Competition Newsletter - Summer 2024

THIS COMPETITION LAW NEWSLETTER PROVIDES INFORMATION ON THE LATEST DEVELOPMENTS IN RELATION TO THE TURKISH COMPETITION MARKET AND THE IMPLEMENTATION OF LAW NO 4054 ON THE PROTECTION OF COMPETITION (THE "LAW") IN LIGHT OF RECENT ANNOUNCEMENTS AND PUBLICATIONS BY THE COMPETITION AUTHORITY (THE "AUTHORITY") AND DECISIONS OF THE COMPETITION BOARD (THE "BOARD") PUBLISHED IN SUMMER 2024 (I.E. MAY-AUGUST).

Competition Market Overview

Announcements

Recently Initiated Investigations

– With its decision number 24-26/626-M(1) dated 4 July 2024, the Board decided to open an investigation against Koruma Klor Alkali Sanayi ve Ticaret A.Ş. in relation to its exclusionary practices and actions that complicate the operations of its competitors in the chlor-alkali products sector.

– Additionally, at its meeting of 12 June 2024, the Board decided to open an investigation (decision number 24-26/626-M(2)), against Koruma Klor Alkali Sanayi ve Ticaret A.Ş. 2S Kimya Arıtma Tarım İnşaat Gıda Turizm Sanayi ve Ticaret Anonim Şirketi, Aykimsan Hiçyılmaz Kimyasal Ürünler İnşaat Gıda Turizm Sanayi ve Ticaret  Limited Şirketi, Irmak Kimya Sanayi ve Turizm Nakliyat Tarım Ürünleri ve Geri Dönüşüm Ticaret Limited Şirketi and Süleyman Kimya Arıtım İnşaat Nakliye ve Tehlikeli Madde Danışmanlığı Hizmetleri Sanayi Ticaret Limited Şirketi, each active in the chemical industry, to determine whether they violated Article 4 of the Law by acting in concert in the process of submitting bidding prices and/or determining the approximate cost in certain public tenders.

– With its decision number 24-24/593-M dated 4 June 2024, the Board opened an investigation against Türkiye Şişe ve Cam Fabrikaları A.Ş. and its subsidiary Şişecam Çevre Sistemleri A.Ş., after seeing that there are serious doubts as to the compliance of these companies with their commitments as submitted under the Board’s decision number 21-51/712-35, dated 21 October 2021, in relation to allegations that they complicate the operations of the undertakings in the glass recycling sector.

– Further, the Board decided to open a direct investigation against Şişecam Çevre Sistemleri A.Ş. and Karacalar Nak. Oto. Geri Dön. San. ve Tic. Ltd. Şti. to determine whether these undertakings had violated Article 4 of the Law by jointly determining the prices of broken glass, allocating regions and customers with the aim of restricting competition and exchanging competitively sensitive information.

– The Board launched an investigation against Koroplast Temizlik ve Ambalaj Ürünleri Sanayi ve Dış Ticaret A.Ş. (decision number 24-27/644-M), based on the allegation that the company had violated Article 4 of the Law by determining the resale prices of its buyers.

– With its decision number 24-27/647-M, dated 27 June 2024, the Board opened an investigation against Abko İç ve Dış Ticaret Ltd. Şti. operating in the cosmetics and personal care products sector, to determine whether the company had violated Article 4 of the Law by restricting the internet sales of its resellers and determining the resale prices.

– At its meeting of 4 July 2024, the Board decided to open an investigation against İntema İnşaat ve Tesisat Malzemeleri Yatırım ve Pazarlama A.Ş. operating in the bathroom products sector, to determine whether the company had violated Article 4 of the Law by determining the sales prices of its resellers and restricting the regions/customers of its resellers (decision number 24-28/668-M).  

– The Board decided to launch an investigation against Otoyol İşletme ve Bakım A.Ş. (“OIB”) and Zes Dijital Ticaret A.Ş. for violations of Articles 4 and 6 of the Law due to exclusivity practices in the charging network operation market on the O-5 Highway, and against OIB also for a violation of Article 6 of the Law due to its discriminatory practices between undertakings in the charging network operation market (decision number 24-28/679-M).

– At its meeting of 15 August 2024, the Board decided to open an investigation against  Zofunlar Beton Üretim Pazarlama San. ve Tic. AŞ, Saros Hazır Beton İnş. Madencilik San. ve Tic. AŞ and Serin Beton İnş. Taah. İnş. Malz. Hafr. Taş. Gıda San. ve Tic. Ltd. Şti. producing and selling ready-mixed concrete, to determine whether these undertakings had violated Article 4 of the Law by maintaining prices, allocating customers and/or exchanging competitively sensitive information (decision number 24-33/789-M).

