2021, The “Dıgıtal Year” of the TCA to Promote Competıtıon ın Dıgıtal Markets: A comparatıve analysıs ın lıght of the G7’s Compendıum
Burak Buğrahan Sezer
With Contributions of Mustafa Ayna (ACTECON) and Arda Deniz Diler (ACTECON)
Since the use of digital platforms in daily life and the context of work is on the rise, the competition authorities are focusing increasingly on the competitive issues and market failures in digital markets. With the rapid growth of digital markets, each and every day competition regulations confront grey areas where national competition authorities are faced with sui generis issues.
As a result of a joint attempt of the competition authorities of the G7[1] countries and four guest countries,[2] a compendium on competition in digital markets (“Compendium“) was published on 29 November 2021.[3]
The Compendium includes evaluations under three main headings: (i) Key Challenges, (ii) Key Findings, and (iii) Conclusions and Next Steps. The first part of this article provides an overview of the Compendium with the Turkish Competition Authority’s (“TCA”) stance on the related issues in the past years. The second part of this article provides a recap of the TCA’s activities regarding competition in digital markets in 2021 to provide a comparative analysis.
An Overview of the Compendium
The main aim of the Compendium is to present the different approaches adopted by different competition authorities to promote competition in digital markets. Accordingly, the Compendium includes sections on how to promote competition in digital markets, identifying common problems encountered in these markets and opportunities for mutually productive work.
In this context, we will provide an overview of the main points and highlight the related steps taken by the TCA in this section of the article.
Key Challenges
The section on key challenges emphasizes that digital markets offer significant benefits to consumers, businesses, and society. In this context, these markets allow businesses to grow quickly, help consumers to access new products and interact with others, and spur innovation and economic growth. However, concerns exist about lack of competition, particularly given the characteristics of digital markets, and about the possibility that a few large undertakings can impose significant market power on their competitors and consumers.
Among these two elements, the first to be examined is the concept of market power. Many digital markets have common features, and these features contribute positively to the efforts of undertakings in gaining a strong position in the market. In terms of common features, three features are emphasized particularly: network effects, the existence of multi-sided markets, and the role of data.
Network Effects
While network effects can have significant benefits for consumers and platform businesses, they also can have adverse effects on the competition by increasing market concentration and entry barriers to the market and helping the consolidation of the existing market power. The authors in the Compendium argue that this can provide undertakings that enjoy great market power the ability and incentive to suppress competitors that are deemed likely to pose a threat in the future.
Multi-sided Markets
In multi-sided businesses, economic factors on one side of the platform may be influenced by the conditions of competition on the other. As stated in the Compendium, digital platforms, for example, may not charge a service fee to consumers to maximize profitability and rely on the income generated by advertisers. In this manner, digital platforms are able to subsidize the cost of services provided to the consumers with the revenue they earn from the other side of the market, from the advertisers. As mentioned in the following sections of this article, this situation can be considered to possess a beneficial efficiency for the consumer, even when it is regarded as a challenge. Aside from that, no positive or negative point is highlighted in the case of multi-sided businesses.
The Role of Data
The Compendium discusses how access to data has become a requirement to compete and offer innovation, and that when this requirement is evaluated alongside other market features such as network effects, the inability to access data emerges as a barrier to entry into core and complementary markets. These characteristics, taken together, may lead to long-term and entrenched market power, which can produce anti-competitive effects such as higher prices and fewer options for consumers, as well as restrictions on competitors’ access to the market.
The second issue examined in the section on key challenges is the challenges to the existing enforcement approaches. It is stated in the Compendium that weaker competition in digital markets would cause some difficulties for competition policies and enforcement. In this context, the effects in the market may be different from the price effects occurring in traditional markets and may require new theories of harm. It is asserted that features such as the multi-sided nature of online platforms make it difficult for courts and authorities to evaluate digital platforms within the traditional frameworks. One of the fundamental examples of this issue is the difficulty in determining a market definition.
Furthermore, it was claimed that although competition authorities have intervened especially against the most powerful digital undertakings, these interventions have not restored competition sufficiently. In addition, digital undertakings operate in a global framework and are bound tightly to areas such as data protection and consumer protection as well as competition. It is recommended that regulators and policymakers in different jurisdictions work together in an interdisciplinary way.
Key Findings
In the discussion of Key Findings, crucial issues in digital markets are evaluated in four categories: (i) digital advertising, (ii) the role of algorithms, (iii) marketplaces and app stores, and (iv) mergers.
The Compendium presents the decisions and works of the contributing competition authorities on the related issues. When these decisions and works are explored, the decisions made by the French competition authority[4] and the European Commission[5] regarding Google stand out in terms of digital advertising.
The authorities commonly have found Google’s actions, such as preventing others from adverting or displaying its own adverts primarily, exclusionary for its competitors and have enforced fines and behavioural remedies.
At this point, it is worth mentioning that the TCA also acted in parallel in its Google Adwords Decision,[6] concluding that Google had abused its dominance by increasingly placing text advertisements with uncertain advertisement quality at the top of the general search results, thus, complicating the activities of the organic search results that do not yield advertising revenue in the content services market. Likewise, in its Google Shopping Decision,[7] the TCA stated that Google had abused its dominance after having determined that the company had put its competitors who offered comparison shopping services in a disadvantaged position.
