Turkcell fined for abuse of dominance as Council of State annulled the previous decision

According to the Turkish Competition Authority’s (TCA) press release, Turkcell, the leading GSM operator in Turkey, was fined approximately TL 40 million  (USD 20 million) by the TCA although it had avoided a fine in the first decision of the preliminary inquiry–which was annulled. The decision, dated 19 December 2013, concluded that Turkcell had abused its dominant position in GSM services used in Vehicle Tracking Services (VTS) market in Turkey by “complicating its competitors’ activities by means of its exclusive practices related to vehicle tracking services….

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According to the press release, in the decision it was also stated that Turkcell should avoid similar conduct and it is expected to announce that its business partners in vehicle tracking services market and their dealers can cooperate with competing operators, there are no barriers to launch competing operators’ services and they could participate in competitors’ campaigns and they are not under any contractual or actual obligations to the contrary- in order to establish competition, in accordance with the Article 9/1* of  the Act on The Protection of Competition no 4054.

It would be interesting to recall the annulled decision (here in Turkish) of the preliminary inquiry on the same issue, dated 02 April 2008 and numbered 08-27/306-97. In this decision the Turkish Competition Board concluded that an investigation was not needed and Turkcell had not breached the Article 4 and 6 of the Act on The Protection of Competition no 4054, which are on anti-competitive agreements and abuse of dominance, respectively. The analysis of abuse of dominance in the annulled decision pointed the infant market structure of vehicle tracking systems and stated that “no evidence was found on whether Turkcell has closed the market to the competitors and excluded them, despite its high market share”. However with its judgement dated 13 February 2012, the Council of State annulled (the judgement is here in Turkish) this decision of the preliminary inquiry as the complainant and plaintiff Vodafone –the main competitor of Turkcell in Turkey- appealed.

In its judgement the Council of State pointed that the TCA had already detected that Turkcell is in a dominant position in the market and an increase in its market share is certain. Moreover, the Council also stated that the case of alleged abuse of dominance should have been analyzed in an investigation where Turkcell’s behavior of forcing its consumers to refuse to deal with Vodafone should have been taken into account as the inferior infrastructure, low market shares and alleged opportunities of the competitors were not enough to conclude, without assessing Turkcell’s influence, that the market is not closed to the competitors. And, as a result, the TCA had started the investigation on the issue, which was resulted with the above-mentioned fine.

This fine is almost half of the approximately TL 92 million fine imposed by the TCA on Turkcell, the leading mobile phone operator company (having 35 million customers in mobile market only in Turkey) which does business also in other fields of communication industry and also in different countries (like Georgia and Azerbaycan),  for a different conduct in 2011 (here is the related post) where it was decided that Turkcell had abused its dominant position by its practices directed at its distributors and dealers.

* Article 9/1 of  the Act on The Protection of Competition no 4054:  If the Board, upon informing, complaint or the request of the Ministry or on its own initiative, establishes that articles 4, 6 and 7 of this Act are infringed, it notifies the undertaking or associations of undertakings concerned of the decision encompassing those behaviour to be fulfilled or avoided so as to establish competition and maintain the situation before infringement, in accordance with the provisions mentioned in section Four of this Act.

Turkey’s “largest industrial enterprise” Tüpras hit with record fine for abuse of dominance

According to Turkish Competition Authority’s (TCA) press release (English version is here) the Turkish Petroleum Rafineries Co. (Tüpraş), the largest enterprise in Turkey was fined by the TCA  TL 412 million (approx. USD 200 million ) for abusing its dominance by “pricing and contractual practices ”.  According to the press release it was also decided to send official opinions to Tüpraş on obligation to stop the practices that caused the breach, and to relevant public authorities within the sector on fixing the failure of the price regulation mechanism in the industry in favor of consumers.

