GENERALLY

The explanations on this topic will be presented assuming that the reader has a general legal understanding of Abuse of Dominant Position in Competition Law. In this context, we expect the reader to have prior knowledge and consideration of questions such as: What is a dominant position? What are its elements? What criteria are used in determining a dominant position? What is abuse? For our study to be useful, it is essential that the dominant position be established and that the dominant undertaking is abusing it unquestionably so that an example of abuse of dominant position can be examined.

In Turkish Competition Law, abuses of dominant position are generally classified within a three-pronged framework: exclusionary, exploitative, and discriminatory abuses. In EU Competition Law, the concept of abuse is addressed under two subheadings, taking into account the \"effects\" of the actions considered within this scope. These are exploitative and exclusionary abuses. This distinction is crucial for understanding the concept of abuse, as these two types of abuse exhibit quite different characteristics. Abuse of a dominant position through selective pricing can be cited as an example of both exclusionary abuse and discriminatory abuse.

1. ABUSE

1.1. EXCLUSIONARY ABUSE

1.1.1 ABUSE THROUGH PRICES

1.1.1.1 ABUSE THROUGH SELECTIVE PRICING

Abuse of a dominant position through selective pricing can be defined as dominant undertakings charging customers in a position to switch to competitors above cost but below other undertakings. In this context, the dominant undertaking charges some customers differently, resulting in price discrimination. However, in our opinion, the exclusionary nature of selective pricing is more prominent. ÖZTUNALI examines selective pricing under the heading of exclusionary abuse, emphasizing its exclusionary nature, while SANLI addresses it under the heading of discrimination. Aslan, on the other hand, makes his observations based on the distinction between predatory pricing and selective pricing without making such a categorization. According to SANLI, discriminatory pricing manifests itself in two distinct forms: first-level and second-level. First-level discrimination occurs when a dominant undertaking imposes low, and therefore discriminatory, pricing on its customers in order to exclude its competitors. In second-level discriminatory pricing, the dominant undertaking distorts competition in the downstream market by imposing discriminatory pricing among its customers for various reasons without justification. A typical example of first-level discrimination is selective pricing. A point that strikes me is that, when we systematically interpret it, there is still no consensus in the doctrine of Competition Law on the classification of abuse of dominant position through selective pricing. However, its classification in different places does not change the sanctions to be applied, only demonstrates the lack of unity in justification. First of all, there is no doubt that a dominant company can charge different prices in different markets. Companies can differentiate their market and pricing policies based on the conditions of the different markets they operate in. The most important difference from predatory pricing is that the prices applied are not below cost, so predatory pricing is not an option. In predatory pricing, the price is set below cost, with the aim of excluding a rival company or intimidating potential entrants. This pricing strategy appears to be in the consumer\'s favor, but when the pricing strategy achieves its objective, it will obviously increase the price, creating a situation that disadvantages the consumer. For selective pricing to be considered a violation, certain conditions must arise. These were addressed in the Competition Authority\'s Anadolu Cam decision:

1. The company in question must be dominant in the relevant market.

2. The dominant company must have the ability to complicate the activities of its competitors through strategic behavior independent of costs.

3. There must be only one competitor in the market.

4. There must be clear evidence that the dominant firm acts with an exclusionary intent.

5. The İzocam decision added \"the identification of other practices that could be alleged to be accompanied by exclusionary intent\" to the selective pricing elements.

The first two of the conditions listed are elements of a dominant position.

The wording of the third condition suggests that there must be only one competitor in the market, but when there is more than one competitor, an abuse of dominant position through selective pricing does not occur. In this case, wouldn\'t an abuse of dominant position through selective pricing constitute an abuse of dominant position when the dominant undertaking has two competitors in the market?

The fourth condition is: \"The primary target of selective pricing is to ensure the competitor\'s

It is stealing customers from other companies. The dominant undertaking charges a higher price to its own customers while charging a lower price to its competitors\' customers. This practice covers a long period of time. Therefore, the key consideration in selective pricing is determining whether this practice is genuinely intended to eliminate competitors or whether it is a practice deemed necessary by the nature of competition. In my opinion, eliminating competitors\' customers serves the purpose of excluding competitors.

Explaining the fifth condition, the criterion sought by the Competition Authority is that there must be other examples of abuse in the specific case, in addition to selective pricing.

The Problem of the Unlawfulness of Abuse of Dominant Position Through Selective Pricing

According to some scholars in the doctrine, abuse of dominant position through selective pricing is unlawful, while others argue that it is a necessity of competition and thus lawful. Abuse of dominant position through selective pricing is a controversial issue in Competition Law.

