Erdem & Erdem Law Office | View firm profile
Introduction
Pursuant to Article 9/4 of the Law on Protection of Competition (“Law No. 4054”), “where serious and irreparable injuries are likely to occur before the final decision, the Board may take interim measures in order to maintain the situation before the infringement, without exceeding the scope of the final decision.” Accordingly, the Turkish Competition Board (“Board”) has the power to apply an interim injunction to investigated undertakings, where it deems, irreparable injury is likely to occur. Considering the fact that investigations last around two years, the relevant provision is clearly a much-needed tool that the Board may use to prevent any probable harms arising from serious competition law concerns. The Board’s recent decisions highlighted below exhibit when and how Board uses the interim injunction tool.
The Retailers’ Decision
In its Retailers’ Decision[1], the Board investigated the pricing behaviors of chain stores and their suppliers during Covid-19, following applications which entered Turkish Competition Authority’s (“Authority”) records with regards to sudden and high increases in prices in nutrition and cleaning products. It was alleged that top nine chain stores had agreed on a mutual excessive pricing behavior for these products by way of an implicit co-operation and thereby were in breach of Article 4 of Law No 4054.
The Board assessed that the stores had increased their market power due to the Covid-19 pandemic and Ramadan by taking advantage of changes in living conditions of consumers. It determined that the stores were oligopolistic in nature on both the sale and purchase sides of the market and therefore were able to avoid competition in prices. The Board also suggested that chain stores were enjoying this market power to get cheap products from suppliers, while increasing the price of the same products for consumers.
Applying Article 9/4 to these facts, the Board decided that all price increases with regards to nutrition and cleaning products had to be submitted to the Authority until the end of the investigation period.
The WhatsApp Decision
In its later dated WhatsApp decision[2], the Board similarly decided to apply an interim injunction regarding Facebook’s decision to use WhatsApp users’ data in relation to other services. The basis of this decision was Facebook’s widely reported announcement that commencing from 08.02.2021, WhatsApp users would be obliged to consent to the transfer of their data to Facebook group companies. According to the Board, this raised competition law concerns.
In its decision, the Board firstly assessed WhatsApp’s nature and its market power. Its evaluation showed that WhatsApp was an application having more than two billion users in 180 countries, and that it had access to its users’ messages, locations, pictures, and other information stored on their devices. The Board concluded that through WhatsApp, users shared more private information in smaller groups compared to what they shared on Facebook. Therefore, such information was classified as more confidential in nature.
Secondly the Board assessed the competition law concerns arising from Facebook’s announcement. It decided that through this obligation, (i) WhatsApp data could be tied to Facebook products and data, (ii) Facebook could use its power in the consumer communications market in a way to obstruct its competitors in the internet advertising market, (iii) consumers could be exploited through excessive data collecting and sharing of such data with other services.
Again, referring to Article 9/4 and considering Facebook’s market power in consumer communications services, social network services, and online advertisement services, the Board concluded that it was is likely that serious and irreparable injury would arise prior to the final decision being made. It decided that if the users were obliged to consent to their data being shared, Facebook and its group of companies would possess and use WhatsApp users’ data. Accordingly, if at the end of the investigation Facebook were to be found in breach, it would be difficult to retrieve such data and eliminate the advantages which arose due to their usage. In order to avoid such a situation, the Board concluded that Facebook had to terminate terms of use in relation to use of WhatsApp users’ data for other services and to announce such termination to all users pursuant to Article 9/4.
The Trendyol Decision
In its most recent interim injunction decision[3], the Board evaluated DSM Grup Danışmanlık İletişim ve Satış Ticaret A.Ş.’s (“Trendyol”) practices in online market places. During the on-site inspections which were carried out in relation to Trendyol’s software and algorithms, it was observed that Trendyol: (i) was interfering with algorithms to advantage its own products as a retailer over sellers using the platform which were also its competitors, (ii) was offering next day delivery for its own products only, (iii) was using sellers’ data to advantage its retailer practices, (iv) was discriminating against sellers through interference with the algorithms and due to lack of transparency regarding sponsored products.
In the documents obtained during on-site inspections, it was observed that number of followers for Trendyol branded products were increased and actual numbers were manipulated through interfering with the algorithm. Similarly, it was alleged that low seller scores for Trendyol branded products were erased; Trendyolmilla, which is Trendyol’s own brand, was listed at the top in brand filters as a result of intervening with the algorithm, and competitor sellers’ sales data was used for making analysis and forecasting for Trendyol branded products.
Accordingly, after evaluating Trendyol’s high market power and concluding that it is in a dominant position, the Board decided that such market power stemmed from its wrongful behavior and that there was significant evidence showing that Trendyol was violating Article 6 of Law No. 4054.
Furthermore, it was determined that delayed intervention in digital markets could cause irreparable injury and therefore it was necessary to apply an interim injunction. The Board decided that Trendyol (i) must cease its activities which advantage itself over its competitors, including interference with algorithms and coding, (ii) must not share or use data for other products and services and (iii) must not discriminate between sellers using the platform.
Conclusion
It is clear that the Authority, when it deems necessary, does not refrain from applying interim injunctions, both with regards to Article 4 and Article 6 violations. In light of the most recent Board decisions where interim injunction decisions were given, it can be observed that the Board assesses the market power of the undertaking(s) alleged to be violating Law No. 4054 and whether irreparable injury would occur in absence of the application of an injunction. If the Board concludes that where Article 9/4 is not applied consumers can be harmed during a potentially lengthy investigation period, it usually does choose to apply an interim injunction for all types of competition law infringements.
(Authored by Merve Bakırcı and first published by Erdem & Erdem on November 2021)
[1] The Board’s Decision dated 07.05.2020 and numbered 20-23/298-145
[2] The Board’s Decision dated 11.01.2021 and numbered 21-02/25-10
[3] The Board’s Decision dated 30.09.2021 and numbered 21-46/669-334