Abuse of Dominant Position in Turkish Competition Law

Summary: Analysis of Article 6 of the Law No. 4054. What constitutes abuse of dominance? Refusal to supply, predatory pricing, and tying explained.

In Turkish Competition Law, holding a dominant position in a market is not illegal. However, abusing this position to restrict competition is strictly prohibited under Article 6 of Law No. 4054.

What is a Dominant Position?

A dominant position is defined as the economic power held by one or more undertakings in a particular market to determine economic parameters (price, supply, production) independently of competitors and customers. Generally, a market share above 40-50% is a strong indicator of dominance, though not the sole criterion. Barriers to entry and vertical integration are also considered.

Types of Abusive Conduct

The Competition Board (Rekabet Kurumu) penalizes various forms of abuse:

1. Predatory Pricing

Selling goods or services below cost with the intention of driving competitors out of the market. The dominant firm sacrifices short-term profit to monopolize the market later.

2. Refusal to Supply

Unjustifiably refusing to supply goods or services to a buyer, thereby eliminating them from the downstream market. This is common in essential facility cases (e.g., port access, grid access).

3. Tying and Bundling

Forcing a buyer to purchase a separate product (tied product) as a condition for buying the dominant product (tying product). Example: “You can buy our popular OS only if you also install our browser.”

4. Discriminiation

Applying different conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage.

5. Excessive Pricing

Though rare, charging excessively high prices that bear no reasonable relation to the economic value of the product can be deemed abusive (e.g., in pharmaceutical monopolies).

Penalties

Abuse of dominance is a serious violation. The Competition Board can impose administrative fines up to 10% of the undertaking’s annual gross revenue. Additionally, the Board can impose behavioral or structural remedies (e.g., forcing the company to sell a business unit).

Conclusion

Companies with significant market share in Turkey must be vigilant. Aggressive commercial strategies that are legal for small players may be illegal “abuse” for a dominant player. Compliance programs are essential to avoid heavy fines.

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