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Legal Update: Turkish Competition Authority Fined Google for Abuse of Dominant Position

24 February, 2020

Turkish Competition Authority (`TCA`) has fined on February 14, 2020 Google Reklamcılık ve Pazarlama Ltd. Şti., Google International LLC, Google LLC, Google Ireland Limited and Alphabet Inc (`Google`) based on violation of Article 6 of the Protection of Competition Act Nr.4054 (Rekabetin Korunması Hakkında Kanun) (`RKHK`) for  abusive exclusionary conduct (referred as abuse of dominant position/ hakim durumun kötüye kullanılması by TCO) as a dominant undertaking in the comparative shopping and general internet search markets.[1]

The TCA unanimously decided that Google is dominant in general internet search market and comparison shopping market and has violated RKHK Art. 6 (abuse of dominant position) by putting competitors shopping comparison services in disadvantage in the market by, complicating the activities of competing undertakings and leading to distortion of  competition in the shopping comparison services market.[2]

The TCA issued a fine amounting to TRY 98.354.027,39 (app. EUR 15.4 Million). The fine has been calculated over Google’s 2019 turnover and since the conduct lasted longer than five years the base of it was increased by one-fold.[3]

To ensure effective competition in the market and prevent future violations and competition in the relevant markets, the TCA ordered Google to comply with the following obligations within three months from notification of the decision; i) To serve conditions with competing comparison-shopping services no less favorable than to its own comparison-shopping service within its general search pages; ii) Removal of the ‘click feature’ of the Google Shopping Unit title in all channels including mobile devices; iii) Reasonably eliminate uncertainties for the title and tagging of the Shopping Unit which is consisted of advertising; iv) Terminate priority positioning of Google Shopping Unit in internet searches containing the product name and explicit names or websites of competitors offering shopping comparison services.[4]

Following the initial compliance measures are fulfilled, Google is also obliged to submit reports to the TCA once a year, for a total period of five years. The TCA’s decision may be appealed before Ankara Administrative Courts within 60 days from the notification of the decision.

Comparison with European Commission’s Google Search (Shopping) Decision

The European Commission’s Decision (‘The Decision’) concludes that Google commits an abuse in the relevant markets for general search services in the European Economic Area (‘EEA’) by positioning and displaying its own comparison shopping service more favorably, in comparison to competing comparison shopping services.[5]

Google's conduct is found abusive due to two factors:

  1. Diverting internet traffic away from competing comparison shopping services to Google's own comparison shopping service by decreasing traffic from Google's general results pages to competing comparison shopping services and increases traffic from Google's general search results pages to Google's own comparison shopping service
  2. Causing anti-competitive effects in the national markets of EEA for comparison shopping services and general search services.

The potential anti-competitive effects of Google within the relevant market were argued under three reasons:

  1. Google's conduct has the potential to foreclose competing comparison shopping services, leading to higher fees for merchants, higher prices for consumers, and less innovation,
  2. Google's conduct is likely to reduce the ability of consumers to access the most relevant comparison shopping services,
  • Google's conduct would also have potential anti-competitive effects, even if comparison shopping services did not constitute a distinct relevant product market, but rather a segment of a possible broader relevant product market comprising both comparison shopping services and merchant platforms.[6]

The Abusive Exclusionary Conduct by Dominant Undertakings under EU Antitrust Regulations

The European Commission has continuously recommended Google to give "equal treatment" to rival comparison shopping services and that it will closely monitor whether Google is complying with that requirement. This approach was based from the Treaty on the Functioning of the European Union (`TFEU`) Article 102 and the following Guidance, which regulates ‘Abusive Exclusionary Conduct by Dominant Undertakings’ (`AEC`). The TFEU is a ‘constitutional’ regulation that sets the fundamental principles of the European Union, which also include Internal Market and Free Movement of Goods and Services(Customs Union), related to Antitrust Law.

The European Commission was criticized for the formalistic approach in competition investigations, where the AEC’s effect is less of a concern than the type of AEC. The Commissioner’s stated that Article 102 TFEU (the equivalent provision for RKHK Art. 6 et al) the ratio legis is for consumer welfare and protection of competition in the market. [7] By ‘protection of the competition in market’, the competition itself is defined as an institution for protecting the free trade and economic liberties in the market. Theoretically, this ‘institution’ is also considered a safeguard for consumer welfare in EU Jurisprudence. Given the potential negative impact of monopolistic behavior against consumer welfare in the abovementioned decisions, Google’s behavior may be considered as anti-competitive market foreclosure where the dominant undertaking may prevent its current or potential competitors in the relevant market that can negatively affect consumer welfare.[8]

Conclusion

While TCO’s, reasoned decision will be published within 3 months from the recent fine, it is likely that TCO will refer to the European Commission’s 2017 Decision and justify the administrative fine accordingly. As a Member of Customs Union and Continental European Legislation, Turkey’s Competition Law’s and Jurisprudence essentially follow the European perspective. Therefore, it can be said that the recent TCO decision was not an unexpected strike against US based Google, but a follow-up of the European Commission’s Google Search Decision

[1] Turkish Competition Authority Decision Nr: 20-10/119-69

[2] Ibid.

[3] Based on RKHK Art. 16(3) and Articles 5(1-b) (2) (3-b) and 7 (1) of Regulation for Fines Concerning Anti-Competitive Agreements, Concerted Practices and Abuse of Dominant Position

[4] Decision Nr: 20-10/119-69

[5] Summary Commission Decision ,Google Search (Shopping), Case AT.39740, OJ C 9, 12.1.2018  C 9/12

[6] Summary Commission Decision ,Google Search (Shopping), Case AT.39740, OJ C 9, 12.1.2018  C 9/13

[7] Akman, Pınar, ÀB Komisyonu 102. Madde Kılavuzu Işığında Hâkim Durumun Kötüye Kullanılması Reformuna Dair Eleştiriler ve Öneriler` in Sanlı, Kerem Cem (ed.), Hâkim Durumun Kötüye Kullanılması Sorunlar ve Çözüm Önerileri Sempozyumu, On İki Levha (2011) 71

[8] Akman(n.1) 79; see also Guidance on the Commission’s Enforcement Priorities in Applying Article 82(102) of EC Treaty(TFEU) to Abusive Exclusionary Conduct by Dominant Undertakings (2009) OJ C45/7 19

 

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