The Impact of EU Law on Swiss and Turkish Regulation of Competition - With Specific Consideration...

S W I S S A N D T U R K I S H R E G U L A T I O N O F C O M P E T I T I O N

189

Erdem Büyüksagis∗

The Impact of EU Law on Swiss and Turkish Regulation of Competition

With Specific Consideration Given to Abuse of Dominant Position Cases

Table of contents

1. Introduction 190

2. The general influence of European law on the recent Swiss

and Turkish legislative frameworks 191

3. The impact of recent developments in European

competition law on the protection of competition and

consumers in Switzerland and Turkey 194

3.1. EU regulations and practice 195

3.1.1. The background and objectives of Article 102 TFEU 195

3.1.1.1. From the protection of competition to the protection of consumers 195

3.1.1.2. The notion of consumer protection 198

3.1.2. Defences 204

3.2. Swiss and Turkish regulations and practice compared to EU

law 206

3.2.1. Swiss and Turkish regulations and practice 206

3.2.1.1. Swiss regulation and practice 206

3.2.1.2. Turkish regulation and practice 212

3.2.2. Comparative reflections 217

4. Some thoughts on improving the application of existing

rules 219

4.1. Remedying the legal uncertainty 219

∗ Priv.-Doz. Dr. at the University of Fribourg and Tenured Aggregate Professor at Antalya

International University, LL.M. (Georgetown). With a few exceptions, legislative and judicial developments have been taken into account until Mars 2013. For an analysis of the Directive on antitrust damages actions, which was signed into law on 26 November 2014, see ERDEM BÜYÜKSAGIS, Standing and Passing-on in the New EU Directive on Antitrust Damages Actions, RSDA/SZW 2015/1, p. 13 ff.

E R D E M B Ü Y Ü K S A G I S

190

4.2. Complementing the effects-based approach by structural and

procedural mechanisms 222

4.2.1. The issue of administrability 222

4.2.2. Access to compensatory justice by way of class action lawsuits 224

4.2.3. Abolition of the passing-on defence 227

5. Conclusion 229

Bibliography

1. Introduction

Over the 88 years since the reception of Swiss private law in Turkey, cooperation

between the two countries’ academic institutions has been promoted thanks to

numerous projects, and much work has been done to enhance a mutual legal

understanding.1 Today, the interaction between the two systems is less constrai-

ned and more diverse than may have been assumed in the last century. The funda-

mental issues arising from the interplay between national and international law as

well as the implementation into national law of international norms and standards

such as the new European regulatory policies have had a significant impact on

Swiss and Turkish laws. Competition law is perhaps the most straightforward

example where such an impact can be observed.

The main goal of this paper is a review of the impact of European competition law

on both Swiss and Turkish competition regimes, with specific consideration given

to abuse of dominant position cases. Before getting into a detailed analysis of this

impact, it is worth briefly touching on the general influence of European private

law upon the Swiss and Turkish legal landscapes (2). Indeed, since the last

Journées Turco-Suisses in 2008, they have undergone significant changes on seve-ral fronts. I will then study the impact of EU competition law on the abuse of

dominance standards in Switzerland and Turkey. I will examine this impact in

light of the current European developments, particularly the effects-based ap-

proach (3) before ending with some thoughts on improving the enforcement of

existing rules on abuse of dominant position (4).

1 ERDEM BÜYÜKSAGIS, What Europeans Can Learn from an Untold Story of Transjudicial

Communication: The Swiss-Turkish Experience, in Mads Andenas/Duncan Fairgrieve (eds.), Courts and Comparative Law, Oxford 2015, Chapter 37.

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2. The general influence of European law on the recent Swiss and Turkish legislative frameworks

In Swiss law, one of the most important recent revisions concerns the im-

plementation of the EU Directive on general product safety (2001/95). The new

Swiss Federal Act on Product Safety, shaped by legal norms based on EU law,

replaced the 1976 Federal Act on the Safety of Technical Installations and Objects.