Completed Investigations

Please see the table below regarding name of the undertaking, the type of violation of the Law and the amount of the administrative fine imposed by the Board.

Summary of Key Decisions

Trendyol Decision1

The Board rendered its decision regarding DSM Grup Danışmanlık İletişim ve Satış Ticaret A.Ş. (“Trendyol”) and its violation of Article 6 of the Law by its discriminatory practices against sellers using the platform and favouring its own retail activity. The Board determined the markets for the assessment of Trendyol's dominant position as the multi-category e-marketplace market and the multi-category e-marketplace retail market offered through the fashion category as a sub-segment.

The Board concluded that Trendyol has had a dominant position in the multi-category e-marketplace market as of 2020 based on the following evaluations; (i) Trendyol has increased its market share since its establishment, became the market leader in 2019 and significantly differentiated from its closest competitor by increasing its market share in 2020, (ii) the market entry and market growth is difficult due to the network effects caused by the expansion of the user base with data, advertising expenditure and campaigns. (iii) Trendyol's expansion of its user base as a result of positive indirect network effects makes it indispensable for sellers who want to reach more consumers, and for consumers who want access to more and various products.

Furthermore, the Board determined that the Trendyol abused its dominant position by favouring itself (i.e. self-preferencing through data and algorithms) and by its discriminatory practices against sellers. The Board decided that the commitment text submitted in 2022 was not sufficient to eliminate the relevant competition concerns and decided to impose a fine of TRY 61,342,847.73 on Trendyol for violating Article 6 of the Law on the grounds that it had provided an unfair advantage to its retail activity by interfering with the algorithm and using the data of third-party sellers in its marketplace. In addition, various measures have been imposed on Trendyol.

On a related note, two dissenting Board members were of the opinion that the decision should be justified differently on the grounds that the administrative fine imposed on Trendyol appears to be symbolic, whereas it should be TRY 552,085,629.57 based on the gravity of the breach and the precedents of the Board.

Sahibinden Decision2

The Board made its decision related to the investigation initiated against Sahibinden Bilgi Teknolojileri Pazarlama ve Ticaret A.Ş. (“Sahibinden”) to determine whether it abused its dominant position in the online platform service market for real estate and vehicle sales/rental services by charging excessive prices.

In its assessment, the Board determined that Sahibinden is in a dominant position in online platform service for real estate sales/rental activities of corporate members, online platform service for vehicle sales activities of corporate members, online platform service for real estate sales/rental activities of individual members and online platform service for vehicle sales activities of individual members markets. The Board used the economic value test to assess whether Sahibinden's pricing was excessive, making a price-cost comparison and service-profit margin comparison within the scope of the test. Pursuant to the economic value test, it was found that the prices did not significantly affect the profitability of real estate agents or car dealers using the platform. There was no substantial evidence that the price increases were passed on to end consumers in a way that would necessitate intervention under the Law.

As a result, the Board concluded that Sahibinden had not violated Article 6 of the Law through excessive pricing in the specified markets and therefore decided not to impose any administrative fine on Sahibinden.

Acquisition of Kahoot by GS&Co3

The Board has rendered its decision regarding the notification for the acquisition of sole control over Kahoot! ASA (“Kahoot”) indirectly by Goldman Sachs & Co. LLC (“GS&Co”) and ultimately by The Goldman Sachs Group, Inc. The Board stated that since Kahoot, the undertaking subject to the transaction, operates in online learning software market, it is considered as a technology undertaking pursuant to Communiqué No 2010/4 on Mergers and Acquisitions Requiring the Authorisation of the Competition Board (“Communiqué No 2010/4”). In this respect, the relevant transaction is subject to authorisation of the Board without seeking turnover thresholds. The transaction was approved by the Board as there is no horizontal or vertical overlap between Kahoot's activities in the online learning software service market and the activities of GS&Co.

Acquisition of Majorel by Teleperformance4

The Board has rendered its decision regarding the notification about the acquisition of sole control of Majorel Group Luxembourg S.A. (“Majorel”) by Teleperformance SE (“Teleperformance”) through a voluntary and public tender offer. The general activities of Teleperformance and Majorel were said to overlap horizontally in the information technology (IT) services, IT consulting services and business process outsourcing services (BPO) in Türkiye. The Board determined that the market share of Teleperformance was relatively low in the relevant markets, both globally and in Türkiye. Therefore, the Board approved the transaction by taking into consideration the competitive structure of the market, the presence of strong competitors in the market, and the market knowledge of the customers.