The fine of TL 412 million is the highest fine faced by a single company in the TCA’s history, almost equal to 2 times of the fine on Garanti Bank which was the record holder with TL 213 million fine in 2013 for participating in anticompetitive agreements among a number of banks-mentioned in a related post.

Tüpraş, owned by one of the largest conglomerates in Turkey Koç Holding since it was privatized in 2006, is the company controlling all of the refining capacity in Turkey with four oil refineries having processed 22 million tons of crude oil creating USD 26 billion net sales just in 2012 according to its 2012 annual report.

According to the press release while Tüpraş was fined for breach of Article 6 of the Act on The Protection of Competition no 4054, which is on abuse of dominance, it was decided that it and its joint venture Opet (a petroleum distributor company in Turkey) did not breach the Article 4 of the Act on The Protection of Competition no 4054, which is on anticompetitive agreements.

The details of the decision and how the breach was interpreted by the Turkish Competition Board will be appear in the reasoned decision which will -probably- be held here as soon as released.

A Comment on GSM Market

Dear Mr. Patrick Byrne had left a comment concerning Turkish Mobile Phone Market. I share his comment below. If you have an explanation or objection, please feel free to join in:

” The incredibly high level of charges for mobile phone users and for mobile data download in Turkey when compared to other countries in Europe would lead one to assume that there was no competitition in Turkey. Yet there are several mobile carriers. Perhaps one could think that Turkey is a small market for mobile phones and that the benefits of large scale delivery did not yet apply here. Yet, Turkey is one of the largest mobile phone markets in the world. In the light of this, the obvious suspicion arises that the existing carriers are involved in some kind of cartel through which they are fixing prices together and only allowing marginal competition for presentation purposes.

Perhaps there is another explanation. Anyone out there have one?”

Guidelines on Horizontal Cooperation Agreements are released

Turkish Competition Board released the long-awaited Guidelines on Horizontal Cooperation Agreements (Horizontal Agreements Guidelines) and the Block Exemption Communiqué Concerning Specialization Agreements on 26 June 2013.

The Horizontal Agreement Guidelines were in fact very similar to the EU guidelines on horizontal cooperation agreements while former ones are adapted to Turkish anti-trust practice and relevant legislation. Those guidelines have been also demanded by and their absence has been subject to criticisms from the European Commission in the progress reports (2012 here) saying that “…Turkey still needs to align with the acquis on horizontal cooperation agreements…” for a couple of years.

Those guidelines set the basic criteria for evaluation of non-vertical cooperation agreements especially R&D agreements, joint production agreements,  joint purchasing agreements, commercialization agreements and -lastly- standardization agreements from  the competition law perspective. The guidelines also lay a stress and have a specific part on information exchange among competitors.

It is expected that those guidelines to be welcomed by the undertakings and anti-trust law practitioners since they set the basic principles of appraising whether an agreement or information exchange among competitors breaches the law or not or may be subject to exemption. The guidelines have also quasi-de-minimis thresholds (while there is no any de-minimis regime in Turkish competition law) saying that specific agreements between competitors having less than that market share  -like %15 market share for joint purchasing agreements- are not expected to have a negative affect on competition as a result of lack of market power while it is reserved that the restriction of competition by object would breach the law irrespective of an effect exists or not.

On the other hand the Block Exemption Communiqué Concerning Specialization Agreements provide an exemption for the specialization agreements, like unilateral or reciprocal production agreements, among competitors as long as the total market share of the parties is below 25% and some other conditions are met.

Away (No More)

Hello everyone!

If you are regularly checking out our blog you may have noticed that we have been away for some time. That wasn’t because we are lazy but 2 out of 3 members of our team were busy with moving abroad. Yes you heard it right. Harun now resides in Ann Arbor, Michigan and Ökmen is in New York City. While Harun taking a long vacation (about 2 years) Ökmen will be studying Public Administration at Columbia University also for 2 years.

So now the burden is mine to fill these pages with posts and news. I’ll be doing my best to keep you guys updated. Keep following :)

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