Later in the related section of the Compenidum, the approaches and opinions of various competition authorities are shared and evaluated to provide a better understanding of the mechanics of algorithms and their effect on competition. The joint report of the German and French competition authorities,[8] as well as that of the UK Competition and Markets Authority (“CMA”),[9] stand out in terms of evaluating the role of algorithms. On the same subject, the decisions of the US Department of Justice’s Antitrust Division[10] and the CMA[11] on Amazon also are highlighted.
Within the scope of the Compendium, self-preferencing, price parity clauses, and restrictive terms of business between sellers and platforms are reported to be common practices for marketplaces and app stores. In this regard, decisions of various competition authorities regarding Amazon and Apple come to the fore. In this context, the TCA’s Google Android Decision[12] also is worth mentioning. In the decision, it was found that Google had abused its dominance in the market of licensable mobile operating systems by placing provisions on the prioritization and exclusivity of its own products in its contracts signed with device manufacturers.
In terms of mergers, widespread and well-founded concerns exist about underenforcement regarding mergers in digital markets. It also is noted that competition authorities recently have become more active in challenging, blocking, and remedying proposed mergers in these markets. In this regard, the Compendium cites several examples of the decisions of various competition authorities dealing with both vertical and horizontal mergers and acquisitions in digital markets.
The Key Findings section also includes evaluations for the strengthening of competition authorities. The authors remark that the competition authorities have taken steps to strengthen institutional capacities and emphasize the significance of forming internal working groups and collaborating with external experts in the context of capacity building. They suggest that institutional knowledge expands as digital markets evolve rapidly and problems arise periodically due to a lack of case law. However, the knowledge of the competition authorities in this field has grown as a result of the sector reports and decisions produced in recent years. In this context, the same is true for the TCA. The authority, seeking to improve its analysis of digital markets, has begun to employ experts with engineering backgrounds to assess digital market cases more accurately.
Reforms to existing powers and approaches are another issue examined in the Key Findings section. Contributors to the Compendium state that despite the above-mentioned recent activities of competition authorities, additional mechanisms, powers, and safeguards specific to digital markets are required. The importance of modernizing and strengthening existing approaches is emphasized in this context. In parallel, with the amendment in 2020, the TCA’s power to conduct on-site inspections has been amended in a way that includes accessing digital data of undertakings irrespective of where they are stored.
In this context, emphasis is placed on the significance of new regulatory regimes and legislative efforts carried out by various jurisdictions, such as the European Commission’s Digital Markets Act. Many competition authorities have stated that they intend to change procedures to act faster and thus be in a position to prevent damages, with practices such as interim measures, as well as to gain easier access to information. Furthermore, it is stated that jurisdictions facing similar problems that have not yet proposed reforms of this kind can benefit from the experience gained from reforms that have been implemented already.
As is known, the TCA also has taken steps in such direction. The TCA initiated a sector inquiry concerning e-marketplace platforms on 11 June 2020,[13] publishing its preliminary report on 07 May 2021.[14] On 06 March 2021, another sector inquiry was initiated regarding the digital advertising market, where market failures and the possible legislative steps to be taken will be evaluated.[15] Detailed information on these sector inquiries will be provided below.
The authors of the Compendium argue that new approaches to merger control are required as mergers and acquisitions in digital markets are particularly unique in terms of thresholds. While such transactions may pose potential competitive risks due to the market features indigenous to digital markets, the turnover of one of the parties in such mergers and acquisitions may be low (or there may be no turnover) and fall outside the jurisdiction of the competition authorities. In this context, the Compendium includes discussions on the ability of various competition authorities to scrutinize mergers and acquisitions in the digital market without being hampered by thresholds.
The Key Findings section ends with an assessment of the value of regulatory cooperation. Consumer data, in particular, is an important component of digital platforms. Competition authorities should collaborate with data protection and consumer enforcement authorities in their evaluations of consumer data collection. Furthermore, according to the Compendium, digital markets are “borderless markets” and thus competition authorities should prioritize both international and domestic cooperation. The goal should be to learn about different approaches to similar problems and to benefit from this knowledge.
Conclusions and Next Steps
In the section “Conclusions and Next Steps,” the Compendium states that many similarities exist between the problems faced by competition authorities in digital markets and the approaches taken by the same authorities to these problems. Increasing institutional capability and capacity, as well as carrying out interdisciplinary and inter-jurisdictional works, are examples of the steps being taken by authorities to improve their effectiveness. Finally, the submissions of the contributing authorities are included in the Compendium, and in this context, the relevant authorities presented their work and plans to be implemented in digital markets.
Since the Compendium provides a general summary of the key issues to be evaluated in the context of digital markets and their compliance with competition law, now we will provide a summary and assessment of the TCA’s approach towards this subject, focusing on the steps taken in 2021 in light of the highlighted issues in the Compendium.