According to Sanlı,

“In the final analysis, the prices applied by the dominant undertaking here are profitable. From an economic perspective, considering such pricing unlawful could create serious uncertainty for undertakings.

However, the Competition Board, in the Anadolu Cam investigation, specifically considering the existence of evidence demonstrating exclusionary intent during the on-site inspection (and Anadolu Cam\'s market power), deemed the implemented pricing strategy unlawful. Since no other violations regarding selective pricing have been issued since this decision, it is unclear whether this decision will set a precedent in the future.”

Öztunalı, on the other hand, expressed the drawbacks of this situation with the following sentences:

“From an economic perspective, considering above-cost pricing as an abuse could lead to price protection for competitors and, consequently, higher prices.”

Korah stated that in a market where price reductions are relatively independent of costs, accepting selective pricing behavior by a dominant undertaking approaching a monopoly, which can be proven to be aimed at distorting competition, would negatively impact competition.

Aslan also stated that selective pricing by a dominant undertaking to its competitor\'s customers—in other words, charging low prices to customers with high price elasticity—could be efficiency-enhancing.

The practice of the European Union and the US will be discussed in conjunction with the decisions to be examined below.

Abuse of Dominant Position Through Selective Pricing

European Community Practices

AKZO Decision: The summary of the case is as follows: AKZO and ECS operate in the benzoyl peroxide market. AKZO commands 50% of the entire European market, while ECS only supplies flour to factories in the UK. In 1979, ECS expanded into the plastics market and began working with AKZO\'s customers. In response to this situation, AKZO began offering very low prices, above and beyond its cost, to its customers in the UK market, which provided economic capital to ECS. As a result, ECS lost 70% of its customers and defaulted on its debts. The European Union ruled in violation.

HILTI DECISION: While the nail gun manufacturer HILTI decision found violations in many respects, the section concerning abuse of dominant position through selective pricing is crucial for our topic. In this particular case, the act that contradicts our example is described as follows: It provided favorable terms to its competitor\'s key customers, especially those it did not offer to its own customers, and it eliminated the discounts its own customers offered to those purchasing products from competitors.

While the decisions are summarized in summary form, when read together with other violation decisions, the common criteria are generally as follows:

1. The decisions demonstrate that the undertaking abusing its dominant position through selective pricing is in a super-dominant position.

2. It is very difficult for the other undertaking to reciprocate against the dominant undertaking.

3. The intent to exclude the competitor from the market is established.

4. The abuse of dominant position through selective pricing is accompanied by highly exclusionary practices.

5. In 30% of the decisions, joint ventures are dominant.

The findings are unanimous.

US PRACTICES

BROOKE GROUP DECISION: LİGGET, operating in the market where branded cigarettes are sold, achieved a significant 97% share of the unbranded cigarette market by selling unbranded cigarettes that are 30% cheaper than branded products. Consequently, the lower price of unbranded cigarettes led to a decline in branded cigarette market customers. Subsequently, B&W also introduced branded cigarettes.

While considered one of the top three companies in the tobacco products market, it entered the unbranded cigarette market and began offering discounts to LİGGET customers. The Supreme Court issued the following statement regarding our case, deeming abuse of dominant position through selective pricing legal:

“The exclusionary effect of above-cost pricing demonstrates either that the dominant undertaking has a lower cost structure than its competitors and competes fairly, or that the courts lack the ability to monitor pricing behavior without deterring lawful price reductions.”

Turkish Practices

ANADOLU CAM DECISION: The situation can be briefly summarized as follows: Anadolu Cam, which has been operating in the dominant market for years, and Marmara Cam, a relatively new company with limited production and technical capacity, participated in the glass tender. In the initial tender, Marmara Cam submitted bids for only two of the 30 different glass types (35 and 70 cc rakı bottles), while Anadolu Cam submitted bids for all types. Marmara Glass won the portion of the tender where it bid for a limited number of products, but Marmara Glass offered a 10% discount on the remaining price, thus incurring a large portion of the remaining cost. In the second tender held 19 days later, Anadolu Glass, knowing it could only offer prices for two specific products, applied a 7% discount to the price offered by Marmara Glass in the previous tender, targeting the production market and applying a 33% increase to other glass types. Marmara Glass, having offered the lowest price across all products, won the entire tender.

TURKCELL-VODAFONE DECISION: Turkcell\'s use of information obtained from Vodafone customers and processed traffic data in telemarketing practices, including offering low-price tariffs and free mobile phones to Vodafone customers who are Tutkcell subscribers, constituted discrimination and selective pricing. The Board stated that the necessary warnings were made and rejected the application.