Hergüner Competition Monthly - July 2023

    The Board Closely Monitors Nadirkitap

    On 27 July 2023, the Board published its decision [1] on its evaluation of whether the obligations set forth in the decision [2] issued in 2022 regarding Nadirkitap Bilişim ve Reklamcılık AŞ (“Nadirkitap”) were fulfilled.

    Investigation Phase

    In 2020, the Board initiated an investigation with the allegation that Nadirkitap violated Competition Law. The activities subject to the violation were complicating its competitors’ ability to operate in the market of intermediary platform services for the sale of second-hand books by not providing them with the data of Nadirkitap’s sellers who wished to market their products through the services of Nadirkitap’s competitors.

    The Board found that platform services intermediating the sale of second hand books, platform services intermediating the sale of new books, and book sales activities carried out in the traditional channel each constitute separate relevant product markets. Based on these findings, the Board narrowly defined the relevant product market as “platform services intermediating the sale of second-hand books.”

    When concluding that Nadirkitap was in a dominant position in the market, the Board thoroughly examined the indirect network effect of multi-sided platforms.

    After establishing that Nadirkitap was in a dominant position, the Board found that when sellers wanted to transfer the data they provided for the books they would sell on to other platforms, Nadirkitap did not make such transfers.

    The Board characterized this practice as the "prevention of data portability" and stated that this practice of Nadirkitap created an artificial obstacle for sellers to work with Nadirkitap's competitors.

    In light of the assessments above, in 2022, the Board published its decision concerning Nadirkitap's practices in the market for intermediary platform services for the sale of second-hand books. The Board imposed an administrative fine on Nadirkitap on the following grounds:

    • Nadirkitap is a dominant player in the market for intermediary e-marketplace services for the sale of second-hand books, and
    • Nadirkitap abused its dominant position by preventing sellers' access to their inventory data on without just cause.

    In order to end the violation and re-establish effective competition in the market, Nadirkitap was ordered to provide book inventory data to the sellers upon their request in an accurate, understandable, secure, complete, free of charge, and appropriate manner.

    Monitoring Phase after the Investigation

    The decision published on 27 July 2023 indicates that the Board closely monitors the fulfillment of obligations imposed after the investigation. This decision contains quite detailed assessments regarding the type of information that falls within the scope of “inventory” and the appropriateness of the format of the information provided to the sellers under the obligation to "provide book inventory data to the sellers upon their request in an accurate, understandable, secure, complete, free of charge, and appropriate manner". To summarize, the Board stated that:

    • Except for the product code, the concept of inventory data includes the category information, image, book title, author, translator, author, place of publication, year of publication, language, second language, additional features (beautifully bound, first edition, signed), price, description, quantity, shipping, publisher, number of pages, ISBN, book size, binding, condition, and shelf code, and
    • The format of the data provided by Nadirkitap should be presented in a format that is usable on other platforms or in a format that is possible to make it so.

    Since Nadirkitap provided much of the data that falls within the scope of “inventory data” to sellers who requested such, the decision only required a detailed examination in terms of product code, category, and photograph data. As a result, the Board concluded that:

    • Since the product code data is generated only for the Nadirkitap platform, it does not play a role in entering inventory data to competing platforms, and therefore, it is not among the data that should be provided,
    • The court ruled that category information is considered inventory data that must be provided to sellers and category information must be provided to sellers who were not previously provided category information within the scope of the data request and to sellers who will request inventory data in the future, and
    • For photograph data, the Board found that the photographs provided by Nadirkitap to the sellers could not be reused as they were watermarked. The Board stated that Nadirkitap did not fail to fulfill its obligations by not providing the book photographs to the sellers since the photographs on Nadirkitap's system were watermarked and it was not possible to remove the watermarks in a successful and usable manner. Thus, it was not possible for the sellers to access the book photographs in a secure and appropriate format. That said, the Board listed two new obligations for Nadirkitap: to inform sellers at the stage of uploading photographs that the raw versions of photographs will not be stored by Nadirkitap and to provide the file names of the photographs in question with other inventory data.

    Following these assessments, the Board decided to grant Nadirkitap a period of 15 days to fulfill the obligation to provide category data instead of imposing an administrative fine since Nadirkitap only failed to fulfill this obligation.

    BSH Investigation Concluded on All Allegations Examined

    The Board initiated an investigation against BSH Ev Aletleri Sanayi ve Ticaret A.Ş. (“BSH”) with its decision dated 9 September 2021 and numbered 21- 42/617-M [3] concerning the alleged violation of Article 4 of the Competition Law. With its decision published on 12 April 2023, the Board accepted BSH's commitment text with respect to certain allegations within the scope of the above-mentioned investigation and terminated the investigation for these allegations. You can find our examination on this part of the investigation in our April bulletin here.