A Recap of the TCA’s Practices on Digital Markets in 2021
In 2021, the TCA engaged closely with digital markets. In addition to the sector inquiries initiated in this direction, the Authority monitored many of Turkey’s largest e-marketplace platforms, as well as undertakings operating globally such as Facebook and Google. The TCA, who also prepared a report on Financial Technologies (“Fintech”), which has a close relationship with digital markets, also pioneered the Balkan Initiative Platform and actively cooperated with other competition authorities. In this chapter, we will present the TCA’s key developments of 2021 with respect to digital markets.
Sector Inquiry into E-Marketplace Platforms
The TCA initiated a sector inquiry into e-marketplace platforms with its decision dated 11 June 2020 and numbered 20-28/353-M (“Sector Inquiry on E-Marketplace Platforms”). According to the TCA’s announcement on the subject, e-marketplaces’ market powers based on data ownership and network effects create concerns about abusive behaviour due to their concurrent roles as a platform owner and a seller. I sector has distinct competitive dynamics, necessitating a more sophisticated structure and functioning than the currently contemplated by the traditional legal framework. As such, the purpose of this Sector Inquiry was to ascertain the competitive and anticompetitive effects of e-marketplaces and to formulate appropriate policies in response to these effects.
In May 2021, a preliminary report regarding the Sector Inquiry on E-Marketplace Platforms (“Report”) was published. The Report identified key structural deficiencies like high barriers to entrance and expansion in the sector, as well as market tipping. The most notable structural market entry barriers cited were network effects, the proclivity of customers for a single resource, the cost advantage provided by economies of scale and scope, and data advantage.
The Report analyzed the primary competitive problems raised by e-marketplace behaviours in terms of inter-platform competition, intra-platform competition, and consumer concerns.
Concerning inter-platform competition, the Report paid special attention to most-favoured-consum“r (”MFC“) clauses and exclusivity constraints. In this regard, it emphasized first and foremost that the wide MFC clauses have the potential to impede effective competition, which is primarily driven by commission rates between e-marketplaces. Secondly, in the event that the wide MFC clause is applied, particularly by gatekeeper marketplaces, the following risks were identifieI: (i) an adverse effect on incentives for sellers to apply different prices and terms to different channels; as well as (ii) for competitor e-marketplaces to engage in price competition; and (iii) that the adoption of this practice by competitors might result in price rigidity and anti-competitive cooperation in the market. Finally, while a new entrant to the market may present an enticing offer by charging cheap commissions, the reality that it will not gain market share due to wide MFC clauses will drive it to quit. In light of these considerations, the Report emphasizes that a wide MFC clause may restrict entry into and growth in the market, resulting in decreased competition and ultimately increased market concentration.
Additionally, it was noted that the exclusivity constraints imposed on sellers by gatekeeper platforms may limit multiple access and hence hinder inter-platform competition. It was assumed that the existence of such practices could result in increased concentration in a market that is highly concentrated inherently already.
Concerning intra-platform competition, the first concern expressed was discrimination between marketplace sellers, includIng (i) self-favouritism of own products/services or those of specific sellers in terms of product/seller listing by the platform, (ii) using third-party s’llers’ data collected by marketplaces in their own favour or against third-party sellers and blocking third-party s’llers’ access to this data, and (iii) preventing the third-party sellers access to certain services offered by the platform.
The second co’cern raised in the Report regaIding intra-platform competition is that even if they do not hold a dominant position, the marketplace platforms may engage in some unfair commercial practices (such as excessive pricing and unfavourable contract terms) against sellers due to their asymmetric bargaining power. It was noted that while this asymmetric bargaining power may provide marketplaces with the potential and capacity to unilaterally establish commercial conditions, it also may cause enormous uncertainty and commercial risk for sellers exposed to it.
Regarding consumer concerns, it was mentioned that the primary issues likely to have a direct impact on consumer welfare are price, consumer dependency and loyalty, data, and innovation. In light of the’market’s current concentration and the ’growing reliance of consumers on leading platforms, the TCA report notes that marketplaces may be incentivizId to (i) increase prices on their platform to increase profits, (ii) link consumers to higher-priced sellers via marketplace rankings, and (iii) cause consumers to encounter higher prices as a result of the MFC and similar practices. These would restrict the ability of third-party sellers to offer lower pricing on their own websites or other platforms.
To ensure th’ market’s competitiveness and to eliminate the concerns mentioned above, the TCA included three complementary policy proposals in the Report. The first of these is to review and reinforce secondary legislation to improve the clareportenesstiveness of the application of Law No. 4054 on the protection of Competition (“Competition Law”) to e-marketplace platforms. It is asserted that there is a necessity in this context for MFC clauses and exclusivity practices utilized by platforms.
The second policy proposal is to enact a Platform Behaviour Regulation to balance the mark’tplaces’ current asymmetric bargaining power. Within the scope of this Regulation, it is stipulated that the mar’etplace’s listing/sorting criteria, as well as their importance, should be conveyed to sellers over the course of the contract. Additionally, marketplaces must ensure that the data provided to the marketplace is accessible to buyers and sellers. Additionally, it is underlined that the mar’etplace’s general fee schedule, which outlines the pricing and costs that the marketplace charges sellers, should be accessible to sellers in as transparent a way as possible.
