Browsed by
Author: Cihan Dogan

I am the founding partner of the CD LAW and a member of Istanbul Bar. I am currently pursuing Ph.D. Study of Private Law at Istanbul Bilgi University, Institute of Social Sciences. I hold an LLM in International Commercial Law degree from City University London and an MSc in Competition and Market Regulation degree from Barcelona Graduate School of Economics. I have extensive experience on competition law matters. I have involved and conducted almost every possible competition law related work including leniency applications and Phase II investigations. I have also worked on complex investigation defence works, numerous merger control filings and individual exemption applications. I have also involved in conducting competition compliance programs and providing day-to-day advice, including delivering legal memorandums concerning highly sophisticated competition law related matters. I am the author of several publications on competition policy matters. My monographies published in English and Turkish by various national and international journals. I also speaks at national and international conferences on competition policy issues.
Turkish Competition Board’s Sahibinden Decision: Excessive Pricing

Turkish Competition Board’s Sahibinden Decision: Excessive Pricing

Turkish Competition Board published the reasoned version of its Sahibinden decision where the Board imposed an administrative monetary fine on Sahibinden, dominant online classified ads platform, for abusing its dominant position in the markets for online platform services with regards to vehicles sales/rental and online platform services with regards to real estate sales/rental by applying excessive pricing.

The interesting part of the decision is that whereas the investigation team (except one member) were of the opinion that Sahibinden did not infringed Article 6 of Law No. 4054 through excessive pricing, the Board found infringement and imposed an administrative monetary fine on Sahibinden. Board’s finding an infringement on excessive pricing cases, to date, were quite rare and this is the first decision where an online platform active in a multi-sided market is fined by the Board for excessive pricing grounds.

The reasoned decision (in Turkish) is here.

Another RPM decision by the Turkish Competition Board

Another RPM decision by the Turkish Competition Board

Turkish Competition Board imposed an administrative monetary fine of 2,346,618,68 TRY on Sony Eurasia Pazarlama A.S.

As a result of the investigation initiated by the Turkish Competition Board against Sony Eurasia Pazarlama A.S., Turkish Competition Board concluded that Sony Eurasia Pazarlama A.S. violated article 4 of the Law No. 4054 on the Protection of Competition (akin to 101 of TFEU) by determining the resale price of its dealers making online sales.

This decision of the Turkish Competition Board seems to be in line with its latest approach to RPM cases. This can be considered as a strong message addressing undertakings to be careful in terms of their involvement to pricing freedoms of their dealers.

Needless to say, this decision of the Board (similar to any other decisions of the Board) is subject to judicial review of Ankara Administrative Courts.

Another Investigation from Turkish Competition Board: Red Bull

Another Investigation from Turkish Competition Board: Red Bull

Turkish Competition Authority recently published in its web page another announcement on the initiation of a different investigation. This time, the investigation initiated against energy drink giant Red Bull.

Upon complaints against Red Bull Gıda Dağıtım ve Pazarlama Tic. Ltd. Şti. (“Red Bull”), Turkish Competition Board (“Board”) decided to initiate a preliminary investigation concerning Red Bull’s exclusivity and resale price maintenance activities. The information and documents acquired together with the observations made within the preliminary investigation phase were found sufficient by the Board to initiate a fully-fledged investigation against Red Bull to see whether Red Bull’s arrangement leads to de facto exclusivity and Red Bull applies resale price maintenance.

Investigation team has 6 months (well, this could also be extended another 6 months) to prepare the investigation report which will include their finding and opinion on the case.

We will see…

Turkish Competition Board Initiated Investigation On Google Comparison

Turkish Competition Board Initiated Investigation On Google Comparison

Turkish Competition Board (“Board”), the competent decision-making body of the Turkish Competition Authority (“Authority), concluded the preliminary investigation conducted upon the complaints that Google abused its dominant position in the global search engine market and complicated its competitors’ activities in the online shopping services market. Following a thorough evaluation on the information, documents obtained during the preliminary investigation phase, the Board decided to initiate a fully-fledged investigation against Google Reklamcılık ve Pazarlama Ltd. Şti., Google International LLC, Google LLC, Google Ireland Limited (all together “Google”) to determine whether Google abused its dominant position as per Article 6 of Law No. 4054 on the Protection of Competition.

