ABUSE OF DOMINANT POSITION
Market competition is regulated in Turkey by the Competition Law enacted on 7 December 1994. The regulatory authority is the Competition Authority and the decision-making body is the Competition Board. The Competition Law has three pillars: (i) agreements, decisions and practices preventing, distorting or restricting competition in markets for goods and services; (ii) abuse of dominance by the undertakings dominant in the market; and (iii) the control of mergers and acquisitions that could lead to the creation or strengthening of a dominant position.
What is a dominant position?
Article 3 of the Competition Law defines a dominant position as being created when one or more undertakings in a particular market use their position in that market to determine economic parameters such as price, supply, the amount of production and distribution, by acting independently of their competitors and customers.
Relevant product market
The first stage in determining whether an undertaking is dominant is to determine the relevant product market, based on the interchangeability and substitutability of products. Where products are regarded as interchangeable or substitutable from a consumer's standpoint, they are considered to belong to the same product market. Interchangeability is measured on the basis of the intended use of the products, the price of the products and their physical characteristics. Once the relevant product market is defined, the relevant geographical market can be analysed.
Relevant geographical market
It is also necessary to define the relevant geographical market when determining a dominant position of an undertaking. The relevant geographic market is the area in which the undertakings concerned are involved in the supply of relevant products or services, in which the conditions of competition are sufficiently homogenous, and that can be distinguished from neighbouring geographic areas because conditions of competition are appreciably different in those areas.
Once the relevant product and geographic market is defined, one can analyse whether the allegation of dominance of an undertaking in the relevant product market is verified.
The dominant position test can be conducted by using different criteria. The main criterion is the market share. Market share cannot by itself give a definite indication of dominance but can give a presumption of dominance. A company may have a large market share for a limited time without being dominant. The market share must be considered together with the length of time for which the company held the critical market share.
Even when the market share gives a presumption of dominance, other factors that could constitute barriers to entry in the market must also be considered. Barriers to entry into the market can be statutory regulations and national legal systems, the requirement of superior technology to be able to compete in a market, the vertical integration and well-developed distribution systems of the firms already present in the market, the product differentiation with brand names attracting the customer, and the conduct of the company in the relevant market.
The listing above is not exhaustive and it is widely recognised that there can be diverse indications of dominance. One final element that should nevertheless be mentioned is the internal correspondence of the