The third policy proposal attempts to identify digital market gatekeepers and the practices they are expected to avoid, as well as to develop a legal framework managing these forbidden practices. In this respect, it was stated that gatekeepers should refrain from imposing contractual or wide MFC conditions on their sellers. They also should abstain from using non-public data gathered through’sellers’ actions on their own products that compete with’sellers’ products. Gatekeepers also are expected to avoid favouring their own products in their ’latform’s rankings, according to the Report.
Additionally, The TCA discussed the Report with representatives from the sector during a workshop conducted on 06 July 2021’ attended by sector representatives such as lawyers and consultants who addressed the issues they encountered, gave their insights regarding the Report itself, and suggested solutions.
As can be seen, the TCA addressed challenges such as network effects and the role of data in the Report in a way similar to how they were handled in the Compendium. Additionally, the role of algorithms was emphasized. Furthermore, the Report laid great emphasis on wide MFC clauses and their potential impact on digital markets, in a way exceeding the Compendium. However, it should be noted that this is a preliminary report, and its scope is expected to expand once it is finalized.
Interim Measures on Facebook
The TCA initiated an investigation of and imposed interim measures[16] against Facebook Inc., Facebook Ireland Ltd., WhatsApp Inc., and WhatsApp LLC (collectively, “Facebook“) in its decision dated 11 January 2021 and numbered 21-02/25-10. The decision was made in relation to the data sharing obligation that Facebook would have imposed on WhatsApp users on 08 February 2021 with the implementation of its new terms of service. These new terms of service stipulate that the WhatsApp users would be required to give permission for the data they provided to WhatsApp to be shared with Facebook. It also is stated in the terms that users who do not give their permission would not be able to use WhatsApp’s services.
It was asserted in the decision that while people share data on Facebook that they intend to reveal to a closed group, data including more private information or trade secrets could be exchanged in smaller groups on WhatsApp. In this context, it was suggested that the usage of the aforementioned data in other markets where Facebook operates and the preconditioning of data sharing for the use of WhatsApp would raise competition law concerns.
The TCA expressed concerns regarding (i) Facebook’s linking of WhatsApp data to other Facebook products, (ii) Facebook’s use of its market power in consumer communication services in a way that complicates competitors’ internet advertising activities and (iii) excessive data collection and use of data for other services that could result in consumer exploitation. The TCA asserted that the obligation to share such data would result in serious and irreparable harm until a final decision was reached. As a result, an interim measure was implemented that suspended the revised terms of service for all customers, including those who had previously accepted them.
Given that the TCA does not frequently implement interim measures, this decision demonstrates the emphasis placed on data, particularly in terms of sharing and using data between platforms/markets.
Sector Inquiry into Online Advertising
The TCA launched a sector inquiry into the online advertising market in January 2021 (“Sector Inquiry into Online Advertising”). The TCA’s announcement noted that the online advertising sector has a complex supply chain that involves a diverse range of services and players, has multi-sided market characteristics, and comprises a wide variety of advertising types and submarkets. The market’s structure and rapid growth have drawn the attention of competition authorities worldwide, and the sector has been the focus of numerous inquiries and studies. The announcement also stated that the publishing industry in Turkey had shifted away from traditional channels toward digital media in recent years, online advertising had accelerated with the growth of e-commerce, and Turkey’s internet and social media usage habits had elevated the country to an important market.
Within the scope of this inquiry, the TCA stated that it aimed to evaluate (i) the sector’s structure and functioning, (ii) structural and/or behavioural competition concerns, (iii) the adequacy of existing competition law tools in terms of establishing effective competition, and (iv) new tools to address these emerging areas.
It should be noted that as yet there has been no publication of the inquiry’s preliminary or final report. However, one may expect a thorough examination of multi-sided markets, as well as the structure and functioning of the online advertising sector. Additionally, just as it did with the e-marketplace platforms, the TCA is expected to present policy proposals on how to eliminate competitive concerns, if it detects any.
Interim Measures on Trendyol
The TCA completed its preliminary inquiry into allegations that DSM Grup Danşmanlık İletişim ve Satış Ticaret A.Ş. (“Trendyol“) was violating Competition Law through abusive practices in the market for online marketplaces and decided to launch an investigation into Trendyol.[17] Additionally, the TCA decided to adopt interim measures regarding Trendyol’s alleged practices and behaviours to avert any serious and irreparable harm until the final decision is reached.[18]
The TCA assessed during the evaluations that (i) Trendyol had been the market leader for multi-category e-marketplaces since 2019, (ii) it had achieved growth in 2020 that its competitors could not match, and (iii) this growth had continued in 2021. In this regard, the TCA ruled that Trendyol held a dominant position in the market for multi-category e-marketplaces due to its large and disproportionate market share in comparison to its competitors, the market’s barriers to entry, and a lack of buyer power.
The documents demonstrating Trendyol’s favouritism for its own retail activities were analyzed under two main categories. The first was Trendyol’s interference with the algorithm to favour its own retail activity. In this context, it was discovered that Trendyol manipulated the algorithm to ensure that its own brands appeared at the top of the list, displayed a fivefold increase in the number of followers for its brands, and inflated the scores provided by the smartlisting algorithm for the desired brands and delivery types. Again, according to multiple documents, Trendyol intervened in the algorithm to conceal low scores for its own products, to display the “next day delivery” option solely for its own products, and to provide an exception for its own brands from the algorithm.
