In a recent decision(1) the 13th Circuit of the High State of Council annulled the Competition Board's decision(2) in Siemens san ve Tic AS. The Competition Board had found no infringement at the end of an investigation initiated following complaints accusing Siemens of abusing its dominant position in the market for technical services of medical devices and its behaviour in the market for spare parts supply.

The case was brought to the High State of Council with a request for annulment of the Competition Board's decision. The Competition Board had identified "the market for medical imaging and diagnosis devices" as the primary product market, and "services regarding Siemens branded medical diagnosis and imaging devices" and "spare parts regarding Siemens branded medical diagnosis and imaging devices" as downstream product markets; and Turkey as the relevant geographical market. As a result of its assessment of whether Siemens had abused its dominant position in the relevant markets, the Competition Board stated that Siemens had the power to dictate the financial parameters in the aftermarkets for its devices, and was in a dominant position in the markets for "services regarding Siemens branded medical diagnosis and imaging devices" and "spare parts regarding Siemens branded medical diagnosis and imaging devices".

The Competition Board further explained that:

  • the total cost of spare parts and technical services throughout the lifetime of a device was lower than the cost of the device itself;
  • information on the price of spare parts was not transparent enough;
  • total ownership costs were not calculated, especially in public hospitals, and this caused judicial uncertainty; and
  • switching to another brand would be expensive in cases where the prices of secondary products were higher, and price differentiation was possible between locked customers and new customers.

Thus, the board ruled that there was no need to impose an administrative fine on Siemens.

In its assessment based on the information and documents within the file, the 13th Circuit found that Siemens had discriminated against other service companies, without any objective justification, in relation to the sale of spare parts for maintenance and repair services, and applied product-bundling arrangements in the market for the sale of spare parts. It further stated that:

  • Siemens held a dominant position in the market for tubes, which were included in their insurance coverage, and was also the sole supplier that replaced these tubes each year;
  • Siemens had imposed conditions on entering into maintenance and repair contracts for tied products, and as most hospitals had concluded maintenance and repair contracts with Siemens, had foreclosed the market; and
  • there was no link between maintenance and repair contracts and the price of the tubes, meaning that there were no reasonable economic or commercial reasons for a package price discount; and the tied selling made it impossible to buy these products separately.

As a result, the 13th Circuit concluded that Siemens had abused its dominant position and an administrative fine should be imposed on Siemens.

This is another example of an action in which the High State of Council has examined the merits of a case. Over the last few years there has been an increasing trend(3) of the administrative courts delving into the details of Competition Board decisions and challenging them on their merits. This gives a clear signal that the administrative courts are no longer content to assess Competition Board decisions solely on procedural grounds.

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) 2014/146.

(2) March 16 2010 (10-23/326-114).

(3) For recent milestone decisions where the administrative courts annulled the Competition Board's decisions upon a substantive analysis on the merits, see 13th Circuit of State Council's 3M decision (2011/5454), 11th Circuit of Ankara Administrative Court's decision (July 11 2013 2013/1083), 13th Circuit of High State of Council's decision (December 18 2012 2012/3883).