The scope of this Act was restricted to technical devices and installations, whereas

the new Federal Act, which entered into force on 1 July 2010, imposes a general

safety requirement on any product put on the market for consumers or likely to be

used by them, including all products that provide a service.2 Thus, taking the EU

Directive as a model, the Swiss legislature raised the safety standards for certain

categories of goods and services where the national sector-specific regulations

were insufficient.3

Another impact of European law on Swiss legislation was the amendment of

Article 8 of the Federal Act against Unfair Competition (AUC).4 The revised

version of Article 8 AUC, which came into force on 1 July 2012,5 is modelled on

Article 3(1) of the EU Directive on unfair terms in consumer contracts (93/13).6

According to the previous version of Article 8 AUC, the setting-aside of general

terms depended on them being misleading,7 a requirement which was seldom

met.8 The new provision, based on EU law, is characterized by the three following

features: 1) general terms and conditions fall within the ambit of Article 8 AUC

only if they have not been individually negotiated; 2) general terms and condi-

tions shall be regarded as unfair if they cause a significant imbalance in the parties'

rights and obligations under the contract to the detriment of the consumer in a

manner or to an extent which is contrary to the requirement of good faith; 3) the

question whether general terms and conditions are misleading no longer plays a

role in the assessment of their unfairness. By complying with legal norms based on

2 RS 930.11; WALTER FELLMANN & ANDREAS FURRER (eds.), Produktsicherheit und

Produkthaftung, Die Schonzeit für Hersteller, Importeur und Händler ist vorbei!, Bern 2012. 3 ERDEM BÜYÜKSAGIS, La relativité de la sécurité du produit: différentes circonstances, différents

défauts, différents régimes de responsabilité, RDS/ZSR 2010, p. 29, 32 ff. 4 RS 241. 5 The Swiss Federal Council’s Message of 2 September 2009 regarding the amendment of the

Unfair Competition Act, p. 5561, available online at www.admin.ch/ch/f/ff/2009/5539.pdf 6 OJ L 95, 21.4.1993, p. 31. 7 KATHRIN KLETT & CHRISTOPH HURNI, Eckpunkte der bisherigen bundesgerichtlichen AGB-Gel-

tungskontrolle, recht 2012, p. 80 ff.; THOMAS PROBST, Kommentierung von Art. 8 UWG (Allge-meine Geschäftsbedingungen), in Peter Jung/Philippe Spitz (eds.), Bundesgesetz gegen den unlauteren Wettbewerb, Bern 2010, p. 634, 662 ff.

8 ANDREAS FURRER, Eine AGB-Inhaltskontrolle in der Schweiz?, Anmerkungen zum revidierten Art. 8 UWG, REAS/HAVE 2011, p. 324.


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EU law, the Swiss legislature aimed at protecting consumers against the use of

abusive general terms and conditions in a more efficient way.9

In Turkey, the entry into force, on 1 July 2012, of both a new Commercial Code10

and a new Code of obligations (NTurCO)11 constitutes the two most crucial recent

legal developments. The legislature did not change the general structure of the

previous Codes, but made a certain number of significant modifications based

partially on the provisions set out by the abandoned Swiss draft bills and European

rules and principles.12 Such a broad reform impetus was necessary in order to

ensure a higher level of legal certainty, since judge-made law had overcome the

barriers imposed by the conceptual requirements of the previous legislation in

favour of a more functional approach.13

The new Commercial Code complies with the acquis communautaire concerning various practices of commercial companies, negotiable instruments, and insurance

contracts as well as the transparency requirements set forth by the Basel II-Revised

International Capital Framework. European law – defined in a broad way – has

also had some impact on the NTurCO. During its preparation, the Turkish legis-

lature drew inspiration from the Swiss Draft Project on the Revision and Unifi-

cation of Civil Liability (SwDP)14 and the Swiss Draft Project on the Revision of the

Rules on Warranty in Sales Contracts, which were ironically abandoned by the

Swiss Federal Council just before the adoption of the Turkish Code of obliga-

tions.15 Even if some Turkish authors criticised the draft version of the NTurCO,16

9 ERDEM BÜYÜKSAGIS, La bonne foi dans l’article 8 LCD: un remède à l’impuissance des

consommateurs face aux clauses générales ‘soi-disant’ négociées?, PJA/AJP 2012, p. 1393 ff.; JÖRG SCHMID, Die Inhaltskontrolle Allgemeiner Geschäftsbedingungen: Überlegungen zum neuen Art. 8 UWG, ZBJV 2012, p. 1 ff; HUBERT STÖCKLI, Der neue UWG 8 – Aufbruch oder perte d’une chance?, in Stephan Weber (ed), HAVE Personen-Schaden-Forum 2012, Zurich 2012, p. 200 ff.; PASCAL PICHONNAZ, Le nouvel art. 8 LCD - Droit transitoire, portée et conséquences, DC/BR 2012, p. 140 ff.