Additional findings indicating Trendyol’s favouritism for its own retail activities were analyzed under the scope of the use of third-party data. Trendyol obtained sales data from brands and third-party sellers that competed with its own brands, including “best-selling 40 products, best-selling categories, price levels, and colour information,” and used it to market its own brands. Additionally, it was discovered that the 250 most frequently searched terms on Trendyol were transmitted to the company’s strategy and product design divisions routinely. Trendyol used the data provided by third-party sellers as a result of their activities on the relevant platform and the data generated by consumer interactions with the relevant sellers to develop its own commercial activities and compete with third-party sellers. Additionally, because third-party sellers did not have access to this data, it was deemed that Trendyol’s favouritism distorted market competition.
Apart from favouritism, certain sellers were provided with a ranking advantage through manipulations in the raw scores and the algorithm, resulting in discrimination between sellers. Additionally, this circumstance was deemed to violate the limitation brought on a dominant undertaking by Article 6 of the Competition Law; “making direct or indirect discrimination between purchasers with equal status by offering different terms for the same and equal rights, obligations and acts.“
The TCA concluded that the following interim measures should be taken to prevent Trendyol’s aforementioned practices and behaviours from causing serious and irreparable damages until the final decision is rendered:
- to put an end to all kinds of action, behaviour, and practices, including interventions made through algorithms and coding, for other products and services under its own economic integrity within the scope of the marketplace activity that would put its competitors at a disadvantage and to avoid these behaviours for the duration of the investigation process;
- to stop the sharing and use of all kinds of data obtained and produced from the marketplace activity for other products and services under its economic integrity, and to avoid these behaviours for the duration of the investigation process;
- to put an end to all kinds of action, behaviour, and practices, including interventions made through algorithms and coding, which may discriminate among sellers selling in the marketplace, and to avoid these behaviours for the duration of the investigation process;
- to take all kinds of technical, administrative, and organizational measures necessary to ensure the auditability of the above-mentioned interim measures;
- to keep the parametric and structural changes made on all algorithm models used for product search, seller listing, seller score calculation, etc., within Trendyol for at least eight years, with versions and undeniable accuracy;
- to keep the source codes of all software specially developed for use within Trendyol for at least eight years with versions and undeniable accuracy; and
- to keep user access and authorization records and manager audit records for all software used within the scope of conducting business processes within Trendyol for at least eight years, with undeniable accuracy.
One may argue that the TCA addressed practically all of its concerns about intra-platform competition that were highlighted in the preliminary report for the Sector Inquiry on E-Marketplace Platforms. Self-favouritism of Trendyol’s own products/services or those of specific sellers in terms of product/seller listing by the platform, as well as the use of third-party sellers’ data collected by Trendyol in their own favour or against third-party sellers and blocking of third-party sellers’ access to this data, were the primary considerations in the decision. Additionally, the TCA determined that Trendyol’s practice of displaying the “next day delivery” option exclusively for its own products precluded third-party sellers from accessing certain platform services.
Google’s Favouring Its Own Local Search and Accommodation Price Comparison Services
The TCA completed its investigation into the allegation that Google Reklamcılık ve Pazarlama Ltd. Şti., Google International LLC, Google LLC, Google Ireland Limited, and Alphabet Inc. (collectively “Google”) abused its dominant position in the general search services market and promoted its local search and accommodation price comparison services to the exclusion of its competitors.[19]
In this context, first, it was determined that Google held a dominant position in the general search services market. Subsequently, it was concluded that Google abused its dominance by giving its own local search and accommodation price comparison services an advantage over its competitors in terms of location and display on the general search results page, and by preventing competitor local search sites from entering Local Unit (Google Local Pack is a group of three local business listings that appears in response to search queries for products or services provided by local businesses. Unlike organic search results which are taken from Google’s index of websites, the listings in Local Packs originate from the Google My Business directory). For this reason, the TCA imposed an administrative fine of TRY 296,084,899,49 on Google. In addition, the TCA stated that within 6 months from the notification of the reasoned decision, in order to end the said violation and ensure effective competition in the market, Google should establish conditions that prevent competitor local search services and competitor accommodation price comparison services from being disadvantaged by Google’s own relevant services on the general search results page.
As can be seen from the decision on Google, as well as the decisions and reports mentioned earlier, preventing undertakings to abuse their dominant position by acting in a self-favouring method, such as intervening with the algorithm, is one of the most important issues from the perspective of the TCA. At this stage, it should be noted that the reasoned decision has not been published yet and it is likely to contain a thorough analysis on such methods.
