Interim Injunctions Under Competition Law: The Turkish Competition Board’s Retailers, WhatsApp and Trendyol Decisions
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.
[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
All rights of this article are reserved. This article may not be used, reproduced, copied, published, distributed, or otherwise disseminated without quotation or Erdem & Erdem Law Firm's written consent. Any content created without citing the resource or Erdem & Erdem Law Firm’s written consent is regularly tracked, and legal action will be taken in case of violation.
Other Contents
At the meeting of the Fédération Internationale de Football Association (“FIFA”) held on 16 December 2022, the FIFA Council approved the FIFA Football Agents Regulations (“FFAR”). In the FFAR, various amendments have been made, such as the introduction of a maximum service fee limit that football agents are...
Resale Price Maintenance (RPM) is still considered a hardcore restriction under the recently revised Vertical Block Exemption Regulation (VBER), which means that it cannot benefit from a statutory exemption under Article 101(1) TFEU, unlike certain other types of vertical agreements. However, it has been debated...
In competition law, it is important to accurately determine the concept of undertaking, especially in terms of mergers and acquisitions. Therefore, the concept of economic entity aims to reveal the economic units covered by the undertakings. The relationship between the concept of economic entity and family ties comes...
In these days when the Competition Board (“Board”) frequently imposes administrative fines for preventing on-site inspections and both the Competition Authority (“Authority”) and undertakings take legal and technical measures regarding on-site inspections, a striking development has occurred. In its decision...
Online advertising has become an important source for businesses for promoting products and services and meeting consumers, as a result of the rapid development of information technologies and increase in the use of internet. Delivering targeted messages to consumers at the right time through the digital...
Selective distribution systems refer to a type of distribution system in which suppliers commit to selling the contracted goods or services directly or indirectly to distributors selected based on specified criteria, while the distributors commit not to sell the said goods or services to unauthorized...
Fast-moving consumer goods is undoubtedly one of the sectors that the Competition Authority has been working most intensively since the COVID 19 pandemic. Among the most important developments of this period was the Sector Inquiry initiated on Fast Moving Consumer Goods (“FMCG”) Retailing...
In the decision of the Constitutional Court ("Constitutional Court" or "Court") dated 09.11.2022, numbered 2020/67 E. 2022/139 K. (the "Decision"), the annulment of certain articles of the Law Amending the Law on the Protection of Competition No. 4054 ("Law No. 7246") was requested...
In Turkish competition law, certain types of mergers and acquisitions are subject to Turkish Competition Board’s (“Board”) approval in order to gain legal validity. Pursuant to Article 7 of the Law No. 4054 on the Protection of Competition (“Law No. 4054”), the Board is competent to define mergers and acquisitions...
Recently, the Competition Board (the Board) had imposed administrative fines on banks and financial institutions for failing to respond to the request for information within the scope of a preliminary investigation.[i] The request for information that lays the groundwork for the administrative fine imposed by...
Amazon, a world-famous company, is an e-commerce company that operates the world’s largest online shopping platform. In the backstage, Amazon is a data-driven company whose retail decisions are mostly driven by automated systems, fueled by the relevant market data. That being said, Amazon has a dual...
The right to make on-site inspections is one of the Competition Board’s (“Board”) most important tools for revealing whether Law No. 4054 on the Protection of Competition (“Law No. 4054”) has been violated. The effective use of this authority is quite important in terms of obtaining fruitful results from...
“Harese” is an interesting Arabic word. There is a thorn that camels love very much in the desert. The camel eats the thorn with great greed. So much so that, its mouth bleeds as it eats, but it doesn't stop eating. The taste of the thorn is mixed with the salty taste of its own blood. This mixed taste drives the camel...
Turkey’s leading pay television service provider, Krea İçerik Hizmetleri ve Prodüksiyon A.Ş. (“Digiturk”), is frequently the subject of complaints made to the Competition Authority (“Authority”). In fact, the Competition Board (“Board”) issues a new decision about Digiturk almost every year. In these decisions...
The French Competition Authority (Autorité de la Concurrence), within the scope of the competition law proceeding initiated upon the complaint of Criteo SA (“Criteo”), accepted the commitments proposed by Meta Platforms Inc., Meta Platforms Ireland Ltd., and Facebook France...
While the scope of Competition Board’s (“Board”) power to conduct on-site inspections has increased with the introduction of Guidelines on Examination of Digital Data during On-site Inspections (“Guidelines”), nowadays the amount of monetary fines imposed on undertakings continue to...
The hub and spoke cartel, which is a relatively new type of violation in terms of Turkish competition law, is defined as the indirect exchange of information between two independent undertakings which are horizontal competitors on the supplier or retailer level, through another undertaking...
The settlement mechanism has only recently been introduced to Turkish competition law practice. It entered into force with the amendment made to the Law on the Protection of Competition (“Law”) numbered 4054 on 16.06.2020, and has been in effect for less than two years. In this relatively...
Due to their increasing share in the economy and rapid growth rate, e-marketplace platforms have come under the increasing scrutiny of the Turkish Competition Authority (“Authority”) as well as many competition authorities around the world...
Pursuant to the Amendment Communiqué Concerning the Mergers and Acquisitions Requiring the Competition Board’s Approval (“Amending Communiqué”) published in the Official Gazette dated March 4th, 2022 and numbered 31768, certain amendments have been introduced...
The Competition Board (“Board”) has recently published a reasoned decision in which it evaluated BSH Ev Aletleri Sanayi ve Ticaret A.Ş.’s (“BSH”) request for negative clearance or exemption with regard to its practice of prohibiting authorized dealers from making sales through online marketplaces...
Shahmaran, a Mesopotamian myth, is believed to take place in Tarsus. According to the myth, the shah of snakes is the immortal and omniscient "Shahmaran." Shahmaran is described as a beautiful woman living in her cave with her snakes...
During the COVID-19 pandemic, competitive concerns about the pricing behavior of chain markets, manufacturers, and wholesalers engaged in the retail trade of food and cleaning supplies led to an investigation by...
When the past decisions and the recent decisions of the Competition Board (“Board”) are examined, a significant increase can be observed in the number of decisions where the Board found hindrance or obstruction of on-site inspections. This situation shows that...
The European Commission began investigating the collusive behavior of Credit Suisse, UBS, Barclays, RBS, and HSBC in the Foreign Exchange (forex) spot trading market in 2019. With the recent press release dated 02.12.2021, the Commission announced that the case is now closed...
Digitalization, in particular, necessitates the rewriting of competition law rules. Competition law is at the center all questions regarding e-commerce and digital platforms. The aforementioned platforms, which have become prominent due to innovations in...