Anticompetitive unilateral conductAbuse of dominance
In what circumstances is conduct considered to be anticompetitive if carried out by a firm with monopoly or market power?
The main legislation applying specifically to the behaviour of dominant firms is article 6 of the Competition Law. It provides that ‘any abuse on the part of one or more undertakings, individually or through joint agreements or practices, of a dominant position in a market for goods or services within the whole or part of the country is unlawful and prohibited.’
Article 6 brings a non-exhaustive list of specific forms of abuse, which is, to some extent, similar to article 102 of the TFEU. Accordingly, such abuse may, in particular, consist of:
- directly or indirectly preventing entries into the market or hindering competitor activity in the market;
- directly or indirectly engaging in discriminatory behaviour by applying dissimilar conditions to equivalent transactions with similar trading parties;
- making the conclusion of contracts subject to acceptance by the other parties of restrictions concerning resale conditions such as the purchase of other goods and services or acceptance by the intermediary purchasers of displaying other goods and services or maintenance of a minimum resale price;
- distorting competition in other markets by taking advantage of financial, technological and commercial superiority in the dominated market; and
- limiting production, markets or technical development to the prejudice of consumers.
Is there any de minimis threshold for a conduct to be found abusive?
No. There is no de minimis threshold for unilateral conducts in Turkish competition law (eg, İstanbul Grand Bus Terminal Operation, 23 September 2005, 05-60/893-242). Having said that, the Authority is increasingly inclined to accept de minimis defences in the enforcement of articles 4 and 6.Market definition
Do antitrust authorities approach market definition in the context of unilateral conduct in the same way as in mergers? If not, what are the main differences and what justifies them?
Yes, the framework explained under Question 14 applies in assessing both dominance cases and concentrations.Establishing dominance
When is a party likely to be considered dominant or jointly dominant? Can a patent owner be dominant simply on account of the patent that it owns?
Article 3 of the Competition Law defines dominance as ‘the power of one or more undertakings in a certain market to determine economic parameters such as price, output, supply and distribution, independently from competitors and customers’. Enforcement trends show that the Board is increasingly inclined to somewhat broaden the scope of application of the article 6 prohibition by diluting the ‘independence from competitors and customers’ element of the definition to infer dominance even in cases of dependence or interdependence (eg, Anadolu Cam, 1 December 2004, 04-76/1086-271; and Warner Bros, 24 March 2005, 05-18/224-66).
The Board considers high market shares as the factor most indicative of dominance. It also takes account of other factors (such as legal or economic barriers to entry, portfolio power and the financial power of the incumbent firm) in assessing and inferring dominance.
The wording of article 6 also prohibits abuse of collective dominance. Precedents on collective dominance are neither abundant nor mature enough to allow for a clear inference of a set of minimum conditions under which collective dominance would be alleged. That said, the Board has considered it necessary to establish ‘an economic link’ for a finding of abuse of collective dominance (see, eg, Turkcell/Telsim, 9 June 2003, 03-40/432-186; and Biryay, 17 July 2000, 00-26/292-162).IP rights
To what extent can an application for the grant or enforcement of a patent or any other IP right (SPC, etc) expose the patent owner to liability for an antitrust violation?
There is no specific case law on this matter. Theoretically, an application for a patent may result in the applicant’s antitrust liability if and to the extent that:
- the applicant is in a dominant position in the relevant market;
- the application amounts to an abuse; and
- the application is incapable of justification under objective and legitimate reasons.
There is no specific precedent or case law on this matter. Theoretically, the answer to question 31 would apply here as well. Misusing the legal proceedings that result from the enforcement of patent rights to prevent the entry of generics (sham litigation) might theoretically result in the dominant patent owner’s antitrust liability.
When would life-cycle management strategies expose a patent owner to antitrust liability?
There is no specific precedent or case law on this matter. Even if they result in the prevention of new market entries, life-cycle management strategies would not raise competition law concerns, if and to the extent they are used for legitimate business purposes such as taking full benefit of the patent system and are capable of justification under objective criteria. If a life-cycle management strategy exceeds the objective need of restricting competition to obtain its efficiencies, it may be interpreted as raising certain competition law concerns.Communications
Can communications or recommendations aimed at the public, HCPs or health authorities trigger antitrust liability?
Communications and recommendations aimed at the public or healthcare professionals mostly consist of promotional activities. These activities pertaining to the promotion of medicinal products must be performed in accordance with the rules laid down in the Regulation on Promotional Activities of Medicinal Products (Official Gazette of 3 July 2015, No. 29405). They are surveilled by the Turkish Medicine and Medical Device Institution. Promotional activities aimed at the public are prohibited under the Regulation on Promotional Activities of Medicinal Products, which ipso facto leads pharmaceutical companies to direct their promotional activities at healthcare professionals. According to the Sectoral Report of the Authority, promotional activities for informational purposes promote competition in the market whereas promotional activities for brand awareness purposes have the tendency to restrict competition as they may cause market foreclosure. Namely, pharmaceutical companies settled in the market may use promotional activities for brand awareness as a strategy to increase the cost of market entry and hamper activities of other undertakings in the market. Promotional activities for brand awareness purposes may also have the tendency to trigger antitrust liability to the extent that they violate article 6 of Law No. 4054. Although there is no specific precedent or case law on this matter, Sectoral Report of the Authority suggests that healthcare professionals prescribe active substances instead of pharmaceutical brands. However, legislative endeavours do not yet include any efforts on that front.Authorised generics
Can a patent owner market or license its drug as an authorised generic, or allow a third party to do so, before the expiry of the patent protection on the drug concerned, to gain a head start on the competition?