10 Official Gazette (Resmî Gazete), 14 February 2011, no 27846, available online at www.resmigazete.gov.tr/eskiler/2011/02/20110214-1-1.htm.

11 Official Gazette (Resmî Gazete), 4 February 2011, no 27836, available online at www.resmigazete.gov.tr/eskiler/2011/02/20110204-1.htm.

12 ERDEM BÜYÜKSAGIS, Le nouveau droit turc des obligations, Perspective comparative avec les droits suisse et européen, Basel 2014; idem. The New Turkish Tort Law, Journal of European Tort Law (JETL) 2012, p. 44, 46 and 88.

13 Id. at 88. 14 For the explanatory report, see PİERRE WİDMER & PİERRE WESSNER, Révision et unification du

droit de la responsabilité civile, Rapport explicatif, available online at www.bfm.admin.ch/ content/dam/data/wirtschaft/gesetzgebung/haftpflicht/vn-ber-f.pdf.

15 The Federal Department of Justice and Police’s Communication of 21 January 2009, available online at www.bj.admin.ch/content/bj/fr/home/dokumentation/medieninformationen/2009/ ref_2009-01-21.html; the Federal Department of Justice and Police’s Communication of 9 November 2005, available online at www.ejpd.admin.ch/content/ejpd/fr/home/dokumen-tation/mi/2005/2005-11-091.html.


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two main reasons explain why the abandoning of the SwDP did not have much

impact on the legislation process in Turkey. First, the time span between the

abandoning of the SwDP and the adoption of the NTurCO did not make it possible

to take all the criticism which was voiced in Switzerland into account.17 Second,

even if their formulations are based on the provisions set forth by the SwDP, most

of the new tort dispositions of the NTurCO are based on standards already

established by Turkish courts.18

Although abandoned in Switzerland, the SwDP influenced the Principles of Euro-

pean Tort Law (PETL) developed by the European Group on Tort Law, a group to

which belongs one of the ‘fathers’ of the SwDP, Professor Pierre Widmer. That is

why one can see the obvious parallel between the PETL19 and the tort provisions of

16 ERDEM BÜYÜKSAGIS, Quelques réflexions sur l’euro-compatibilité des dispositions du Projet

turc, in Bénédict Winiger (ed), La responsabilité civile européenne de demain, Geneva 2008, p. 121 ff; idem. Die Haftung aus unerlaubter Handlungen im Entwurf eines neuen türkischen Obligationenrechts REAS/HAVE 2006, p. 330 ff; AHMET M. KILIÇOĞLU, Türk Borçlar Kanunu Tasarısı’na Eleştiriler [Criticism of the Turkish Draft Code of Obligations], Ankara 2008; RONA

SEROZAN, Borçlar Kanunu Tasarısı Geri Çekilmelidir [The Draft Code of Obligations Should Be Withdrawn], Güncel Hukuk Dergisi 2005, p. 16 ff.

17 For criticism of the SwDP, see eg FRANZ WERRO, Quelques remarques sur l’avant-projet de la Loi fédérale sur la révision et l’unification du droit de la responsabilité civile, REAS/HAVE 2002, p. 14 ff; INGEBORG SCHWENZER, Der schweizerische Entwurf zur Reform des Haftpflicht-rechts, Eine kritische Stellungnahme, in Bénédict Winiger (ed.), fn 16, p. 77 ff.

18 For damage resulting from the practice of abnormally dangerous activities such as the exploi-tation of railway transportation, electrical supply installations, coal gas pipelines and mines, for instance, the Turkish Supreme Court has interpreted widely the specific rules set out for damage resulting from the inadequate maintenance of a construction. Besides, in the absence of a special rule of strict liability, courts have imposed on enterprises running dangerous commercial operations a heightened duty to avoid harm. The Supreme Court has, for example, held liable owners of base transceiver stations for cellular phones, classifying such stations as abnormally dangerous for people living nearby, although admitting that they are necessary for the good of society. Finally, the courts have considered dangerousness as a factor which is almost as relevant as misconduct in establishing liability (see ERDEM

BÜYÜKSAGIS (fn 12) p. 68-69). This jurisprudential intervention has, to some extent, eliminated the problem of discrimination between the victims of relatively similar accidents, but has not completely solved it. In light of these developments, Article 71 NTurCO, which extends the scope of strict liability to all dangerous activities not covered by special rules, can be seen as the codification of the courts’ efforts to make fault-based liability stricter in certain circumstances and the articulation of the principle of equity. For a recent study on this topic from a comparative perspective see ERDEM BÜYÜKSAGIS & WILLEM H. VAN BOOM, Strict Liability in Contemporary European Codification: Torn between Objects, Activities, and their Risks, Georgetown Journal of International Law 2013, p. 609 ff.