Sahibinden on the TCA’s Radar
Since 2017, Sahibinden Bilgi Teknolojileri Pazarlama ve Ticaret A.Ş. (“Sahibinden”) has been under the scrutiny of the TCA when a full-fledged investigation of the company was initiated regarding its abuse of dominance via excessive pricing.[20] It was the first example in the online platform market to examine pricing claims. The TRY 10.7 million levied on Sahibinden, however, ultimately was annulled by the court.[21]
The TCA continued to keep Sahibinden on a tight leash in 2021 by concluding two investigations and launching a new one. The first of the concluded investigations was related to the excessive pricing, upon the court’s annulment decision mentioned above. In the decision, the TCA stated that Sahibinden is dominant in the market for “online platform services related to providing ad spaces for corporate customers’ transactions for selling/renting real estate” and in the market for “online platform services related to providing ad spaces for corporate customers’ transactions for vehicle sales”, yet it did not violate the Competition Law during the period 2015-2017 by means of excessive pricing in the said markets.[22]
The second investigation also was conducted in response to a claim that Sahibinden had abused its dominant position by means of excessive pricing. The TCA stated that Sahibinden is dominant in the markets for “online platform services related to corporate members’ activities for selling/renting real estate, online platform services related to corporate members’ activities for selling vehicles, online platform services related to individual members’ activities for selling/renting real estate and online platform services related to individual members’ activities for selling vehicles,” but it did not violate the Competition Law during 2018-2020 by means of excessive pricing in the said markets.[23]
Last, the TCA launched a new investigation due to an allegation that Sahibinden had abused its dominant position by preventing data transfer within online platform services and by other means.[24]
It should be noted that no reasoned decision on the aforementioned issues has been released. Nonetheless, two critical aspects emerge. The first is that Sahibinden has been identified as a dominant undertaking in numerous markets in the decisions on excessive pricing, despite the fact that it was cleared of the allegations. This may constrain Sahibinden’s business actions and prompt the TCA to continue its monitoring. Second, unlike the claims of excessive pricing, preventing data transfer will be a relatively recent addition to the TCA’s case law, and all actors await the TCA’s evaluations with bated breath.
Importance of Dominant Position: Hepsiburada Decision
The TCA also evaluated competition in digital markets in its decision following its examination of the allegation that D-Market Elektronik Hizmetleri ve Ticaret A.Ş. (“Hepsiburada”) and Anka Mobil Tedarik A.Ş. (“Anka”) had violated the Turkish Competition Law by means of MFC practices, discrimination, restriction of intra-brand competition, refusal to supply, and resale price maintenance.[25]
The above-mentioned allegations are related to Spigen branded mobile device accessories, of which Anka is the sole importer in Turkey. In this context, the relevant product market is broadly defined as “smart device accessories“, narrowly as “smartphone cases” and their “marketing activities“. In the evaluation made for Hepsiburada, it was stated that; even if only the market shares of the platforms that have adopted the marketplace concept, among the platforms that sell phone accessories and phone cases only through online channel, are calculated, Hepsiburada cannot be considered as in dominant position. It is also evaluated for Anka that it is not in a dominant position by emphasizing that there are hundreds of undertakings in the market and there are no barriers to entry to the market.
The first allegation examined in the decision was that Anka did not directly supply -Spigenbranded products to the complainant Monofe Teknoloji Hizmetleri ve Ticaret Limited Şirketi (“Monofe“) and forced it to purchase these products from Hepsiburada, therefore, there was a violation in the form of refusal to supply. This allegation was rejected on the grounds that the practise in question would not constitute a violation since Anka was not in a dominant position.
Another allegation examined in the decision was that Hepsiburada discriminated against Monofe by applying high commission rates for related products. However, as it had been determined that since Hepsiburada was not in a dominant position, the practise in question would not constitute a violation and the increase in commission rates of Hepsiburada applied the same way to undertakings other than Monofe as well and there was no discrimination.
In the decision, the TCA also examined the allegation that Anka had discriminated in favour of Hepsiburada. The TCA had discovered an agreement between Hepsiburada and Anka to the effect that when the Samsung Galaxy Note 7 product was first released, Spigen branded accessories for this product would be sold only through Hepsiburada for 15 days. In addition, customers who wanted to buy the product through Anka’s website were directed to Hepsiburada’s website. The TCA considered this situation as favouring Hepsiburada. In this context, since Anka was not in a dominant position, this situation was not considered as an abuse of dominance, but the act of favouring based on the agreement between Anka and Hepsiburada was deemed a violation within the scope of Article 4 of the Competition Law. However, due to the fact that Anka’s market share was below 40%, it was concluded that this agreement benefitted from block exemption within the scope of the Block Exemption Communiqué on Vertical Agreements No. 2002/2 (“Communiqué No. 2002/2”).
In the decision, the TCA also examined the MFC clause in the contract signed by Hepsiburada with the sellers, which prohibited selling on other platforms, including the seller’s own website, at a lower price than Hepsiburada. At this point, the TCA requested information from some undertakings selling on Hepsiburada about whether this MFC clause had been applied. From the responses of these sellers, it was concluded that the MFC clause had not been imposed by Hepsiburada. However, the TCA stated that the MFC clause should be considered as restrictive to competition, considering competitive concerns such as the effect of closing the market for other online platforms operating with a lower commission rate, creating a barrier to entry to the market, and causing price rigidity. Still, the TCA concluded that the MFC clause benefitted from the block exemption since the clause did not have an actual effect, the market share of Hepsiburada did not exceed 40% and it met the other conditions stipulated in Communiqué No.2002/2.
