Hergüner Competition Monthly - October 2023

The Competition Board's Investigation against Krea A.Ş. has been Concluded

The Competition Board (“Board”) announced on its website that the investigation initiated against Krea İçerik Hizmetleri ve Prodüksiyon AŞ (“Krea”) was concluded with a commitment procedure¹. Almost a year ago, the Board had initiated an investigation against Krea, the exclusive holder of the broadcasting rights for Turkish Super League and Turkish First League football matches, abused its dominant position as per Law No. 4054 on the Protection of Competition (“Competition Law”) by discriminatorily o ering sub-broadcasting rights, including “news-related footage” and “full highlights,” to other broadcasting companies under the scope of broadcasting rights.

The Board initiated the commitment process upon Krea's request and determined that:

• Krea has a monopoly, and therefore, a dominant position was held in the sale of summaries of Turkish Super League matches,
• Krea abused its dominant position by discriminating between equally situated public TV channels in its sales policy, and
• The commitments submitted by Krea are su icient to address the competitive concerns raised by the investigation.

The Investigation Against Sunny Concludes Through Settlement

The Board initiated an investigation on 18.05.2023 against Sunny Elektronik Sanayi Ticaret AŞ ("Sunny") for allegations of imposing an internet sales ban on resellers, fixing the resale price, and mediating indirect information exchanges between various electro markets². The Board published the decision³ on its website on 19.10.2023, stating that the investigation was concluded with a settlement.

The on-site inspection conducted by the Board revealed a suspicion that Sunny employees were monitoring the prices of the products and intervening in the resale prices of dealers to prevent practices contrary to the price stabilization policy set by the undertaking.

The Board continued its examination in this regard and stated that restrictions on the internet sales of undertakings are possible if they do not prevent internet sales or price competition. However, as in the Sunny case, if the restrictions imposed on internet sales serve the purpose of the resale price determination, the Board, referring to its previous decisions⁴, stated that these behaviours may complement each other and determined that the restrictions in question were complementary to the practice of resale price determination in the subject case.

Regarding the indirect exchange of competitively-sensitive information in the electromarkets between buyers/retailers, the Board examined the information obtained to determine whether there was a hub for information exchange with Sunny at the centre. The Board concluded that there was insu icient data to establish the existence of a hub and spoke cartel, finding that there was no horizontal consensus among the electromarkets, and Sunny merely attempted to dictate its price policy to the buyer undertakings.

Based on the abovementioned assessment of the alleged violations, the Board concluded that Sunny's behaviours were qualified as determining resale price and noted that a single sanction should be imposed. Sunny subsequently requested a settlement. Upon the Board's acceptance of the settlement request, the investigation was concluded through settlement.

One highlight from the decision is that the Board deviated from its common practice and excluded the undertaking's export figures when calculating the administrative monetary fine. However, two Board members dissented this approach and stated that administrative fines should be calculated based on the total turnover and that data on exports should be included in this calculation.

Eczacıbaşı Investigation Ended with Settlement

In its decision⁵ dated 09.03.2023, the Board concluded the investigation against Eczacıbaşı Tüketim Ürünleri San. ve Tic. AŞ (“Eczacıbaşı”) with a settlement. The decision was announced on 13.10.2023 on the Board’s website.

The investigation was initiated against Eczacıbaşı over allegations of being a party to a hub-and-spoke cartel by coordinating the price increases of its retailers in the downstream market and fixing the resale price of its retailers.

It was concluded that Eczacıbaşı acted anti-competitively by being party to a hub-and-spoke cartel. In the conversations in question, there were elements such as discussion concerning:

• how much the shelf price would be,
• when the retailers in the downstream market in question would reflect the price increases,
• organizing the retailers to make their increase at the same time, and
• information about the behaviour of other retailers in order to convince retailers to increase the prices.

In addition, it can be seen from the photos sent via WhatsApp that the increases were made by the relevant retailers as requested by Eczacıbaşı.

