News and developments
Türk Telekom Decision: Recent Approach to Refusal to Deal
The Board determined that TT is in dominant position in the upstream market, i.e., the wholesale fixed broadband internet access services market, however, it could not determine any finding that TT’s conduct complicated the activities of its competitors requesting port/infrastructure and led to anti-competitive market foreclosure within the scope of the theory of refusal to deal. Therefore, the Board concluded that TT did not abuse its dominant position within the scope of Article 6 of the Law No. 4054 on the Protection of Competition (the “Law No. 4054”), and it did not impose an administrative monetary fine. It should also be noted that one of the Board members disagreed with the majority and stated in the dissenting opinion that TT’s conduct constituted an infringement under Article 6 of the Law No. 4054. The Decision contains important points in terms of the principle of “Ne Bis In Idem” and the theory of refusal to deal that will be discussed through this article.
Article by Erdem AKTEKİN, Helin YÜKSEL and Mehmet Mikail DEMİR
[1] With the exception of the certain level of merger or acquisition transactions in the banking sector.
The Board’s Assessment
Before delving into the details of the Board’s assessment of TT’s conducts under Article 6 of the Law No. 4054, it should be noted that the Board as usual requested opinion from the Information and Communications Authority (“ICTA”). ICTA stated that it has already carried out an investigation upon the complaints with similar grounds subject to the investigation carried out by the Board and imposed administrative monetary fine pursuant to the ICTA Administrative Sanctions Regulation. TT argued that ICTA is the competent authority in the electronic communications sector, and the conduct subject to the file has already been dealt with by ICTA, thus, the investigation launched by the Board is contrary to the principle of “Ne Bis In Idem”. In other words, TT claimed that the person, subject matter, and legal interests are the same. In response to these defences, the Board stressed that the Law No. 4054 is applicable to all sectors of the economy and there is no regulation that excludes its application,[1] thus, the Turkish Competition Authority (the “Authority”) is authorized to investigate and impose sanctions on competition infringements in all sectors including the telecommunication sector. In line with its established jurisprudence, the Board indicated that ICTA, as the regulator of the electronic communications sector, made an assessment regarding the obligations which TT is subject to under the relevant regulation, while the Authority’s investigation limited to the allegations on restricting competition by abusing its dominant position within the scope of the Law No. 4054. In its assessment under Article 6 of the Law No. 4054, the Board firstly stated that copper and fiber infrastructure lengths are the most appropriate criteria for determining the market shares and infrastructure capacities of undertakings in the relevant product market and determined that TT is in dominant position in the upstream market, i.e., the wholesale fixed broadband internet access services market. The Board further indicated that although the presence of other providers in fiber and cable infrastructure has increased in Turkey, TT still maintains its dominant position with its infrastructure length and the number of households it reaches compared to alternative operators. In terms of abuse of dominance, the Board assessed the allegations that TT arbitrarily rejected the port allocation applications of ISPs on unreasonable or unjustified grounds (no available ports or insufficient technical infrastructure) and favored TTNet against other providers within the scope of theory of refusal to deal. In light of the Guidelines on the Assessment of Exclusionary Abusive Conduct by Dominant Undertakings, for the existence of anti-competitive refusal to deal, following three conditions should be met cumulatively:- Refusal should relate to a product or service that is indispensable to be able to compete in a downstream market,
- Refusal should be likely to lead to the elimination of effective competition in the downstream market,
- Refusal should be likely to lead to consumer harm.
Conclusion
As stated above, the Board took into account the change in the market shares of ISPs, and it did not find anticompetitive effect as they continue to exist on the market and albeit to a limited extent, their market shares have increased. However, telecommunication is an important sector with lots of sectoral and structural problems as well as a heavily and strictly regulated one, since it relies on enormous infrastructure investment to operate, thus, one can argue that it is not sufficient to focus merely on the exits from the market, and therefore effects on the other competitors’ investment incentives, e.g., for creation of an alternative infrastructure, may also be taken into account. In any case, the Decision contains important points regarding the theory of refusal to deal, and maybe more importantly the way the Board gives value to concrete evidence of market foreclosure in assessing Article 6 cases.Article by Erdem AKTEKİN, Helin YÜKSEL and Mehmet Mikail DEMİR
[1] With the exception of the certain level of merger or acquisition transactions in the banking sector.