19 European Group on Tort Law, Principles of European Tort Law, Text and Commentary, Wien 2005. For an overview, see BERNHARD A. KOCH, Principles of European Tort Law, King’s Law Journal 2009, p. 203 ff. For a Turkish translation of the PETL, see ERDEM BÜYÜKSAGIS, Yeni Sosyo-Ekonomik Boyutuyla Maddi Zarar Kavramı [The Concept of Damage in its New Socio-Economic Dimension], Istanbul 2007, p. 453 ff.


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the NTurCO.20 However, except with respect to the tort provisions, the Turkish

Working Commission and the legislature overlooked the European model rules,

whose conceptual structure could have brought innovative solutions particularly

to some current issues of Turkish contractual law.21

The impact of European law on the new Swiss product safety regulation,22 on the

new Swiss law of unfair competition23 as well as on the new Turkish private law24

has already been analysed in various scientific publications. As already noted, I

will focus here on another way in which European law has influenced Swiss and

Turkish laws: the criteria taken into consideration to assess abuse of dominant

position cases.

3. The impact of recent developments in European competition law on the protection of competition and consumers in Switzerland and Turkey

At the European level, as a reaction to the doctrinal call for coherency, various pro-

posals have been put forward to establish some concrete standards to determine

how the potential anti-competitive effects of conduct should be assessed. One of

these proposals is the effects-based approach, which is modeled upon economic

theories and definitions (3.1.).25 The consistency of Swiss and Turkish laws with

the new ‘effects-based approach’ is a question which needs to be addressed (3.2.).

20 ERDEM BÜYÜKSAGIS, Extracts from the New Turkish Code of Obligations, Journal of European

Tort Law (JETL) 2012, p. 90 ff. 21 Take the issue of the modification of statutory provisions establishing time-limitations.

According to Article 148 NTurCO, the requirements for time-limits may, as in the previous Code, not be modified by agreement between the contracting parties. However, the European tendency is to allow parties to do that. See Article III.-7:601 of the Draft Common Frame of Reference (DCFR). See also Article 134 of the Swiss Revision of Prescription, Federal Depart-ment of Justice and Police, 31 August 2011, available online at www.bj.admin.ch/content/ bj/de/home/dokumentation/medieninformationen/2011/ref_2011-08-31.html. On this topic see FRANZ WERRO, Vers la révision du droit de la prescription, une appréciation critique de l’avant-projet, REAS/HAVE 2012, p. 70 ff; PASCAL PICHONNAZ, La renonciation à la prescription des réformes proposées par l’avant-projet de révision de la prescription, REAS/HAVE 2012, p. 79, 84; ERDEM BÜYÜKSAGIS, Le nouveau CO turc est-il toujours attaché à ses racines suisses? Analysée à la lumière du principe européen d’effectivité, une réponse particulière-ment intéressante en matière de prescription extinctive, REAS/HAVE 2012, p. 44, 49.

22 ERDEM BÜYÜKSAGIS (fn 3) p. 29 ff; WALTER FELLMANN/ANDREAS FURRER (fn 2). 23 ERDEM BÜYÜKSAGIS (fn 9) p. 1393 ff; HUBERT STÖCKLI (fn 9) p. 199 ff; JÖRG SCHMID (fn 9) p. 1 ff. 24 ERDEM BÜYÜKSAGIS (fn 12) p. 44 ff; idem. (fn 21) p. 44 ff. 25 RICHARD WHISH & DAVID BAILEY, Competition Law, 7th edit., Oxford 2012, p. 208 ff; CARLES E.

MOSSO, The More Economic Approach Paradigm – An Effects-based Approach to EU Competition Policy, in Jürgen Basedow/Wolfgang Wurmnest (eds.), Structure and Effects in


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3.1. EU regulations and practice

The new principles were launched in the EU Guidance on the Commission’s en-

forcement priorities in applying Article 102 of the Treaty of the European Union

(TFEU).26 In light of these new principles, I will first examine Article 102 TFEU,

which governs the abuse of dominant position (3.1.1.), before talking about the

practices which, although presumptively abusive, in fact do not amount to a

violation of Article 102 TFEU because of their ‘objective justification’ (3.1.2.).