The last allegation examined in the decision is that Anka had determined the resale price of the related products. In this context, in a document obtained during the on-site inspection in Anka, it was seen that Monefe, which had wanted to obtain Spigen-branded products, had been allowed to buy the product on the condition that it would sell it at a price TRY 5 higher than the price at Hepsiburada. The TCA deemed this practice as a per se violation of Article 4 of Competition Law.
While the TCA concluded that Hepsiburada had not violated the Competition Law, it decided to impose an administrative fine of TRY 157,897,84 on Anka due to its interference with the resale price.
This decision is especially important in terms of competition practices in digital markets, specifically in terms of the MFC clauses and inter-platform favouritism. As can be seen, whether the undertakings are in a dominant position or not is of critical importance for these evaluations within the scope of the current legislation.
The Balkan Initiative Platform
The TCA initiated “The Balkan Initiative Platform,” which reflects the common will of nine Balkan countries for cooperation with respect to competition.[26] The first workshop of the platform, “Recent Trends in Competition Law Enforcement in the Balkans” was held on 09 November 2021. One of the main topics at the workshop was the abuse of dominant position cases in digital markets. A specific report regarding to competition in digital markets, similar to the Compendium, may be expected in the future.
Review Report on Financial Technologies in Payment Services
Fintech impacts numerous aspects of the financial system. In this context, the TCA published a Review Report on Financial Technologies in Payment Services (“Fintech Report“), in which it assessed Fintech’s impact on financial markets and the fintech ecosystem’s development.[27] The Fintech Report was published on the official website of the TCA on 09 December 2021.
In the Fintech Report, digitalization, differentiated service expectations, disruptions in the classical banking system, unbanked population problem and the effect of customer portfolio were shown as the most important factors that feed Fintech.
Additionally, the Fintech Report highlighted the impediments to Fintech development and the challenges new players face. In this context, some unilateral actions taken by the undertakings in a dominant position in the market, the agreements made among the established undertakings in order to make it difficult to enter the market, or the concerted practices they exhibit, required the use of competition law instruments because they harmed competition in the market. In addition to these, it was stated that vertical agreements also should be evaluated in terms of the implementation of Article 4 of the Turkish Competition Law in the context of Fintech. In this respect, it can be said that vertical agreements concluded by established undertakings that contain provisions restricting competition, such as non-compete obligation, selective distribution and exclusivity, have the effect of making it difficult for Fintech companies to enter or operate in the market.
According to the TCA, due to the innovation-oriented nature of the Fintech field, established undertakings form their strategies by taking into account Fintech companies that have just started to operate in the market and have the potential to develop predatory innovations. In this context, examples are frequently encountered where established undertakings prefer to acquire Fintech companies instead of directly competing with them. In this regard, it is stated that the TCA also will examine the acquisitions of Fintech companies in terms of whether they result in the restriction of innovation and lead to a significant impediment of effective competition.
The Fintech Report also described barriers related to consumer behaviour and market structure in front of the development of Fintech companies’ activities. Examples it provided were (i) consumers’ lack of trust in financial technology markets, (ii) consumers’ lack of knowledge about the existence of alternative services and their advantages, (iii) the existence of a strong relationship based on trust between established banks and consumers, and (iv) the fact that consumers are exposed to barriers such as various fees and penalties if they want to change providers. The report views issues such as (i) the existence of a capital shortage, (ii) the existence of a network effect, (iii) the lack of interoperability between payment platforms and devices, and in this context, the complementarity of the products offered by Fintech companies, (iv) not having a branch network, and (v) not having information related to customers as barriers related to the market structure.
The Fintech Report touched on the entry of large technology companies into the market. Although these companies have not reached a significant market share yet, they have significant potential to gain a strong position in the payment markets. In this context, large technology companies can provide financial services with low costs through the data they have, such as search history, information related to social media accounts and shopping history.
In its assessment of the impact of large technology companies on the market, the TCA draws attention to the fact that the entry of these companies into Fintech markets, especially payment services, will have many positive effects on the competitive structure and consumer experience. An example of these positive effects is the increase in reflexes of classical financial institutions, which will be under competitive pressure with the elimination of the oligopolistic structure for payment services, to offer more innovative, consumer-friendly, and efficient solutions. On the other hand, it was underlined that the risk of exclusionary behaviours of large technology companies, which may arise in the form of abuse of their dominant position in one market in another, should not be overlooked.
The TCA brought several recommendations for removing barriers to innovation and competition in Turkish financial markets, including the following:
- The regulatory rules to be established should take into account the continuity of competition and innovation in the markets, as well as classical regulatory concerns, especially the protection of financial stability;
- Regulatory rules that allow the imposition of differentiated and gradual obligations for players with different qualifications in the market should be introduced;
- Regulations and government policies should be designed towards the Fintech ecosystem to eliminate market dynamics that create entry barriers;
- New generation players in the market should be able to access data sets that are currently accessible to classical financial players, and the asymmetric situation between competitors in data access in the market should be eliminated; and
- Regulations should be introduced allowing Fintech companies to directly access banking infrastructures, especially the essential ones.
