrative monetary fine of TRY733,016.80 (approximately €350,000) was imposed on Condor, corresponding to 1.5% of its annual gross revenue. This decision provides an example of a successfully implemented leniency application.

Cement sector
The board recently concluded its investigation in the cement sector (for further details please see "Competition Board concludes investigations in cement sector"). Following this investigation, which commenced at the end of 2010 and examined collusive behaviour in terms of pricing between 10 undertakings in the Turkish cement sector, the board decided that the investigated undertakings had violated Law 4054. The board imposed total fines of approximately TRY23 million (approximately €10 million). The decision further demonstrates that the chronic problem with respect to competition law-related infringements within the cement sector cannot easily be cured.

Sodium sulphate and raw salt sectors
Finally, the board rendered its decision(5) regarding two undertakings that are active in the sodium sulphate and raw salt sectors. The board had launched an investigation against Otuzbir Kimya ve Sanayi Türk Ltd Sti and Sodas Sodyum Sanayi AS at the end of 2010, examining whether the relevant undertakings had violated Article 4 of Law 4054 by fixing prices and sharing customers in the sodium sulphate market in Turkey. The board ruled that the relevant undertakings had fixed prices and shared customers for a duration of six years (ie, from September 2005 until April 2011). It therefore imposed administrative monetary fines both on the relevant undertakings and on an executive official who was deemed to have influenced the violation. The total amount imposed on the undertakings and the individuals was approximately TRY1 million.

This is the second board ruling in which, in addition to the undertakings, an individual has incurred administrative monetary fines due to his or her heavy involvement in a competition law violation. Therefore, it can be expected that the reasoned decision regarding the case will include useful clues for understanding the circumstances under which executives and employees of parties will be considered to have significantly influenced a violation.

For further information on this topic please contact Gonenc Gürkaynak at ELIG by telephone (+90 212 327 17 24), fax (+90 212 327 17 25) or email ([email protected]).

Endnotes

(1) November 19 2008, 08-65/1055-411.

(2) See, for example, Trakya Cam, November 17 2011, 11-57/1477-533; Denizcilik Isletmeleri, October 12 2006, 06-74/959-278; and Feniks, August 23 2007, 07-67/815-310.

(3) Dynamic pricing can be described as a revenue management system that utilises variable pricing for fares depending on availability and how far in advance travel is booked, where cheaper fares can be found by booking further in advance and at off-peak times, rising at peak times and for later booking.

(4) May 31 2012, 12-29/854-254 (as yet unpublished).

(5) May 3 2012, 12-24/711-199.

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