The Turkish Competition Authority (TCA) has been rather active in the recent months in launching investigations into alleged abuse of dominance via excessive pricing. For instance, on 4 May 2017 by decision No 17-15/175-M the TCA launched an investigation into alleged abuse of dominance by Sahibinden.com via implementing excessive pricing practices, i.e. sales conditions with real estate agencies. Additionally, on 27 September 2017 the TCA by its decision No 17-30/488-M opened one more investigation in relation to the abuse of dominance by Sahibinden in the online automotive listings market. These two investigations will be combined and carried out together.
The cases may shed a light on such a debated issue as to what extend the excessive pricing shall be considered as a violation of competition law in innovative industries (if at all), as well as the criteria for determining this “excessiveness” in Turkey.
Excessive price actions by the TCA have in general been relatively rare. Most of the excessive pricing cases have been closed at the preliminary inquiry stage (as mentioned in the OECD report 2011).
From the perspective of former precedents, the TCA defines the excessive pricing as pricing significantly and persistently higher than those that have prevailed under viable competition as a result of the exercise of the market power. In other words, the implementation of much higher prices that could not reasonably be related to the economic value of the supplied product is evaluated within the scope of Article 6 of the Turkish Competition Law. In this regard, the TCA examines such issues as market structure, possibility of new entries, existence of legal regulations and demand elasticity; and then conducts a comparison of actual costs with price and another analysis for the comparison of the prices in itself as well as with those of the competitors.
The first ever (milestone) decision and fine of the TCA was in relation to excessive pricing policy of a public undertaking in a dominant position Belko (decision No 01-17/150-39 dated 6.4.2001). The TCA in its assessment of excessive prices took prices and compared them with the prices of identical/equivalent products in other more competitive geographical markets.
In BOTAŞ-EGO-İZGAZ-İGDAŞ decision No 02-13/127-54 dated 8.3.2001 in spite of 66-67% profit of the undertakings concerned, the TCA did not consider the prices as excessive on the grounds that the upper and lower limits of prices of the companies were regulated by the Ministry of Energy and Natural Resources. Hence, the companies in the regulated industries cannot in principles be charged with excessive pricing claims since they do not have a freedom to set their prices.
Determining whether the price is excessive (unfair) has always been a challenge for the competition authorities in various jurisdictions, which also explains the reluctance of the latter to deal with and investigate such cases. The landmark judgement in United Brands case, which dates back 1978, outlining the test for determining the excessive pricing is still valid and the recent September 2017 Court of Justice of the EU’s judgement in AKKA/LAA case confirms this. Additionally, the Court of Justice of the EU thereby emphasizes that the difference in rates following the price comparison must be significant and not temporary in order to be considered as appreciable and hence abusive. The concept of significant is rather vague and subjective depending on the circumstances of each specific case. Even so, these factors are “merely indicative” of abuse of a dominant position. In such situations, it is for the undertaking holding a dominant position to show that its prices are fair by reference to objective factors that may have an impact on management expenses; and it is up to the national court/competition authority to assess the circumstances of each specific case.
There are high chances that the TCA may take into consideration the recent AKKA/LAA judgement in the process of concluding its investigations in Sahibinden cases. This is something yet to be seen…
Hanna Stakheyeva