This will be the second investigation initiated against Google by the Board. As you know through the first investigation, the Board reviews whether (i) Google’s conducts on the markets for mobile operating system and mobile applications; and (ii) Google’s exclusivity agreements with original equipment manufacturers violated Article 4 and 6 of Law No. 4054 which prohibits anti-competitive agreements among firms and abuse of dominant position by dominant firms. This investigation is reached to the oral hearing phase and the oral hearing will be held on August 28, 2018. The Board render its decision within 15 days following the oral hearing.

We will see whether Commission’s huge fine will provide the Board with any incentive to impose administrative monetary fine on Google.

New Paper is Out: A Brief Evaluation on the Legal Foundation of the Responsibility Arising from the Infringement of Competition Law and Associated Issues

New Paper is Out: A Brief Evaluation on the Legal Foundation of the Responsibility Arising from the Infringement of Competition Law and Associated Issues

Another paper of mine on the Legal Foundation of the Responsibility Arising from the Infringement of Competition Law is published by Banking and Commercial Law Journal (BATİDER).  This has lately been one of the hottest topics of the competition law community of Turkey. Generally speaking, under Turkish law the type of liability could be contractual, tort, unjust enrichment or acting without authority. Yet, the type of liability arising from competition law infringements is ambiguous. there are different views in this regard. The vast majority accepts the type of liability arising from competition law infringements as tort liability as the damage does not arise from a contractual relationship between the injurer and the injured but rather from a breach of a general duty owed to everyone. Some others, while agreeing with the initial one, further claim that the type of the liability could also be considered as a quasi-contractual liability where the general provisions of the Law of Obligations concerning contractual liability will also be applicable.  I also believe, the type of liability arising from the infringement of Law No. 4054 on the Protection of Competition is considered as tort liability since the liability arises from the breach of a duty owned to everyone. However, depending on the type of the relationship among the aggrieved party and the undertaking infringing the competition law, the aggrieved party can base its claims on the contractual liability due to the infringement of duty of loyalty. Moreover, it can also breach its duty to act in good faith by not revealing the necessary information truly to aggrieved party. This duty to act in good faith is not one of the contractual duties arising from a contractual relationship but rather a behavioural duty arises from the Article 2 of Turkish Civil Code numbered 4721. The importance of the type of liability is more significant especially for the statute of limitations, burden of proof for the fault; and joint liability of the infringers.

New paper is out: Acquisitions of Non-Controlling Minority Shareholdings: Assessment from a Competition Policy Perspective

New paper is out: Acquisitions of Non-Controlling Minority Shareholdings: Assessment from a Competition Policy Perspective

My paper (here) on the acquisitions of minority shareholdings is published by the Competition Journal of the Turkish Competition Authority. Acquisitions of minority shareholdings can be divided into two diverse types. In the first type, a controlling shareholder acquires a non-controlling minority share from another firm. In the second type, a non-controlling shareholder acquires another non-controlling share from another firm. This would be the case (for example) where the same investment fund acquires minority shareholding from two different firms. In this paper, I did not analyse the second type but rather focused on the first type where a controlling shareholder (or the firm itself) acquires non-controlling share from another firm. Under Turkish merger control regime, in order for a merger or an acquisition transaction to fall within the scope of Communiqué No. 2010/4, a permanent change in control is required. However, acquisition of non-controlling minority shareholdings could raise certain competition law concerns especially in cases where there is a horizontal or vertical overlap among the activities of the parties. To illustrate, an acquisition of non-controlling minority shareholding from a competitor could create an incentive for the acquirer to unilaterally increase its price since such acquisition will allow the acquirer to recapture some of its lost profits through the minority shareholding and thus will be able to gain more profit from a potential price increase. Similarly, an acquisition of non-controlling minority shareholding from a competitor could reduce the incentive of the acquirer to deviate from the cartel and thus enable the cartel to be more sustainable. Intuitively, the acquirer will have to bear some of the loss made by the other cartel participant in which it has minority shareholding.