The concept of ‘authorised generics’ is not defined in Turkish pharmaceutical laws. This is because the licensing regulations in Turkey allow only one licence for a formula. However, there appears to be no legal roadblock against the patent owner gaining a head start on the competition by marketing a generic through establishing a new company and an abridged licence application process.Restrictions on off-label use
Can actions taken by a patent owner to limit off-label use trigger antitrust liability?
Off-label medicine consumption is illegal in Turkey. According to the Guidelines on Off-Label Medicine Use published by the Pharmaceuticals and Medical Devices Authority pursuant to Notice 2009/36 of the Ministry, off-label medicine consumption is subject to Pharmaceuticals and Medical Devices Authority’s permission. The Guidelines on Off-Label Medicine Use provides exemption from requirement of permission for certain medicines that it determines in Exhibits 4 and 5. Thus, theoretically, a patent holder can exercise its patent right for limiting off-label use, only if its product is in the scope of the exemption or after permission is granted for such product.
There is no specific case law or legislation on this matter in Turkish competition law enforcement. To the extent that the patent holder lawfully exercises the right to comply with the Guidelines on Off-Label Medicine Use, the Board would be unlikely to intervene and find an antitrust violation. Existence of health and safety concerns for off-label consumption of certain drugs may be deemed as a valid justification for exercising patent right to limit off-label use of certain drugs. Having said that, one cannot altogether rule out the possibility that the Board might not consider exercising patent right as an objective and legitimate reason to limit off-label use of a drug, since it may deprive consumers from accessing affordable treatment and their and doctors’ freedom to choose and apply a treatment. For that reason, such conduct might be classified as an abuse of dominant position, if the patent holder undertaking holds the dominant position in the market.Pricing
When does pricing conduct raise antitrust risks? Can high prices be abusive?
The wording of article 6 does not consist of any definition or exemplification on pricing conducts to raise antitrust risks. By taking the Guidelines on the Assessment of Exclusionary Conduct by Dominant Undertakings (the Guidelines) as a reference, one can assert that a pricing conduct will raise antitrust risks, when the undertaking:
- is in dominant position;
- exploits its market power against consumer welfare; and
- does not have an objective necessity or an efficiency to implement such conduct and, even if it had, restricted competition only to the extent needed for that reason.
The Guidelines state some examples of pricing conduct that have exclusionary effects (eg, predatory pricing, price/margin squeeze, rebate systems, price discrimination, excessive pricing). There are also exploitative and discriminatory pricing conducts that raise antitrust risks.
Accordingly, the Board may interpret excessive prices as abusive. Excessive pricing is a company setting prices significantly above the competitive level by exploiting market power, thereby transferring welfare of consumers to itself. Turkish case law, in this context, defines excessive pricing as an abuse of dominant position and the Board has various precedents considering excessive pricing as an antitrust infringement.
The Board applies a twofold economic value test to determine the existence of excessive pricing. At the first stage, the test requires comparison of cost and set price, thus it measures profit margin; then, the set price is compared with itself in different conditions or the price of competing product or services. However, the Board mostly utilises comparison of set prices with price of competing product or services (second stage of the test), especially when it is not possible to measure the profit margin (eg, Viessmann, 15 May 2017, 17-16/223-93; and Congresium, 27 October 2016, 16-35/604-269).
Even though its profit margin was negative, the Board imposed a fine against Belko, since its price differences with its equivalent services were 50-60 per cent (Belko, 6 April 2001, 01-17/150-39). The Board does not have a constant threshold of reasonableness for profit margin or price difference to impose a fine owing to excessive pricing. It did not find excessive pricing, when Biletix’ profit margin was between 11 and 18 per cent (Biletix, 1 March 2007, 07-18/164-54) or MTS’ price difference was between 25 and 30 per cent with a substitute product (MTS, 26 May 2006, 06-36/462-124). However, it found that Tüpraş set excessive prices when its prices were 15 per cent different from the price of competitors in Italy and 30 per cent different from its own export prices (Tüpraş, 17 January 2014, 14-03/60-24). Hence, one can argue that the Board takes the three bullet points articulated above into consideration along with the economic value test while determining the infringement.Sector-specific issues
To what extent can the specific features of the pharmaceutical sector provide an objective justification for conduct that would otherwise infringe antitrust rules?
Sector-specific features of the pharma industry may provide good objective justifications for conduct that can otherwise be viewed as anticompetitive. For instance, price control regulations and statutory market monitoring mechanisms justify suppliers’ attempts to track the products, which might otherwise raise competition law concerns in some other industries (eg, 3M, 13 March 2007, 07-22/207-66). Similarly, the obligation on manufacturers and wholesalers to keep adequate supply of medicines at all times may justify sales and export restrictions (Pfizer/Dilek Ecza, 2 August 2007, 07-63/774-281). Similarly, designating distributors to attend public tenders on an exclusive capacity has also been found to serve the public good by keeping hospital inventories stocked (eg, Roche, 16 November 2016, 16-39/642-288; Roche, 13 October 2016, 16-33/569-247; and Daiichi, 8 September 2016, 16-30/504-225).