3.1.1. The background and objectives of Article 102 TFEU

Article 102 TFEU has been applied to achieve a variety of goals.27 There is a ten-

dency to move away from protecting competitors, as such, towards protecting con-

sumer interests (3.1.1.1.). It is thus important to have a comprehensive vision of

what the notion of ‘consumer protection’ means (3.1.1.2.).

3.1.1.1. From the protection of competition to the protection of consumers

European institutions first tried to promote the creation of a well-functioning

single European market.28 The Court of Justice of the European Union (CJEU) ex-

pressed this already in 1966 in Consten and Grundig.29

EU Competition Law: Studies on Exclusionary Conduct and State Aid, Alphen aan den Rijn 2011, p. 11, 13 ff.

26 Commission’s Guidance on the Commission’s Enforcement Priorities in Applying Article 82 of the EU Treaty to Abusive Exclusionary Conduct by Dominant Undertakings [2009] OJ C45/7.

27 On which see recently PINAR AKMAN, The Concept of Abuse in EU Competition Law, Oxford 2012, p. 50 ff.

28 RENATO NAZZINI, The Foundations of European Union Competition Law, The Objective and Principles of Article 102, Oxford 2011, p. 135; LIZA L. GORMSEN, Article 82 EU: Where are we coming from and where are we going to?, The Competition Law Review 2006, p. 5, 7.

29 Joined Cases 56/64 and 58/64 Etablissements Consten SàRL and Grundig-Verkaufs-GmbH v Commission [1966] ECR 340. In this case from 1966, dealing with the applicability of Article 101 TFEU to vertical agreements, the Court reiterated that an agreement between producer and distributor which might tend to restore the national divisions in trade between Member States might be such as to frustrate the most fundamental objectives of the Community. The Treaty, whose Preamble and content aim at abolishing the barriers between States, and which in several provisions gives evidence of a stern attitude with regard to their reap-pearance, could not allow undertakings to reconstruct such barriers. Article 101(1) TFEU is designed to pursue this aim, even in the case of agreements between undertakings placed at different levels in the economic process ». See also Case C-126/97 Eco Swiss China Time Ltd v. Benetton International NV [1999] ECR I-3055, [2000] 5 CMLR 816, para. 36; Case T-168/01 GlaxoSmithKlineServices v. Commission [2006] ECR II-2969, para. 118. It is worth remem-bering that Article 101 TFEU, which governs the conduct of multiple undertakings that have agreed to group together, and 102 TFEU, which governs the conduct of individual under-takings exercising market power, pursue the same aims, albeit on a different level. See Case 6/72 Europemballage & Continental Can v. EV Commission [1973] ECR 215 [1973] CMLR 199. para. 25.


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Nevertheless, in the following years, instead of presenting competition as a means

of advancing the common market, the CJEU formulated the objectives of compe-

tition law in a way that conceptualizes competition and market integration as ser-

ving a common end. In Commercial Solvents, the Court stated that «[…] an under-

taking being in a dominant position as regards the production of raw material and

therefore able to control the supply to manufacturers of derivatives cannot […]

act in such a way as to eliminate their competition which, in the case in question

would have amounted to eliminating one of the principal manufacturers of

ethambutol in the Common Market […] An undertaking which has a dominant

position in the market in raw materials […] refuses to supply a customer […] risks

eliminating all competition on the part of this customer, is abusing its dominant

position within the meaning of Article [102] TFEU».30 Later on, in the 1999 White

Paper on the modernization of EU competition law, the EU Commission officially

declared the policy change and adopted the political framework which promotes

rivalry: «At the beginning the focus of [the Commission’s] activity was on establi-

shing rules on restrictive practices interfering directly with the goal of market

integration […] The Commission has now come to concentrate more on ensuring

effective competition by detecting and stopping cross-border cartels and main-

taining competitive market structures».31 The ordoliberal school of thought put

forward mainly by the German University of Freiburg professors played a role in

that policy change32 aiming at equating an abuse with a restriction of economic

freedom.33 The principle of ordoliberalism - ‘ordo’ refering to ‘order’ - is opposed to monopoly, not because of its harmful effects on consumers, but because of its

coercive effects on private economic power.34

The great reform of the enforcement of EU competition law which took place in

2004 changed one more time the European competition policy based on the

30 Cases C-6/73 and C-7/73 Istituto chemioterapico italiano and Commercial Solvents v.

Commission [1974] ECR 223, para. 25. 31 White Paper on modernization of the rules implementing Articles 81 and 82 of the EU Treaty