Establishment of joint venture between Renault and Geely5

The Board authorised the establishment of a fully functional joint venture (“JV”) by Renault S.A.S. (“Renault”) and Zhejiang Geely Holding Group Co. (“Geely”). According to the Board’s decision, the JV to be established after the notified transaction will operate in the market of manufacturing, development and supply of ICE and hybrid powertrain solutions for passenger cars and light commercial vehicles.

Although the activities of the parent undertakings of the JV overlap in the field of power transmission mechanism solutions, it was emphasised that there will be no overlap between the activities of the parent undertakings in the field of power transmission mechanism solutions, as such activities will be merged within the JV after the finalisation of the transaction. In addition, it is indicated that vertical overlaps may occur between the activities in downstream market of passenger/light commercial vehicle manufacturing of the parent undertakings of the JV and the supply activities in upstream market of powertrain solutions for passenger and light commercial vehicles of the JV. Nevertheless, the transaction was authorised by the Board since the vertical overlap would not cause input or customer foreclosure and would not lead to significant competitive concerns.

Doğuş Otomotiv Group Exemption Decision6

The Board decided to grant exemption/negative clearance for Doğuş Otomotiv Servis ve Ticaret A.Ş. (“Doğuş”) to make base salary recommendations to its dealers to be taken into account in the remuneration of its employees.

In its decision, the Board stated that Doğuş operates in the automotive sales and after-sales services market. However, since the effects of the relevant transaction will arise on the employees in the automotive sales and after-sales services market, it is indicated that the relevant product market can be determined as the labour market in automotive sales and after-sales services. The Board considered the practice of Doğuş to recommend base salaries to its dealers that will be applied to its employees (the “Practice”) as a vertical agreement within the scope of the Law. The Practice is similar to resale price maintenance in terms of having vertical effects in the market. Therefore, the Board indicated that the vertically-oriented Practice in the labour market may create vertical restrictions (e.g. upward or downward pressure on salaries) as is the case with resale price maintenance. In addition, the Practice, though advisory in nature, may have an impact on the wages of employees and may lead to wage rigidity, which would mean restrictions on the transfer and mobility of labour. Hence, the Board ruled that the Practice would violate Article 4 of the Law and the relevant practice cannot be issued a negative clearance.

The Board stated that a group exemption can be granted, since the determination of maximum price or advisory price is covered by Communiqué No 2002/2. To that end, the Board decided that Doğuş could benefit from the group exemption as its market share in the labour market for automotive sales and after-sales services was found to be below 20% (based on the number of employees of undertakings operating in the relevant product market).

Whirlpool EMEA – Vestel Decision7

The Board issued its decision to end the investigation of the Board against Whirlpool EMEA S.p.A. (“Whirlpool”) and Vestel Ticaret A.Ş. (“Vestel”) in order to meet the requirements of the decision of the 13th Chamber of the Council of State (“Council of State”), which reversed the decision of the Ankara Regional Administrative Court 8th Administrative Law Chamber (“Court of Appeal”).

In this regard, the flow of decisions from the Board, the administrative court, the Court of Appeal and the Council of State is as follows:

 i.      The Board’s decision dated 12 November 2019 and numbered 19-39/612-265

Several authorised service providers in Türkiye filed complaints to the Board alleging that Whirlpool, which is exiting the Turkish market, transferred the authorised services of its affiliates to Vestel under a secret agreement. As a result of a preliminary investigation, the Board rejected the complaints and decided not to initiate an investigation, stating that the service agreement between Whirlpool and Vestel benefitted from the group exemption under Communiqué No 2002/2, considering that Whirlpool and Vestel are not competitors due to Whirlpool's exit from the Turkish market.

The complainants took the Board's decision before the administrative court to reverse the Board’s decision. However, the 11th Administrative Court of Ankara rejected the complainant’s appeal. After that, the complainants appealed the decision before the Court of Appeal.

ii.      Decision of Ankara Regional Administrative Court 8th Administrative Law Chamber dated 2 November 2022 and numbered 2022/148 E. 2022/1272 K.

The Court of Appeal stated that it was unlawful for the Board to accept the negative clearance/exemption application of Vestel and Whirlpool and end the investigation, and it ruled the Board to re-evaluate the matter of group exemption also by taking into consideration the claim that Whirlpool continues to sell its products manufactured in its factories in Türkiye under the Silverline brand, through Silverline Endüstri ve Ticaret A.Ş., and therefore is still a competitor of Vestel.

Upon the relevant decision, the board initiated an investigation once again in 2023.

iii.     Decision of 13th Chamber of the Council of State dated 10 April 2023 and numbered 2023/206 E. 2023/1767 K.

The Council of State ruled that agreement between the two undertakings (Whirlpool-Vestel) is in the nature of outsourcing services and does not involve an asset transfer, such as the transfer of a dealer/dealership system, therefore, this agreement does not constitute an acquisition. It also decided that this agreement is a vertical agreement between Whirlpool and Vestel, thus, it may be subject to the group exemption. Hence, the Council of State decided to reverse the decision of Court of Appeal. Consequently, the Board decided to end the investigation which was re-initiated in 2023.

İstanbul Gübre Sanayi A.Ş. (İGSAŞ) Decision8

With its decision dated 12 August 2021 and numbered 21-38/543-M, the Board initiated an investigation against several undertakings operating in the fertiliser production sector, including Istanbul Gübre San. A.Ş. (“İGSAŞ”), on the grounds that they violated Article 4 of the Law through the exchange of competitively sensitive information.

While the investigation was ongoing, İGSAŞ submitted settlement text to the Board and requested to terminate the investigation. Accordingly, the Board imposed an administrative fine on İGSAŞ and decided to terminate the investigation into İGSAŞ through a settlement. For other undertakings that were being investigated, the investigation process continued and, with the Board's decision dated 3 August 2023 and numbered 23-36/670-226 (“Final Decision”), it ruled that the remaining undertakings had not violated the Law and no administrative fine would be imposed on them.

Upon that decision, İGSAŞ asked to revoke the settlement decision dated 23 December 2021 and numbered 21-63/883-432 (“Settlement Decision”) in accordance with the provisions of the Administrative Procedure Law. İGSAŞ stated the following as grounds for its related request:

(i) The Board had imposed an administrative fine on İGSAŞ when concluding the investigation through settlement, while the Board had later decided that no undertaking had violated Article 4 of the Law within the scope of the relevant investigation.

(ii) The exchange of competitively sensitive information is an act that can only be carried out on a reciprocal basis, and the imposition of an administrative fine on İGSAŞ in this regard violates the right to a fair trial, the principle of equality, the principle of legal certainty and the right to property, while it was established that other undertakings had not violated the Law through the exchange of information.

(iii) The contradiction between the Final Decision of the Board and the Settlement Decision led to inequal administrative actions between undertakings in the same legal situation, thus violating the principle of equality of administration before the law, as enshrined in Article 10 of the Constitution. As a result of the Settlement Decision, the right to the property of İGSAŞ was violated.

In this respect, İGSAŞ requested that the Settlement Decision be revoked and a new action be taken in its favour. In its response, the Board decided to reject the request of İGSAŞ on the grounds that İGSAŞ voluntarily accepted through the settlement text that it had violated the Law and that the issues in the settlement text cannot be subject to a lawsuit.

Global Anti-Trust Law Updates

Acquisition of Viatris by Cooper9

The European Commission (“Commission”) has approved, under the EU Merger Regulation (“EUMR”), the proposed acquisition of the European over-the-counter business of Viatris Inc. (“Viatris”) by Cooper Consumer Health S.A.S. (“Cooper”). The approval is conditional upon full compliance with the commitments offered by the parties. The Commission's investigation showed that the notified merger would have reduced competition in the markets for certain pharmaceutical products (specified as laxative enemas for infants in Portugal and earwax removal products in Germany). In particular, the Commission found that the transaction would have led to high combined market shares as well as high concentration levels in the affected markets. The Commission also found that, post-merger, there would not be sufficient potential competitors to exert sufficient competitive pressure on the merged entity. To address the Commission's competition concerns, the parties proposed to divest (i) Cooper's rights, title and interests in its infant laxative medicine Bebegel and (ii) Cooper's rights, title and interests in its earwax removal product Otowaxol. The Commission authorised the transaction on condition of compliance with the commitments proposed by the parties.

Obstruction of Antitrust Inspection by International Flavors & Fragrances10

The Commission has fined International Flavors & Fragrances Inc. and International Flavors & Fragrances IFF France SAS (together “IFF”) EUR 15.9 million for obstructing a Commission inspection in 2023. The Commission found that, during the inspection, a senior employee of IFF intentionally deleted WhatsApp messages exchanged with a competitor. During its inspection in March 2023, the Commission asked to review the mobile telephones of some of IFF's employees. While reviewing, the Commission detected that a senior employee had deleted WhatsApp messages exchanged with a competitor containing business-related information. After the detection, IFF immediately acknowledged the facts and proactively cooperated with the Commission during and after the inspection. IFF cooperated by helping the Commission recover the deleted data. After that, the Commission concluded that an overall fine amounting to 0.3% of IFF's total turnover was appropriate. At the same time, the Commission decided to reward IFF for its proactive cooperation during and after the inspection. Therefore it decided to reduce the fine amount by 50% and to impose a fine of EUR 15.9 million, which represents 0.15% of IFF's total turnover.