Regarding the allegations of resale price fixing, the Board determined that the retailers were asked to increase their shelf prices to the desired level through the Whatsapp conversations. In many cases, the prices were raised to the requested levels. In cases where different prices were set in the market, it was evident that Eczacıbaşı had contacted its retailers selling at lower prices.

The Acquisition of Control through an Agreement in the Merger Control Regime

The Board published its decision⁶ dated 25.09.2023 authorizing the establishment of a joint venture by Parks Bottom Co. ("Parks Bottom"), Omers Realty Corporation ("Omers Realty"), and Accor Management Canada Inc. ("Accor Management") on a hotel in Canada.

The notification submitted to the Board concerns the acquisition of The Rimrock Resort Hotel in an undertaking jointly controlled by Parks Bottom and Omers Realty (“Acquirer Undertaking”) while Accor Management will enter into an agreement with the Acquirer Undertaking regarding the management of the hotel. Per the planned structure, Omers Realty and Parks Bottom will have primary control over the hotel management, while Accor Management only has control over the hotel management under the agreement.

The Board evaluated the conditions set out in the Guidelines⁷ regarding contractual control. Under the Hotel Management Agreement, Accor Management has been appointed as the sole and exclusive operator of the hotel. Therefore, based on the existence of (i) a long-term contract that (ii) involves exclusivity and (iii) grants control over the management and resources without the transfer of shares, the Board concluded that these conditions were met in the transaction at issue.

The Board concluded that there is no horizontal or vertical overlap since the parties and the joint venture do not have any operations in Turkey and that no restriction on competition would result, and consequently, approved the acquisition.

The Board’s Approval of the Merger of Dalsan Alçı and Saint-Gobain Rigips under a Single Roof

The final examination regarding the establishment of joint control by Dalsan Yatırım and Saint-Gobain over Dalsan Alçı Sanayi ve Ticaret AŞ ("Dalsan Alçı") controlled by Dalsan Yatırım ve Enerji AŞ ("Dalsan Yatırım") and Saint-Gobain Rigips Alçı Sanayi ve Ticaret AŞ ("Saint-Gobain Rigips"), controlled by Saint-Gobain Weber Yapı Kimyasalları Sanayi ve Ticaret AŞ ("Saint-Gobain") has been concluded. The Board's decision⁸ authorizing the transaction was published on its website on 25.09.2023.

The Board concluded that the horizontal overlap between the parties to the transactions in the powder plaster and plasterboard markets would not significantly reduce effective competition due to:

• The limited increase in the concentration ratio,
• The presence of strong competitors that can impose competitive pressure,
• The presence of competitors with idle production capacity,
• Changes in the HHI⁹  values do not indicate a risky market structure,
• The absence of high market entry barriers,
• Turkey has rich reserves of gypsum mineral, and
• The lack of a concentrated market structure.

In addition, the Board concluded that effective competition would not be lessened due to the horizontal overlap in the gypsum market since:

• “The total market share of the parties to the transaction is not high,
• The most important gypsum supplier - of the producing undertakings sells all of its gypsum through dealers, and
• The coordination risk in the market is low.

The Board concluded that in cases of vertical overlap, the parties to the transaction do not have the power to effectively force competitors off the market and the risk of coordination between undertakings will not increase. Therefore, the Board concluded that effective competition would not be reduced.

The Board Continues its Decisions on Hindering On-Site Inspections

In October, the Board imposed administrative fines on 3 undertakings for hindering the on-site inspections during the preliminary investigations.

In the first decision¹⁰, during the on-site inspection conducted at Şanal Emlak Tur. Taah. San. ve Dış Tic. Ltd. Şti., the representative of the undertaking stated that the cell phone on which WhatsApp was installed was not present and it was not possible to bring it to the site. For this reason, the Board imposed an administrative fine for hindering the on-site inspection.

In its second decision¹¹, during the on-site inspection conducted at Empa Gayrimenkul Pazarlama AŞ, the representative of the undertaking stated that:

• The examination of personal phones is contrary to the personal data protection legislation,
• The TCA does not have the authority to examine personal devices and e-mail addresses, and
• Such an inspection can only be possible with a decision taken by a court or prosecutor's office.