The TCA at Full Throttle on Digital Markets
The TCA has deepened and intensified its investigations into digital markets, together with the sector inquiries it initiated. In this context, it is possible to say that the outputs of the preliminary report on Sector Inquiry on E-Marketplace Platforms can be observed in the evaluations within the TCA’s decisions. Especially the importance of data and the way it is used/shared, favouritism, and discrimination have been the most prominent issues regarding competition in digital markets. At this point, it should be noted that due to the current legislation, these prominent issues can be applied mostly in cases where the undertaking is in a dominant position. However, if the approach of introducing regulations specific to digital markets, which both the G7 countries and the TCA state can be adopted, is implemented, it will be possible to intervene in the aforementioned issues without the need for detecting the existence of a dominant position.
The TCA increased its effective attitude towards digital markets in 2021, addressing almost all of the issues that apear in the Compendium. The scope of its reviews during the year were not limited to digital platforms, e-marketplaces, or online advertising, but also expanded to include areas such as Fintech, which is a different part of digitalization. It is expected that the TCA will maintain this effective attitude in the coming years as well.
Are Things Moving Too Fast between Digital Markets and Competition Authorities?
As per the evaluations contained within the scope of the Compendium, there is a general acceptance that some new competitive concerns have arisen as a result of the characteristics of digital markets and that these concerns necessitate intervention. The same perspective also has been adopted by the TCA. However, different perspectives on the appropriateness and timing of these interventions can be argued.
In this context, aside from the concerns it raises, as is firstly mentioned by the Compendium, the benefits brought by the advancement of digital markets to consumers and society overall are too significant to be overlooked. The benefits of network effects to consumers and competition, for example, as well as the free services provided to consumers on multi-sided platforms, are highlighted in the Compendium in this respect. Both the TCA and competition authorities worldwide seem eager to introduce new regulations on the subject. Yet, these planned regulations should be discussed and analysed to balance the anticompetitive and procompetitive effects. New regulations, theories of harm and thresholds in mergers and acquisitions should be envisaged in a way that is sufficient in the sense of deterrence and protection of competition while without hindering the development of digital markets and innovation. In short, based on concrete information, further analysis can be performed to determine whether planned interventions are required.
Furthermore, the timing for implementing these policies, if they are to be implemented at all, is an important issue. Since digital markets have only recently come under the scrutiny of competition authorities, it would be beneficial to gain more market experience before intervening in the market with strict regulations. Acting hastily could lead to penalizing success and pioneers, which, of course, reduces the incentive for competition, especially given that gatekeepers are the ones who create these gates while also being perceived as dangerous in terms of competition.
In conclusion, digital markets differ from traditional markets with their unique features. For this reason, it is argued that the interventions to competition problems seen in digital markets with traditional tools of competition law will be insufficient. However, with the impact of these unique features, digitalization also can offer sharp and rapid benefits compared to traditional markets. Therefore, although there is no doubt that these markets should be followed closely, it can be said that rushing to intervene in them will not necessarily be beneficial.
[1] The G7 consists of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States and the representation of the European Union.
[2] The UK invited Australia, India, South Korea, and South Africa to the G7 summit.
[3] See the press release and the Compendium at:
[4] The Autorité de la concurrence’s Decision dated 07.06.2021 and numbered 21-D-11.
[5] European Commission’s Decision dated 20.03.2019 and numbered 40111.
[6] The TCA Decision dated 12.11.2020 and numbered 20-49/675-295.
[7] The TCA Decision dated 13.02.2020 and numbered 20-10/119-69.
[8] See the joint report at:
[9] See the CMA’s report at:
[10] See the release by the US Department of Justice at:
[11] The CMA’s Decision dated 12.08.2016 and numbered 50223.
[12] The TCA’s Decision dated 19.09.2018 and numbered 18-33/555-273.
[13] See the press release at:
[14] See the report in Turkish at:
https://www.rekabet.gov.tr/Dosya/sektor-raporlari/e-pazaryeri-si-on-rapor-20210705115502897-pdf.
[15] See the press release by the TCA in Turkish at:
[16] According to Article 9 of the Turkish Competition Law, the TCA may impose interim measures to restore the circumstances prior to the potential infringement if the occurrence of serious and irreparable damages is likely. These measures cannot exceed the scope of the final decision.
[17] TCA’s Decision dated 23.09.2021 and numbered 21-44/650-M
[18] TCA’s Decision dated 30.09.2021 and numbered 21-46/669-334
[19] TCA’s Decision dated 08.04.2021 and numbered 21-20/248-105
[20] TCA’s Decision dated 01.10.2018 and numbered 18-36/584-285
[21] Ankara 6th Administrative Court’s Decision dated 18.12.2019 and numbered 2019/246 E. 2019/2625 K.
[22] TCA’s Decision dated 08.07.2021 and numbered 21-34/475-237
[23] TCA’s Decision dated 05.08.2021 and numbered 21-37/540-263
[24] TCA’s Decision dated 30.09.2021 and numbered 21-46/655-M
[25] TCA’s Decision dated 15.04.2021 and numbered 21-22/266-116
[26] See the press release at:
[27] See the report in Turkish at:
