Draft Bill to Amend the Turkish Competition Law

Turkish Competition Authority (“Authority”) prepared a Draft Bill (“Draft Bill”) in order to amend the Law on Protection of Competition numbered 4054 (“Competition Law”) recently and shared it with various institutions to receive their opinions and evaluations.

The ground for preparing the Draft Bill is set out to be the requirement to keep the regulations up with the new business models that emerge with the improving technology and digitization. Further, there is a notion worldwide that as digital platforms gain value, this negatively affects competition and the competitive environment, and also, unfair practices in digital markets such as high prices, low quality, and ultimately result in ineffective and undesirable consequences that may be harmful for the consumers.

Amendments that come with the Draft Bill are mostly parallel to the Digital Markets Act (DMA) which was published in the Official Journal of the European Union on October 12th. Therefore, it is safe to say that the purpose for the Draft Bill is to regulate and protect the fair and competitive environment in Turkey’s digital sector while ensuring further compliance with the European Union legislation.

Here are the details of the Draft Bill.

a. Definitions

The Draft Bill adds multiple terms and definitions to comprehend the undertakings operating with the technology, such as digital sector, core platform service, significant market power, end-user, and non-public data. The notable definitions in the Draft Bill are “core platform services” and “significant market power”.

i. Core platform services are defined as “online intermediation services, online search engines, online social networking services, video/voice-sharing and distributing services, number-independent interpersonal communications services, operating systems, web browsers, virtual assistants, cloud-computing services, and online advertising services delivered by the provider of any of these services”. The Draft Bill also defines each service considered as a core platform service separately.

ii. Pursuant to the Draft Bill, in order for an undertaking to be considered to have significant market power (“SMP”), the undertaking must:

• provide one or multiple core platform services,
• have a significant impact on access to end-users or on the activities of business users; and,
• possess the capability to maintain this significant impact or demonstrate the potential for maintaining it.

While designating an undertaking to have SMP or not, the Authority will be taking into account quantity elements, such as the number of business users using the core platform service to reach end users and the number of end users, and annual gross revenue; and quality elements, such as network effects and data-driven advantages, conglomerate corporate structure or vertical integration of that undertaking, scale and scope effects from which the undertaking benefits, business user or end user lock-in, multi-access, the behavioral bias of users, M&As executed by the undertaking. It is also regulated that the undertaking with SMP will not be able to separate their operations in order to avoid quantity elements or avoid complying with the obligations by commercial or technical methods or with their interface designs.

By adding these definitions, the digital platforms providing core platform services are planned to be included in the scope of the Authority’s supervision. According to the Draft Bill, regardless of whether the undertaking is Turkish or foreign, if the undertaking has significant market power and provides services to consumers who are citizens or residents in the Republic of Turkey, it will be within the scope of the Competition Law.

b. Application

Pursuant to the Draft Bill, the undertaking will be obligated to prove if it does have SMP or not.

The undertakings which fulfill the conditions to be considered to have SMP will apply to the Authority within 30 days after the relevant communiqué is issued for the platforms that provide core platform services. Following the application, the Authority will examine whether the undertaking has SMP which is regulated to take 60 days. The Authority will also be authorized to make the SMP examination ex officio or upon complaint.

The determination that an undertaking has SMP will be valid for 3 years and if a new application is not made 90 days before the 3-year deadline, the determination will continue for another 3 years.

c. Obligations

The Draft Bill regulates the obligations of the undertakings with SMP. Broadly, the undertakings with SMP:

• Cannot treat more favorably for their own goods/services compared to the goods/services of business users, and must apply transparent and fair conditions in ranking and related indexing and crawling,
• Cannot use non-public data when competing with business users,
• Cannot offer their goods/services to users by tying it with their other goods/services,
• Cannot present the membership to other core platform services as a condition to access, log in or register to any of their core platform services,
• Must enable users to effectively use the software, application, or application store that is pre-installed on the operating system,
• Cannot restrict or obstruct business users from working with their competitors, or from presenting different prices or conditions while doing the same,
• (i) Cannot combine, process, or use the end-users’ personal data with the personal data obtained from other services or from third parties; (ii) cannot process sensitive competitive data other than the purpose of providing relevant services; in a way that may prevent competitors from entering the market or effective competition,
• Must provide free and effective access to data that are used in relation to the services to the involved parties,
• Must enable interoperability of core platform services or ancillary services (services that will be determined with a communique, including payment services, technical service supporting payment service, the payment system for in-app purchases, delivery services, etc.) with other related goods/services effectively and free of charge,
• Must provide free access to the necessary operating system, hardware, or software features, limited to the relevant core platform service,
• Must provide sufficient information about the scope, quality, performance, pricing principles, and conditions of access to these services, if requested by business users,
• Must provide free, continuous, and real-time information on the visibility and usability of the ad portfolio and ad validation and performance measurement tools and the data needed to use these tools to the advertisers, publishers, advertising intermediaries, or third parties authorized by them, for whom provides online advertising services,
• Must not discriminate between commercial users by asserting fair and unreasonable terms to commercial users.

d. Sanctions

Lastly, the Draft Bill regulates additional sanctions with regard to the undertakings with SMP. If an undertaking with SMP breaches any of the abovementioned obligations, an administrative fine of up to 20% of the appraised gross annual income of the relevant undertaking will be imposed.

The significant new sanction under the Draft Bill is the prohibition of mergers and acquisitions. According to the regulation, if an undertaking with the SMP violates the set-out obligations at least twice within 5 years, mergers and acquisitions of this undertaking may be prohibited for up to 5 years.

Tagged with: Competition, Turkish Competition Authority, TCA, 4054, Law on Protection of Competition, Digital Markets Act, E-Commerce, Özdağıstanlı Ekici Attorney Partnership, Hatice Ekici Tağa