On May 8 2014,(1) the Competition Board – the decision-making body of the Competition Authority – initiated an inquiry into the cement production sector to identify the source of competitive problems in the cement sector and introduce structural or behavioural solutions to those problems.

On its website, the authority has invited every participant in the market (eg, producers, customers) to submit their opinions to the authority. This is not the first time that the authority has conducted an inquiry in a particular market: over the last three years the sector inquiries were initiated in the retail, petroleum, pharmaceutical and automobile markets.

The main reason for the board's decision is the importance of the cement sector to the construction sector – one of the most important sectors in the domestic economy given its significant contribution to high economic growth and its connections with the other sectors.

It is well known to the Competition Authority that the cement production sector is one of the most cartelised and therefore one of the most problematic sectors from a competition law perspective, due to the homogeneous nature of the product and the oligopolistic structure of the relevant market.

Even though several on-the-spot inspections have been conducted at the premises of cement producers, and significant fines imposed on undertakings involved in either cartels or any other type of infringement of the Law on Protection of Competition (4054), the sector still poses problems from a competition law perspective. One of the most significant indications of the problematic nature of the sector is the high number of complaints concerning competition law infringements. The number of investigations and the fines imposed have not reduced the number of complaints. Moreover, there has been a noticeable increase in the number of complaints about price hikes observed in the sector. The complaints also include allegations regarding the allocation of regions and/or customers, refusal to supply and predatory pricing – a form of abuse of dominant position.

Due to the homogenous nature of the product and the easy-monitorable structure of the cement sector the sector is more vulnerable to anti-competitive behavior than any other sector. Therefore, complaints concerning anti-competitive behaviour mostly involve the pricing strategies of cement producers which can be easily monitored and followed by competitors.

By 2013, the authority had concluded 15 different investigations in the cement and ready-mixed concrete sector. At the end of 11 of these investigations, the board imposed total fines of TRY94,152,685 (approximately € 32.46 million) on the undertakings active in the market. Further, on June 12 2014(2) the board initiated an investigation against six cement producers active in the Aegean region.

For further information on this topic please contact Gönenç Gürkaynak at ELIG by telephone (+90 212 327 17 24), fax (+90 212 327 17 25) or email (gonenc.gurkaynak@elig.com). The ELIG website can be accessed at www.eliglegal.com.

Endnotes

(1) 14-17.

(2) 14-21/416-M