Tying and Bundling in Turkish Competition Law

The Guidelines on the Assessment of Exclusionary Conduct by Dominant Undertakings define tying as the practice of making the sale of one product (i.e., the “tying” product) a condition of the buyer’s acceptance to simultaneously purchase another product (i.e., the “tied” product). Tying may also refer to the practice of conditioning the sale of the tying product on the buyer’s acceptance not to purchase the tied product from any other seller. In general, the demand for the tying product is high, whereas there is a lower demand for the tied product, which would be more difficult to sell. In terms of Turkish competition law, tying may take various forms: (i) contractual tying, (ii) refusal to deal, (iii) withdrawal or withholding of guarantee, and (iv) technological tying. The Board generally reviews tying practices under contractual tying and technological tying. Contractual tying occurs when a customer is forced to buy the tied product along with the tying product—in other words, when the customer is forced to refrain from purchasing the tied product from a competitor. As to the technological tying, it occurs when the tied and tying products are sold together as the tying products cannot be separated, i.e., the tying product can only be utilised by the purchase of the tied product.

The incentive for market foreclosure through bundling or tying depends on the extent to which this restriction would be profitable for the merged undertaking. In order for a merged entity to engage in foreclosure, it should be able to make a profit as a result of the trade-off between the costs of anti-competitive practices and the gains. Therefore, the parties’ incentives to carry out bundling or tying practices are assessed on a case-by-case basis from an economic point of view. For example, the pure bundling practices that do not allow sales of the tied products separately may lead to loss of customer base which generally prefers to purchase the products separately, despite certain gains. Likewise, a merged entity would be unlikely to engage in bundling practices in a relatively low-profitable market by risking its profit in a profitable market. In assessing the merged entity’s incentive to engage in foreclosure, the Board also takes into consideration the shareholding structure, previous market strategies and business plans of the merging parties. As for the assessment on the impacts of bundling and tying practices, their possible outcomes are assessed together with the countervailing factors. In markets where (i) the competitors offering the products separately would be able to compete after the transaction, (ii) there is buyer power, or (iii) potential entries downstream or upstream are expected to maintain effective competition, the market dynamics may render all anti-competitive attempts futile.

For more information on tying and bundling in Turkish antitrust law, please feel free to reach out to ELIG Gurkaynak at +90 212 327 1724 or through gonenc.gurkaynak@elig.com.