The rapid change in internet technologies in recent years has reshaped digital markets and consumer habits, and it has become inevitable for competition law to keep up with this change.
In recent years, with the digitalization of commerce, competition concerns in the markets have started to change. Due to the increase in online sales volumes and the growth of e-commerce platforms, in particular, the Competition Board started a sector inquiry regarding the e-commerce platforms on 11 June 2020 in order to examine and find solutions to potential competition concerns related to e- commerce platforms. Accordingly, the Turkish Competition Authority published the industry preliminary report (“Preliminary Report”) regarding e-commerce platforms on May 7, 2021, revealing its preliminary findings and first solution proposals. After that, the final report (“Final Report”) regarding the sector review on e-commerce platforms was published on 14 April 2022.
In this article, firstly, the competition concerns regarding e-marketplaces brought to the agenda by the Competition Authority and the solution proposals mentioned in the Final Report will be discussed:
1. Key Competition Concerns Regarding the E-Marketplaces
As in the Preliminary Report, the Turkish Competition Authority has examined the main competition problems arising from the behavior of e-marketplaces under the headings of;
1.1. Inter-Platform Competition Concerns
In the context of inter-platform competition, it is stated that e-marketplaces will remain open to improvement to the extent that they feel competitive pressure on them, and accordingly, competition should be a necessity, not an option. In this direction, the main problems in terms of cross-platform competition are; (i) the most favored nation (“MFN”) (ii) exclusivity, and (iii) limiting multiple access.
In the Final Report, it is stated that as a result of the implementation of the wide MFN clauses by the gatekeeper undertakings, competition in the market would decrease, price rigidity would occur, and growth would be hindered by the decrease in market entry.
It has also been stated that the exclusivity clauses imposed on the sellers by the undertakings qualified as gatekeepers also have a positive effect on competition but may cause further concentration of the markets where there is already concentration. The Turkish Competition Authority also underlined in the Final Report that platform exclusivity principles should be regulated by secondary legislation.
In terms of limiting multiple access, it is understood that platforms generally do not prevent multiple access but make the transition to another platform financially and technically difficult. It has been determined that this method also makes it difficult and prevents consumers and/or third-party sellers from transfer their data on the platform to alternative platforms.
1.2. Intra-Platform Competition Concerns
The main concern of the Final Report regarding intra-platform competition emerges as “self-nepotism” (kendini kayırma) on the axis of discrimination. Accordingly, in hybrid marketplaces, there may be practices such as the platform prioritizing its own products rather than the products of third-party sellers, providing unfair advantages in lists and algorithms, or providing more advantageous circumstances for the products of third-party sellers using their own services (logistics, shipping, payment methods, etc.) compared to other sellers.
It is envisaged that if the above-mentioned behaviors occur with the encouragement and coercion of the platform, it will harm the competition within the platform. In response to this, in the Final Report, it was concluded that there is no aspect that harms competition in increasing the visibility of high-rated or more preferred sellers without any intervention of the platform.
Another intra-platform competition concern is unfair commercial practices. Unfair commercial practices consist of two main headings: (i) excessive pricing and (ii) unfair contractual terms. Accordingly, it is stated that platforms holding asymmetric market power have the risk of unilaterally determining and dictating commercial terms against third-party sellers. It is stated that sellers who are exposed to such unfair commercial practices may face commercial risks.
1.3. Competition Concerns Regarding Consumers
According to the Final Report, there are competition concerns for e-marketplace consumers based on (i) price, (ii) consumer addiction and loyalty practices, (iii) data, and (iv) innovation. Accordingly, excessive collection of consumer data and privacy breaches, information asymmetry, and unfair commercial terms imposed on third-party sellers are among the concerns regarding the exploitative practices of e-commerce platforms.
2. Final Policy Recommendations for Competition Concerns
Based on the competition concerns described above, three solutions were proposed in the Final Report:
In this context, the competition concerns in the Preliminary Report and the prominent ones in the Final Report, and the solution recommendations for the concerns about the consumers and the future of the market have been reviewed, and the final policy recommendations created by the evaluations are as follows:
1. Legislative Study for Undertakings Qualified as Gatekeeper
In accordance with the Final Report, some undertakings will be appointed as gatekeepers and additional obligations will be imposed on them. In this direction, the gatekeeper undertakings basically:
Additionally, it is aimed to impose obligations to prevent the undertakings qualified as gatekeepers from applying to the MFN clauses and exclusivity practices.
It is also aimed that the transactions carried out by undertakings with significant market power in digital markets and the acquisition of newly established or developing enterprises will be subject to the supervision of the Turkish Competition Authority to a large extent and to prevent the lethal acquisition of the aforementioned undertakings.
2. “Platform Code of Conduct” Regulation
As explained above, there is a concern with e-marketplaces that sellers will be exposed to unfair commercial terms inter-and intra-platform. In the Final Report, it is recommended to define a “Platform Code of Conduct” in order to prevent this situation and ensure effective competition.
The Final Report highlights that the Platform Code of Conduct recommendation should be implemented more broadly, not just to the dominant e-marketplace platforms. As a matter of fact, it is underlined that unfair commercial terms may arise not only from the dominant position but also from the loyalty of the sellers. Considering the “dominance” threshold of Law No. 4054, it was considered appropriate to implement the Platform Code of Conduct recommendation by the relevant Ministries, and it was also stated that the Ministry of Commerce was carrying out a legislative study on this issue.
It is considered that it would be appropriate for the Platform Code of Conduct to include the following general terms:
3. Strengthening Secondary Legislation
The rapid concentration trend in digital markets, including e-marketplace platforms, provides incumbent undertakings a market power and position that is difficult to capture by other actual or potential competitors. Accordingly, there is a requirement for a more conservative and strict application of competition law rules in terms of these markets.
Based on this requirement, the Turkish Competition Authority is of the opinion that the secondary legislation regulating the implementation of competition law rules should be strengthened in a way to eliminate the uncertainties observed in terms of the platform economy.
Pursuant to the Final Report, (i) excessive data collection and privacy issues, (ii) consumers becoming vulnerable due to information asymmetry and the limitation of making choices based on accurate information, and (iii) unfair contract terms/unfair commercial practices are more frequently on the agenda with their exploitative nature in platform economies. It has been emphasized that the secondary legislation to be prepared regarding how these issues will be reflected in the evaluations within the scope of Article 6 of Law No. 4054 will contribute to the application of competition law.
The final policy recommendations regarding the competition concerns that may arise in the e-marketplace platforms and the policy tools to intervene in these problems are presented in the table below:
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