New paper is out: Algorithm and Competition Law: Digital Versions of Article 4 Infringements

New paper is out: Algorithm and Competition Law: Digital Versions of Article 4 Infringements

My new paper (here) where I analysed the relationship between pricing algorithms and competition law within the framework of Article 4 of Law No 4054 on the Protection of Competition, is published by the Journal of Galatasaray University Faculty of Law. As we all know, the digital age affects the consumer behaviour in an increasing pace. While in the past consumers were only using online platforms for booking a plane ticket or a hotel room, nowadays, consumers can perform banking transactions, order a taxi or purchase their needs. The demand shift towards to online platforms naturally necessitates a shift from supply side as well. Undertakings’ sifting towards online platforms affected the competitive landscape. Undertakings, through better data collecting and analysing tools, can easily analyse the factors affecting the price and adjust sale prices instantly with very low marginal costs. The ability of undertakings to optimize their pricing strategies through algorithm driven software, increased the use of such tools. This, in turn, raised the question whether undertakings can use algorithms to behave in anti-competitive way. Together with efficiency gains associated with pricing algorithms, they can provide undertakings with new tools to behave anti-competitively. Whereas pricing algorithms can be used to implement an anti-competitive agreement, they can lead to anti-competitive pricing even in the absence of an agreement. Likewise, self-learning algorithms, even in the absence of a human will, can identify coordination as optimal strategy through trial-and-error and lead to decrease in consumer welfare.

An Update on the Guidelines on Vertical Agreements: Positive Sign for the Awareness of Digital Age

An Update on the Guidelines on Vertical Agreements: Positive Sign for the Awareness of Digital Age

Turkish Competition Authority (“Authority”) updated its Guidelines on Vertical Agreements (“Vertical Guidelines”) that is issued as per the Block Exemption Communiqué on Vertical Agreements (“Communiqué No. 2002/2”). This update is a result of a two-year study conducted by the Authority. Given the exponential growth of online sales, this update can be considered as positive sign of the Authority’s awareness of the digital age and potential changes in the competitive structure associated with the digitalization.

The Authority, through its announcement of July 20, 2017, revealed that the anticipated update will focus on three main subjects: Agency Agreements; Internet Sales and Most Favoured Customer (“MFC”) Clauses. Nevertheless, based on the opinions received from the public, the Authority decided not to make any amendment on the agency agreements but rather proceed with the update on internet sales and MFC clauses.

The update on the internet sales were made by considering the growth of internet as a new distribution channel. Intuitively, internet sales are becoming an important sales channel and its share on the overall sales are increasing exponentially. Internet sales provide consumers with the ability to reach wide data sets, compare prices easily and access more products. It also facilitates producers to market their product to a wider area but with a lower cost. The Authority, in its statement, indicated that while revisiting the rules on internet sales, a balance was sought between protecting the efficiencies associated with the internet sales for consumers and resellers and at the same time protecting the commercial interests of the producers. In this regard, the Board added five new paragraphs to Vertical Guidelines (paragraph 25, 26, 27, 28, 29) and amended an existing one (paragraph 31).

–          Newly added paragraph 25, basically indicates that a restriction by a supplier on sales made by its buyers (distributors/dealers) through their webpages is considered as a restriction on passive sales. It further exemplifies the cases which will not benefit from the protective cloak of the Communiqué No. 2002/2. These examples are (i) the restriction preventing consumers from buying on the webpage of an exclusive distributor that is located in another region; (ii) exclusive distributors’ cancellation of a transaction made by a customer located in another exclusive region; (iii) limiting the internet sales shares among the total sales; and (iv) demanding from the distributor to pay a higher price for products intended to be resold by the distributor through internet than for products intended to be resold offline.

–          Paragraph 26 of the Vertical Guidelines starts by indicating that the restrictions exemplified under paragraph 25 will be considered as a restriction of passive sales. Whereas the first two example concerning the geographical restriction will be considered as a hard-core restriction, sales to another region through promotion or advertisement will be considered as active sales and may fall within the scope of the Communiqué No. 2002/2.