For these reasons, the representative interfered with the on-site inspection of the TCA’s case handlers. The Board did not accept the arguments of the representative of the undertaking in line with the Constitutional Court decision, which we detailed in our June issue, and imposed an administrative fine on the undertaking on the grounds that the on-site inspection was hindered.

Lastly, the Board imposed an administrative fine on GBK Gayrimenkul İnşaat Araç Kiralama İletişim Prodüksiyon Reklam ve Org. İç ve Dış Tic. Ltd. Şti, similar to the abovementioned two decisions on the grounds that:

• The on-site inspection was hindered because the owner of the undertaking was not present,
• He came to the undertaking after being warned by the inspection committee, and
• The owner stated that the examination of the owner and the attorney’s personal phones is only possible with a court order

The Board Continues its Decisions on Hindering On-Site Inspections

The Board decided to grant an individual exemption to the exclusive bancassurance agreement between Metlife and Denizbank, which was previously granted an individual exemption for 15 years, for an additional 5 years¹².

First, in 2011, a 15-year contract was signed with non-competition and non-promotion clauses appointing Denizbank as the exclusive agent for the marketing, distribution, sale, and premium collection of Metlife's life and personal accident insurance and private pension products throughout Türkiye. Within the scope of the application made at that time, the Board decided that the agreement could not benefit from a group exemption since the duration of the contract was longer than 5 years but could benefit from an individual exemption for the duration of the contract (15 years).

The amendment protocol dated 19.11.2021, which is considered to fall within the scope of the application subject to the current decision, envisages that at the end of the 15-year period granted individual exemption in 2011, the agreement will be extended for another 5 years until 2031. When considering the agreement in terms of duration, the Board made an 8-year evaluation including the 5-year extension from the date of the second application for an individual exemption and not for the 5-year extension. Thus, it actually re-evaluated 3 years of the first 15 years of individual exemption. Although the accuracy of this method is controversial, its effect on the result does not make a significant di erence since the Board ultimately evaluated the individual exemption for a 15+5 year contract. In this context, the Board added a new exceptional example of the past and granted an individual exemption for a total of 20 years for an exclusive bancassurance relationship.

Moreover, the Board emphasized that the "non-solicitation obligation" stipulating that the parties will not make any sales to each other's customers as a result of their direct active e orts does not stipulate the period of time after the expiration of the contract. The Board assessed that the non-solicitation obligation does not meet the condition of "not restricting competition more than necessary" for an individual exemption. Accordingly, the Board decided that if the provision is revised for a maximum period of 2 years a er the expiry of the contract, the amendment protocol and the amended agreement may benefit from the individual exemption until 2031.

The important point here is that the mutual obligations of the parties not to solicit each other's customers was not evaluated by the Board in the first individual exemption application. Therefore, it constitutes a concrete example that it is possible to evaluate a matter that was not evaluated during the first application during the second application (for the extension period).

The Decision Regarding an Investigation Against Undertakings Operating In the Fast-Moving Consumer Goods Sector has been Published

The Board published¹³ its reasoned decision regarding an investigation that was conducted against certain undertakings operating in the fast-moving consumer goods sector as producers/suppliers and retailers. The investigation was in relation to the allegations of mediating the indirect exchange of competition-sensitive information regarding prices among retail supermarket chains and determining the resale prices of these retailers.

The Board evaluated the followings for 5 chain markets¹⁴ party to the investigation:

• They coordinated their prices and/or price increases through indirect contacts made via their common suppliers,
• They shared competitively sensitive information such as projected prices, dates of price increases, seasonal activities, and promotions through their common suppliers,
• By intervening in the prices of retailers that reduced or did not increase prices during the period when prices increased across the market through their suppliers, they increased the prices to the disadvantage of consumers, and
• Compliance with the conspiracy between undertakings is continuously maintained through several strategies such as price reduction (cut) on a specific product if competitor prices do not increase.

The Board concluded that the aforementioned retailers violated Competition Law by executing agreements in the form of a hub-and-spoke cartel or concerted practices with the intention of fixing the resale prices of many products.

The Board also concluded that 12 suppliers violated Competition Law through hub-and-spoke cartel agreements and concerted practices with the abovementioned 5 chain markets and are jointly and equally liable with those chain markets for this violation.

As the Board imposed an administrative fine pursuant to its decision¹⁵ on Beypazarı, a party to the investigation, and its decision on retailers¹⁶, the Board decided not to impose an administrative fine in line with the principle of “ne bis in idem”, which is the prohibition of repeating punishment in competition law.

Dissenting opinions were submitted by several Board members against the decisions rendered for Kent, Coca Cola, Beypazarı and Doğanay.

The Active Cooperation Regulation is Being Renewed!

The Board announced with its decision dated 28.09.2023 and numbered 23-46/884 that the new draft regulation for the Regulation on Active Cooperation for Detecting Cartels (“Active Cooperation Regulation”) has been opened for public opinion.

The Board considered that the Active Cooperation Regulation needs to be updated and prepared a new draft regulation, noting that there have been many significant developments in practice and legislation since the effective date of the Active Cooperation Regulation, which was published in the Official Gazette dated 15.02.2009 and numbered 21142.

The dra Active Cooperation Regulation regulates the requirement to submit documents in a way that clearly distinguishes between settlement and active cooperation, introduces a reasonable deadline for active cooperation applications, and sets a deadline for applicants to submit new findings regarding their applications. This dra is also considered important since it provides legal certainty for the parties to a hub-and-spoke cartel, those who are in a vertical relationship, or other cartel facilitators to benefit from active cooperation. In addition, the Board also discussed the issue of determining the consequences of applications for active cooperation in cases where the applicants make an active cooperation application thinking that they may be party to a cartel, and the application is accepted and decided by the Board, but the violation is not considered as a cartel by the Board at the end of investigation procedure.

The dra has been opened to the public for comments, recommendations, and evaluations to be submitted to the Competition Authority by 09.10.2023, and the effect of the Active Cooperation Regulation with its renewed provisions in practice in the upcoming period is of interest.

1The Board’s announcement dated 29.09.2022

2 Vatan Bilgisayar San. ve Tic. AŞ, Teknosa İç ve Dış Tic. AŞ ve Media Markt Turkey Ticaret Limited Şirketi.

3 The Board’s decision dated 05.01.2023 and numbered 23-01/12-7.

4 The Board decisions dated 16.12.2021 and numbered 21-61/859-423 BSH, dated 04.03.2021 and numbered 21-11/154-63 Groupe SEB, dated 05.08.2021 and numbered 21-37/524-258 Philips, dated 30.09.2021 and numbered 21-46/672-336 Singer and dated 30.09.2021 and numbered 21-46/671-335 Arnica.

5 The Board’s decision dated 09.03.2023 and numbered 23-13/212-68.

6 The Board’s decision dated 13.04.2023 and numbered 23-18/351-119.

7 Guideline on the Cases Considered as a Merger or an Acquisition and the Concept of Control.

8 The Board’s decision dated 08.12.2022 and numbered 22-54/829-339

9 The Herfindahl Hirschman Index (HHI) is a method that is used to measure concentration and is calculated by taking the sum of the squared shares of the undertakings in the market.

10 The Board’s decision numbered 23-15/255-85 and dated 23.03.2023

11 The Board’s decision numbered 23-14/244-80 and dated 16.03.2023

12 The Board’s decision dated 23.03.2023 and numbered 23-15/254-84

13 The Board’s decision dated 09.03.2023 and numbered 23-13/216-71

14 The Board’s decision dated 15.12.2022 and numbered 22-55/863-357.

15 Ibid

16 The Board decision dated 18.05.2022 and numbered 21-23/379-158

17 The Board decision dated 28.10.2021 and numbered 21-53/747-360