Legal AlertThe Competition Authority Published a Guide on the Reflections of Digital Transformation on Competition Law.

25 April 2023

In April 2023, the Competition Authority published the “Reflections of Digital Transformation on Competition Law” (“Guide”). The Guide aims to provide a forward-looking roadmap on the application of Turkish competition law in digital markets and the challenges and policy changes needed in these markets, which will be of interest to a wide range of stakeholders, from consumers to large technology companies.

The Guide covers competition issues arising from digitalization in Turkey, the Competition Board’s decisions on digital markets, steps taken by competition authorities around the world, possible competition violations observed in digital markets, and market insights on basic platform services.

In the Guide, data processing activities are examined in detail in terms of possible competition violations observed in digital markets. In addition, topics of data portability and interoperability, self-promotion, tying and bundling practices, most favoured customer (“MFC”) practices, unfair contract terms, lack of transparency, and mergers and acquisitions in digital markets are also addressed.

The areas where data is prominent in the implementation of competition law are categorized under three headings in the Guide:

  • Identification of the relevant market and determination of dominant position
  • Evaluation process of mergers and acquisitions
  • Abuse of dominant position (exclusionary or exploitative)

According to the Guide, exclusionary misuse generally covers actions such as discrimination in access to data, aggregation of data, and the exclusion of competitors or the creation of barriers to entry. On the other hand, exploitative practices generally involve violating privacy policies, decreasing the quality of the service received by the consumer, or requesting more data in order to benefit from existing services.

According to the Guide, where privacy/confidentiality is considered as a quality factor or competition parameter, practices that decrease privacy in data processing will be interpreted as a decrease in the quality of the service and therefore a decrease in consumer welfare. Where data is considered as an input, excessive data collection or intensive use or aggregation of data may be considered under theories of harm such as increasing market power, creating barriers to enter the market or locking consumers into a platform.

In this context, it is assessed that a regulation that prevents undertakings with significant market power from creating or significantly increasing market entry barriers by processing/aggregating personal data unless it is necessary for the performance of a contract to which the end user is a party should be implemented.

It is proposed to introduce a data portability regulation to cover platforms that have significant market power in data portability and interoperability, covering the data portability of both real persons and commercial users on the platform in question.

In order to prevent self-preferencing, it has been evaluated that it is appropriate to introduce a regulation to prevent undertakings with significant market power from using non-public data in competition with commercial users.  It has also been underlined that undertakings should be prohibited from discriminating in the ranking or other conditions of their goods or services compared to the goods or services of commercial users.

Since tying or bundling may allow undertakings to use their dominant position in one market as leverage to prevent competition in another market and thus gain market power in the second market, it has been envisaged that a regulation be made to ensure that undertakings with significant market power in digital markets refrain from tying practices.

In order to ensure that undertakings with significant market power do not impose commercial conditions on commercial users while commercial users are working with competing platforms or offering products and services through their own sales channels, it has been considered appropriate to regulate the application of exclusivity, unfair commercial terms and MFC conditions by undertakings with significant market power.

For advertisers, publishers and intermediary undertakings in the supply chain for the online advertising market, the need for regulations to address transparency concerns regarding the price or performance measurement criteria arising from the platforms they receive services from and to increase transparency have been emphasized.

The Guide also states that a detailed analysis process is necessary for mergers and acquisitions in data-driven economies.  To prevent anti-competitive behaviour in digital markets, it is stated that these transactions should first be notified to the Competition Authority. Therefore, considering the current turnover thresholds, it has been pointed out that alternative thresholds are needed to ensure the notification of transactions that are not subject to notification.

You can access the full text of the Guide from the link below.