    The Board’s decision regarding the allegations on resale price maintenance and territory/customer allocation, which were le under investigation, was published on 20 July 2023.

    The Board stated from its findings on resale price maintenance that some of the correspondence gave the impression that there is an intervention in the resale price. Yet, the Board remarked that the allegation was not proven by favorable evidence as there was no other available evidence proving that BSH was engaged in resale price maintenance.

    Accordingly, the Board concluded the investigation by stating that there was no need to impose an administrative fine on BSH since BSH did not violate the Competition Law regarding the allegations of resale price maintenance practice, which fall outside of the applicability scope of the commitment procedure. In this decision, the Board, as seen in several prior cases, separated the allegations subject to the investigation in terms of applicability of the commitment mechanism. Should the Board have conducted its assessment on the applicability of the commitment mechanism without separating the violation allegations, the commitment mechanism would have become inoperable for any investigation in which a resale price maintenance allegation is included.

    The Investigation against 7 Undertakings Operating in the Feed Sector Has Been Concluded

    On 21 July 2023, the Board published its reasoned decision [4] regarding the investigation initiated against the allegation that certain undertakings and dealers operating in the animal feed sector fixed prices through agreements and/or concerted practices. Prior to the investigation, various practices of feed producers and dealers, such as increasing feed prices at the same rate and same time, were reported to CİMER, [5] which initiated the Board’s preliminary investigation. The Board decided to conduct an investigation due to the findings of its preliminary investigation initiated against 7 undertakings to determine whether they had violated Competition Law.[6]

    The Board analyzed the exchanges of competitively sensitive information of the undertakings. While the on-site inspections revealed that the publication dates of the price lists diered from the implementation dates, the Board determined from internal correspondence that the undertakings were in communication when determining their market strategies. The Board characterized the direct discussion of prices between the undertakings as a violation and did not attach any importance to the price movements in the market, which demonstrated that there is no price fixing. The Board also considered that the low total market share of the undertakings in the relevant market did not affect the existence of a violation.

    The Board emphasized that these exchanges of information between competitors eliminates "strategic uncertainty", which is an integral part of the competitive order in the market and that the removal of this uncertainty itself constitutes a violation of competition law. In this regard, referring to both the EU and its own case law, the Board assessed that in such a case, a violation may be found regardless of the eect the anticompetitive communication has on the market.

    In the defenses of investigation parties, the “de minimis” exception was discussed. However, the Board stated that “hardcore violations” are excluded in these regulations, and therefore, concluded that “de minimis” cannot be applied due to the existence of a “hardcore” violation.

    The Board concluded that 4 undertakings violated Competition Law by exchanging competitively sensitive information and determining feed sales price jointly and imposed an administrative fine on those 4 undertakings.

    The Board Decided Not to Initiate an Investigation Against Philips

    The Turkish Competition Board’s (“Board”) decision [7] regarding the preliminary investigation initiated upon the allegation that Türk Philips Ticaret Anonim Şirketi (“Philips”) abused its dominant position by not delivering documents to Baytuna Sağlık Eğitim Altın İnşaat Danışmanlık Hizmetleri San. Tic. Ltd. Şti. (“Baytuna”) concerning Philips-branded devices oered as part of the service procurement tender was published on the TCA’s website on 10 July 2023.

    The dispute between Philips and Baytuna arises from Philips’s refusal to deliver documents to Baytuna, the tenderer, which were required for the tender for the procurement of medical imaging services. Philips employees considered that it was not usual in terms of the tender procedure to request documentation for devices after the tender oer date and rejected Baytuna's request due to its timing. Baytuna filed a complaint application to the TCA claiming that Philips's conduct constituted a refusal to deal (refusal to supply) and thereby abused its dominant position.

    The Board considered that the allegation that Philips did not provide Baytuna with the documents required for the tender, and due to this action, Baytuna was excluded from the tender did not meet the elements of refusal to deal and did not deem it necessary to conduct a dominant position assessment. In the evaluation regarding the refusal to deal, the Board concluded that:

    • When the tender specifications were examined, it was seen that devices of different brands could also be accepted by the contracting authorities, and it was evaluated that Philips branded devices did not meet the indispensability requirement,
    • As for the eect on effective competition in the market, it was determined that Philips' behavior in question was limited to a single tender, and therefore, effective competition in the market was not eliminated, and
    • Based on the information obtained, it was determined that the usual practice in the sector is for undertakings participating in a tender to request documents from the manufacturer undertakings before the bid date. Hence, Philips's behavior was also considered to be based on the timing of Baytuna’s request and not for any other economic rationale.

