Hergüner Competition Monthly - August 2023

The Board Concluded the Investigation on Gentlemen's Agreements for the Labor Market!

In 2021, the Turkish Competition Board (“Board”) initiated an investigation of certain leading undertakings, varying across different sectors, for entering into gentleman’s agreements in the labor market in a way that adversely affects competition in the relevant market. The investigation was concluded with the final decision  published on the Turkish Competition Authority (“TCA”)’s website on 02.08.2023, and a total administrative fine of approximately TRY 151 million was imposed on 16 of the 48 undertakings party to the investigation.

The investigation was based on the Board’s suspicion of the existence of a “gentlemen’s agreement” between undertakings acting as employers competing in the labor markets, which resulted in:

• complicating or preventing the transfer of employees between competing employers,
• lowering or suppressing employee wages, and
• keeping working conditions below competitive levels.

Accordingly, the Board decided to initiate an investigation against 32 undertakings, deeming the findings of the preliminary investigation sufficient. This number was later increased to 48 undertakings.

Within the scope of the investigation:

• the investigation process was concluded with a settlement for 11 undertakings upon their request for settlement,
• administrative fines were imposed on 16 undertakings, including LC Waikiki, Türk Telekom, Çiçeksepeti and Vodafone, for violating Article 4 of Law No. 4054 on the Protection of Competition (“Competition Law”), and
• the investigation against 21 undertakings, including Google Reklamcılık, Migros, NTV, and Sahibinden, was concluded as there was no evidence that they had violated the Competition Law.

“Gentlemen’s agreements”, also known as non-solicitation agreements, may adversely affect the labor market and the growth of the economy in general. The Board previously evaluated the use of gentlemen’s agreements in the transfer of teachers between private schools in the Private Schools Association of Turkey Decision  and assessed the agreements of private hospitals concerning the non-solicitation of medical employment,  discussed in our November bulletin. Since this investigation (similar to the Private Hospitals Decision) was directly related to the labor market and was conducted against a large number of undertakings, it is expected to act as a comprehensive guide for how the Board’s future practices regarding labor markets will be shaped.  It was also stated in the announcement made on the TCA’s website in May 2021 that a guideline study on the labor market was intended. Once the highly anticipated reasoned decision is publicly disclosed, we will review and share the Board's detailed assessments and, if published, the guide for the labor market.

The Board's August Agenda is Quite Full!

In August, the Board announced that 12 different investigations were initiated against undertakings operating in different sectors.

As per the Board’s announcements published this month, the Board initiated investigations against:

• Six undertakings  operating in the power transformer sector for the alleged violation of Article 4 of the Competition Act;   
• Storytel Turkey Yayıncılık Hizmetleri Anonim Şirketi (“Storytel”),  which operates in the audiobook market, for the alleged violation of Articles 4 and 6 of the Competition Act by preventing its competitors from entering the market through exclusivity agreements with publishers and authors;
• Fourteen undertakings  operating in the cosmetics and personal care products sector  for the alleged violation of Article 4 of the Competition Act by (i) fixing resale prices of resellers, (ii) restricting internet sales, and (iii) participating in a hub and spoke cartel; 
• Against five undertakings  operating in the field of egg tray production for the alleged violation of Article 4 of the Competition Act;
• Five undertakings  operating at the manufacturer/supplier level in the fast-moving consumer goods sector for the alleged violation of Article 4 of the Competition Act through resale price maintenance;
• Against Canon Eurasia Görüntüleme ve Ofis Sistemleri Anonim Şirketi for the alleged violation of Article 4 of the Competition Act through resale price maintenance;
• Against four undertakings  operating in the educational publications sector for the alleged  violation of Article 4 of the Competition Law by (i) fixing the resale prices of distributors, (ii) restricting the passive sales of dealers, and (iii) imposing territorial/customer restrictions on their dealers;  and
• Against five private schools  operating in the Kocaeli province for the alleged violation of the Article 4 of the Competition Law. 

Resale Price Maintenance is on the Board’s Radar

Following the investigation conducted against Arçelik Pazarlama AŞ (“Arçelik”), Samsung Electronics İstanbul Pazarlama ve Ticaret Limited Şirketi (“Samsung”), LG Electronics Ticaret AŞ (“LG”), and SVS Dayanıklı Tüketim Malları Pazarlama ve Ticaret Limited Şirketi (“SVS”), the Board announced on 09.08.2023 that  an administrative fine was imposed on the aforementioned undertakings for violating Article 4 of the Competition Law by fixing the resale price of the resellers (“RPM”).

In addition to the violation decisions mentioned in the previous section, the Board initiated eleven investigations in August involving a number of undertakings to assess the RPM allegations. Due to the Board’s close monitoring of RPM practices, the number of investigations and infringement decisions have been increasing since 2018. The Board decided that there was no violation in approximately 15% of investigations concerning the allegation that the undertakings violated Article 4 of the Competition Law due to RPM practices. This means that in approximately 85% of the investigations, the Board determined that the undertakings subject to the investigation had in fact violated Article 4 of the Competition Law due to RPM practices. However, about half of the investigations concluded with an infringement decision resulted in a settlement. This settlement trend has continued to increase since 2021.

Finally, taking into consideration the totality of the Board's preliminary investigations and inquiries on RPM practices:

• In approximately 10% of the conducted procedures, the undertakings were advised to terminate their RPM practices and renew their agreements accordingly pursuant to Article 9/3 of the Competition Law, and
• In approximately 30% of the cases, an investigation was not initiated.

In August, RPM practices resulted in administrative fines for Arçelik, Samsung, LG, and SVS in accordance with the Board’s approach towards such practices. The outcomes of eleven new investigations in terms of the undertakings are eagerly awaited.

What are the Board’s Expectations from Digital Platform Service Providers?

The Board concluded the investigation regarding Sahibinden Bilgi Teknolojileri Pazarlama ve Ticaret AŞ’s (“Sahibinden”) alleged abuse of its dominant position in the online platform services market for property sales/rental services with its final decision published on 23.08.2023.

The Board’s Assessment

In its final decision, which was published as a short decision indicating that the reasoned decision will be announced later, the Board determined the following facts regarding Sahibinden:

• that it dominates the online platform services markets for the property sales/rental activities of corporate members and the vehicle sales activities of corporate members, and
• that it abuses this dominant position by preventing data portability and creating contractual/actual exclusivity.

As we mentioned in our July bulletin, similar to the Nadirkitap Bilişim ve Reklamcılık (“Nadirkitap”) investigation, Sahibinden preventing its corporate members from using more than one platform by blocking them from transferring their data has been determined as a violation of competition. In contrast to the Nadirkitap decision, Sahibinden also imposes contractual/actual exclusivity on its corporate members.

As its aforementioned practices were found to have excluded its competitors, Sahibinden was sanctioned with an administrative fine of approximately TRY 40 million and must fulfil certain obligations in order to restore competition in the market.

As also discussed in our July bulletin, Nadirkitap and DSM Grup Danışmanlık İletişim ve Satış Ticaret A.Ş. (“Trendyol”)  were also subject to investigations concerning their data practices. While Nadirkitap was investigated in the context of data portability, Trendyol was subject to allegations of self-preferencing and abuse of a dominant position based on the use of data. Along with the Sahibinden decision, the main common ground of all three investigations was the imposition of administrative fines and the imposition of certain obligations on the undertakings in order to stop the infringement and restore effective competition in the market. Most of these obligations seem to overlap. The obligations set by the Board for Sahibinden in comparison with the obligations imposed on Nadirkitap and Trendyol are discussed below.

Obligations

• To amend the agreement signed with institutional members that includes the provisions subject to the violation within 3 months following the notification of the reasoned decision and to certify the changes with the TCA (the obligation to revise the contract only exists in the Sahibinden decision),
• To establish an infrastructure that enables corporate members to effectively transfer real estate and vehicle advertisement data they enter on the Sahibinden platform to competing platforms; to keep the data covered by the advertisements up-to-date free of charge; to fulfill these obligations within a period of 2 months following the notification of the reasoned decision; and to certify the compliance measures prepared at least 1 month prior to this period to the TCA (the Nadirkitap decision imposes an obligation to ensure data transportation rather than the establishment of infrastructure),
• Providing uninterrupted and effective responses to requests from competing platforms by establishing an infrastructure that enables members to move and keep their data up-to-date without any delay, as soon as reasonably possible and without any charge. If corporate users with seats on competing platforms request to move their real estate and vehicle advertisement data from these platforms to the Sahibinden platform, the data contained in the advertisements must be kept up to date on the Sahibinden platform and the competing platforms must accept this request (the Nadirkitap decision contains a similar obligation),
• To certify the process with the TCA both at the commencement and termination in order to ensure that the above-mentioned issues are fulfilled in accordance with the Board’s decision (it was also decided that Trendyol must submit the compliance measures the company has prepared), and
• To report to the TCA for a period of 3 years from the commencement of the implementation of the first compliance measure and on an annual basis (it was also decided that periodic reporting must be done by Trendyol).

Relevance for Online Platform Market Participants

Regarding the Board’s approach to data portability, the following points are taken into consideration:

• the restriction of data portability may cause transition costs for the data owner, and due to these costs, data owners may prefer to stay on the platform they first logged in to as they will have difficulty in moving their data to another platform;
• for competitors, these restrictions will result in increased costs as they force competitors to use additional resources to promote the use of their platforms; and
• in this way, cross-platform transitions will become more difficult.

In this regard, the Board may be expected to continue to impose similar obligations because of its investigations on undertakings that have reached certain market power and have significant amounts of user data. Indeed, the obligations set forth in the aforementioned decisions essentially establish a list of behaviors expected from other players in the online platform services market.

In digital markets, which are becoming increasingly popular, many national authorities are adopting policies to ensure data portability,  including the European Union in the Digital Markets Act (“DMA”) regulation. By emphasizing that the relevant undertakings should ensure the effective portability of user data and that failure to do so may result in sanctions, the Board is also guiding players in digital markets towards certain rules of behavior. To this end, in light of the Board's approach in recent decisions, the online platform services market may be monitored more closely in terms of data carriage.

TCA’s 2022 Annual Report Has Been Published

The annual report  (“Annual Report”) covering the relevant data regarding the activities of the TCA for the year 2022 was published on 23.08.2023.

According to the Annual Report, 342 files were finalized in 2022, 78 of which were related to competition violations, 19 of which were related to exemption/negative declaration applications, and 245 of which were related to merger/acquisition transactions. Despite the fact that the Board issued more decisions on merger/acquisition transactions than the other two titles, an increase was observed in the number of files related to competition violations when compared to the number of finalized files in 2021.

Regarding the competition violations under Articles 4 and/or 6 of the Competition Law, the majority of cases decided on as a result of a preliminary investigation or investigation process concerned undertakings operating in the food sector. The distribution of files examined ex officio by year indicates that there has been an increase from last year, which leads to the conclusion that the Board takes the initiative to initiate examinations in sectors deemed important without any complaint. Furthermore, information technologies, platform services, agriculture, and agricultural products seem to be the main sectors on the Board’s radar. Moreover, in the finalized cases, the Board imposed administrative fines on the infringing undertakings amounting to TRY 2 billion in total. As for the sectoral distribution of these fines, the food industry is the sector with the highest amount of fines amounting to approximately TRY 1 billion.

Among the 19 exemption/negative declaration applications evaluated by the Board in 2022, four of them resulted in a negative declaration decision and eight of them resulted in a group and/or individual exemption decision. Applicants were concentrated in banking, capital markets, financial, and insurance services; health services; the food industry; and chemical and mining sectors. These statistics reveal that the Board's individual exemption examinations have been increasingly demanding proof of effectiveness and the presentation of detailed information in applications in recent year.

Out of the merger/acquisition transactions, majority being among the chemical and mining, information technologies and platform services, health services, banking, capital markets, finance, and insurance services sectors, 209 transactions were unconditionally authorized and two transactions were conditionally authorized. Furthermore, 34 transactions are identified as out of scope or not subject to authorization.

In its Annual Report, the Board also highlighted the most prominent decisions of 2022. There were 13 decisions regarding competition violations, four decisions regarding exemption/negative declarations, and five decisions regarding merger/acquisition transactions. Additionally, regulations amending the secondary legislation in 2022 were also included in the report.

This Annual Report emphasizes competition advocacy activities as well. In this context, the Board conducted sector reviews in some markets to identify competition concerns and proactive solutions to ensure competitive functioning.

First published by Hergüner Bilgen Üçer Attorney Partnership, September 2023

[1] Board’s decision dated 26.07.2023 and numbered 23-34/649-218

[2] Board’s decision dated 03.03.2011 and numbered 11-12/226-76

[3] Board’s decision dated 24.02.2022 and numbered 22-10/152-62

[4] İbid.

[5] Board’s decision dated 13.07.2023 and numbered 23-31/596-M

[6] Most recently, the Board issued a decision on the application regarding the attorney-client privilege of certain documents obtained during the on-site inspection conducted as part of its preliminary investigation. Our July newsletter, in which we discussed the Board’s decision dated 24 July 2023, is available here.

[7] Board’s decision dated 06.04.2023 and numbered 23-17/301-M

[8] İbid.

[9] Board’s decision dated 13.04.2023 and numbered 23-18/343-M(3)

[10] İbid.

[11] Board’s decision dated 13.04.2023 and numbered 23-18/322-M

[12] İbid.

[13] Board’s decisions dated 07.06.2023 and numbered 23-26/494-M; dated 13.07.2023 and numbered 23-31/594-M; dated 05.05.2023 and numbered 23-20/384-M; dated 18.05.2023 and numbered 23-23/437-M; dated 13.04.2023 and numbered 23-18/321-M.

[14] Board’s decision dated 11.05.2023 and numbered 23-21/411-M

[15] İbid.

[16] Board’s decision dated 22.06.2023 and numbered 23-28/541-M

[17] İbid.

[18] Board’s decision dated 28.04.2023 and numbered 23-19/374-M

[19] Board’s decision dated 17.08.2023 and numbered 23-39/754-263

[20] Board’s decision dated 29.12.2022 and numbered 22-57/886-366

[21] Board’s decision dated 23.09.2021 and numbered 21-44/650-M

[22] France, Italy, and the Netherlands are among the countries developing policy proposals for digital markets and emphasizing data portability for the development of competition in these markets. The German Competition Act foresees the prohibition of certain actions of "undertakings of exceptional importance for intermarket competition," which is considered a third category of market power. The prevention of interoperability and data portability are among these actions. The inclusion of access to data within the scope of the prohibition of refusal to supply goods, which is one of the cases of abuse of dominant position, attracts attention.

[23] https://www.rekabet.gov.tr/tr/Guncel/2022-yilina-iliskin-yillik-rapor-yayimlandi-2e4a13409241ee118ec500505685da39

[24] Communiqué (Communiqué No. 2022/2) Amending the Communiqué on Mergers and Acquisitions Requiring the Authorisation of the Competition Authority (Communiqué No. 2010/4), Communiqué on the Procedures and Principles to be Followed in the Preliminary Notifications and Authorisation Applications to the Competition Authority for the Legal Validity of Acquisitions through Privatisations 2013 2022/2), Communiqué No. 2022/3 Amending the Communiqué No. 2013/2 on the Procedures and Principles to be Followed in the Preliminary Notifications and Permission Applications to be Made to the Competition Authority for the Legal Validity of Acquisitions through Privatisations, Agreements Restricting Competition, Regulation Amending the Regulation on the Settlement Procedure Applicable in Investigations on Concerted Practices and Decisions and Abuse of Dominant Position, Regulation Amending the Regulation on the Fines to be Imposed in Case of Agreements, Concerted Practices and Decisions Restricting Competition and Abuse of Dominant Position (15. 08.2022, OG 31867), Guidelines on the Evaluation of Horizontal Mergers and Acquisitions, Guidelines on the Evaluation of Non-Horizontal Mergers and Acquisitions, Directive on the Procedures and Principles Regarding On-Site Investigations, Legislation on the Control of Concentrations.