–          Paragraph 27 includes explanations both on (i) limiting the internet sales shares among the total sales; and (ii) demanding higher prices for the products sold through internet. The Vertical Guidelines clearly reveals that limiting the shares of internet sales among the total sales constitutes a hard-core restriction. As per the restriction by demanding higher prices for the products sold through internet, the Authority emphasise the potential negative effect of such different pricing on the motivation of the buyer in terms of making sales through internet. Yet, a contribution for the sale effort is considered as acceptable.

–          Under paragraph 28, it is stated that a supplier may impose certain conditions for the internet sales as it can also do for brick and mortar stores. To illustrate, the supplier may require certain quality standards for the webpage or may require the provision of certain services to the consumers purchasing through internet. Especially, the suppliers may, under selective distribution system, require from its distributors to be active at least one brick and mortar store. Yet, this should not be used as a tool to exclude distributors that solely uses the internet as a sales channel.

–          Paragraph 29 clearly indicates that the imposed conditions should not be designed to restrict internet sales either directly or indirectly. Even though the restrictions on brick and mortar sales and the internet sales do not necessarily be identical due to differences associated with these two channels, those restrictions should serve to the same purpose and ensure comparable results.

–          An amendment made on the paragraph 31 which is now the paragraph 36 of the Vertical Guidelines and concerns the selective distribution system. As per the new change, a webpage launched for reselling through internet by a distributor within a selective distribution system, will not be considered as a new brick and mortar store. Yet, active or passive sales of distributors to the consumers cannot be restricted.

The second update was on the MFC clauses which were one of the hot topics of the competition policy world. Under Vertical Guidelines, an explanation is added to the paragraph 19 and a new section is created for the MFC clauses.

–          Paragraph 19 of the Vertical Guidelines reveals the direct and indirect methods of application of resale price maintenance. With the amendment, it is further added that MFC clauses may ease the reinforcement of resale price maintenance. Yet, sole use of MFC clauses does not constitute a resale price maintenance.

–          Paragraph 223 includes explanation on MFC clauses. The use of MFC clause does not always have same effects in the market. Whereas there could be efficiencies associated with the MFC clauses, the use of such clauses may have anti-competitive effects in the market. Thus, for an accurate evaluation, it is of the significant importance to consider the market position of the players, the purpose of the MFC clause and the market conditions. An MFN clause may benefit from the protective cloak of the Communiqué No. 2002/2 so long as other conditions of the block exemption are met. However, if the market share threshold of %40 is exceeded, below examples will have a guiding role for the individual exemption.

–          Paragraph 224 illustrate the guiding examples of the cases where the use of MFC clauses may have anti-competitive effects. Retroactive MFC clauses are likely to harm competition more than ordinary MFC clauses. Besides, the cases where the parties to the agreement including MFC clauses have market power when compared to their competitors, may also be more problematic from competition policy perspective due to foreclosure effect associated with the high market power and the MFC clauses. The wide use of MFC clauses in the market may also increase the potential anti-competitive effects.

–          Paragraph 225 illustrates the guiding examples of the cases where MFC clauses may contribute to the competition in the market. Clearly, when the market players do not have any market power, the use of MFC clauses unlikely to be problematic. Besides, buyers with low market power can even benefit from the favourable price and conditions with the use of MFC clauses and this undoubtedly contribute to the competition in the market. The use of MFC clauses in the markets where the market conditions are not transparent, is not likely to lead anti-competitive effects as it is difficult to monitor whether the MFC clauses are implemented effectively.

 

Hello everyone!

Hello everyone!

Hello everyone, myself and Bugra will be publishing posts on the legal developments here. Whereas our focus will mostly be on competition policy (as the name of the blog indicates), we will do our best not to omit other areas of law as well (especially corporate law). We will try to evaluate (to the extent of our capacity) important case-law together with the important legislative developments. We also intend to mention and sometimes criticize (of course lightly) the important monographies published recently. We also want to use this blog to raise certain questions (not to confuse readers of course but to make them think). 

Well, we basically aim to keep the readers fully updated. Let’s see if we can do it!