    Considering that the sole behavior of Philips did not cause Baytuna to be excluded from the tender and that no consumer damage was caused, it was decided that the case subject to the application did not constitute an abuse of dominant position and that there was no need to initiate an investigation against Philips.

    Interim Injunction on the Exclusivity Agreement between NESİNE and MAÇKOLİK

    The Board published the interim injunction decision [8] on 5 July 2023 regarding the removal of all other provisions that may contain exclusivity in the Advertisement Sales Service Agreement concluded by D Elektronik Şans Oyun ve Yayıncılık AŞ (“NESİNE”) with Mackolik İnternet Hizmetleri AŞ (“MAÇKOLİK”).

    Previously, the Board had conducted a preliminary investigation upon the allegation that NESİNE and MAÇKOLİK had violated the Competition Law with their exclusivity agreements, and initiated an investigation. [9]

    Upon the failure of the commitment negotiations conducted during the course of the investigation, the Board evaluated whether the provisions of the Advertisement Sales Service Agreement (“Agreement”), which includes an exclusivity clause, concluded between MAÇKOLİK and NESİNE would pose serious and irreparable damages before the investigation is concluded, and to this end, the Board considered the need for interim measures.

    The provisions of the agreement subject to the Board's assessment are briefly summarized as follows:

    • MAÇKOLİK shall not display the advertisements of other betting companies with similar activities other than NESİNE on the channels in which MAÇKOLİK is active
    • MAÇKOLİK has undertaken a certain number of annual clicks on NESİNE advertisements on its websites, and if this number is not attained, MAÇKOLİK is obliged to pay a penalty clause, and
    • Should MAÇKOLİK engage in an advertising relationship with any other company operating in the same sector as NESİNE, NESİNE shall have the right to immediately terminate the agreement and MAÇKOLİK would be obliged to pay penalty clauses.

    The Board concluded that MAÇKOLİK is a highly important platform for virtual dealers considering MAÇKOLİK's position in the market, live betting rates, and the number of clicks directed from MAÇKOLİK to NESİNE.

    The Board rendered an interim injunction to annul the provisions of the Agreement containing the exclusivity clauses due to the possibility of “serious and irreparable damage” and the possibility of market closure due to the provisions of the Agreement containing exclusivity clauses until the final decision has been rendered.

    The Board Assessed Attorney-Client Confidentiality in On-Site Inspection

    On 24 July 2023, the Board published its final decision [10] regarding the application of attorney-client privilege for certain documents received during the on-site inspection conducted within the scope of the preliminary investigation regarding Storytel Turkey Yayıncılık Hizmetleri (“Storytel”). The decision revealed that the date of the document received during the on-site inspection at Storytel was earlier than the date of the preliminary investigation and was therefore not directly relevant to the exercise of the right of defense.

    Storytel argued that 259 pages of the documents obtained from the on-site inspection conducted at Storytel through the computers and mobile devices of the undertaking officials were subject to attorney-client privilege. The attorney who was the sender/receiver of some of the documents submitted a request to the Board to determine the situation and return the documents.

    The Board defines Professional Privilege as the professional protection afforded to information and documents exchanged between a lawyer and a client in the exercise of the right of defense. Based on its previous decisions, the Board first assessed whether there is an employee-employer relationship between the lawyer and his/her client, and if so, whether the documents are relevant to the claim. The Board also evaluated whether correspondence with an independent lawyer shall be indicative of whether it is directly related to the exercise of the right of defense.

    The Board rejected the request for the return of this document as it was not included in the scope of the Confidentiality Principle, on the ground that Storytel’s on-site inspection revealed that the date of the document received was earlier than the date of the preliminary investigation and was therefore not directly relevant to the exercise of the right of defense.

    First published by Hergüner Bilgen Üçer Attorney Partnership, August 2023

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

    [2] Board’s decision dated 07.04.2022 and numbered 22-16/273-122

    [3] Board’s decision dated 08.09.2022 and numbered 22-41/579-239

    [4] Board’s decision dated 25.04.2022 and numbered 22-19/310-135

    [5] Cumhurbaşkanlığı İletişim Merkezi (Presidency Communication Center)

    [6] Board’s decision dated 18.03.2021 and numbered 21-15/179-M

    [7] Board’s decision dated 09.02.2023 and numbered 23-07/110-33

    [8] Board’s decision dated 15.06.2023 and numbered 23-27/520-176

    [9] Board’s decision dated 07.07.2022 and numbered 22-32/500

    [10] Board’s decision dated 30.03.2023 and numbered 223-16/274-94

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