[1999] OJ C132/1, [1999] 5 CMLR 208. 32 PHILIP MARSDEN, Some Outstanding Issues from the European Commission’s Guidance on

Article 102 TFEU: Not-so-faint Echoes of Ordoliberalism, in Frederico Etro/Ioannis Kokkoris (eds.), Competition Law and the Enforcement of Article 102, Oxford 2010, p. 53, 54; CHRISTIAN

AHLBORN & CARSTEN GRAVE, Walter Eucken and Ordoliberalism: An Introduction from a Consumer Welfare Perspective, Competition Policy International (CPI) 2006, p. 197, 206.

33 See also Case 6/72 Europemballage & Continental Can v. EV Commission [1973] ECR 215 [1973] CMLR 199. para. 12: «[…] abuse may therefore occur if an undertaking in a dominant position strengthens such position in such a way that the degree of dominance reached sub-stantially fetters competition, i.e. that only undertakings remain in the market whose beha-viour depends on the dominant one […] it can […] be regarded as an abuse if an undertaking holds a position so dominant that the objectives of the Treaty are circumvented by an altera-tion to the supply structure which seriously endangers the consumer’s freedom of action in the market such a case necessarily exists if practically all competition is eliminated».

34 LIZA L. GORMSEN (fn 28), p. 9 ff.


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authoritarian liberal project that ordoliberalism favours and placed the protection

of consumers squarely at the heart of EU competition law discourse.35 Neelie

Kroes, who took up office as Competition Commissioner in 2004, announced the

new goal: ensuring efficiency and consumer protection. On 15 September 2005, in

a speech at the European Consumer and Competition Day in London, she stated:

«Consumer welfare is now well established as the standard the Commission ap-

plies when assessing mergers and infringements of the Treaty rules on cartels and

monopolies. Our aim is simple: to protect competition in the market as a means of

enhancing consumer welfare and ensuring an efficient allocation of resources. An

effects-based approach, grounded in solid economics, ensures that citizens enjoy

the benefits of a competitive, dynamic market economy».36 Even if, in her speech,

the Commissioner referred mainly to the rules governing vertical integration, the

application of the effects-based approach is not limited to Article 101 TFEU.

On 3 December 2008, the EU Commission’s Directorate General for Competition

published a Guidance on the Commission’s Enforcement Priorities in Applying

Article 102 TFEU to Abusive Exclusionary Conduct by Dominant Undertakings37

and thereby adopted an approach which goes beyond the application of Article

101 TFEU: «Dominant undertakings do not impair effective competition by fore-

closing their competitors in an anticompetitive way, thus having an adverse

impact on consumer welfare – either at the intermediate level or at the level of

final consumers –, whether in the form of higher price levels than those which

would have otherwise prevailed or in some other form such as limiting quality or

reducing consumer choice».38 This statement came just a few days after the publi-

cation of the US Department of Justice’s Report39 favouring a similar approach

based on the disproportionality test for cases which do not fit in a specific sub-

category that calls for a specific rule.40

35 See eg Council Regulation 1/2003 [2003] OJ L1/1 and the accompanying secondary legislation

and Notices. 36 European Consumer and Competition Day, 15 September 2005 London, available online via

http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/05/512&format=HTML&aged=0&language=EN&guiLanguage=en.

37 Guidance (fn 26) on which see ARIEL EZRACHI, The Commission’s Guidance on Article 82 EU and the Effects Based Approach – Legal and Practical Changes, in Ariel Ezrachi (ed), Article 82 EU, Reflections on its Recent Evolution, Oxford 2009, p. 51 ff; PHILIP MARSDEN (fn 32), p. 53 ff.

38 Id. para. 19. For some authors, the Guidance has no binding effect on the EU Courts, but it provides a «useful point of reference». See RICHARD WHISH & DAVID BAILEY (fn 25), p. 177. In his opinion in TeliaSonera, Advocate General Mazák also defended this idea. See the Opinion delivered on 2 September 2010, C-52/09, ECR [2011] 00000, para. 21.

39 The United States Department of Justice, ‘Competition & Monopoly: Single-Firm Conduct under Section 2 of The Sherman Act’ (2008) 45 ff, available online via www. usdoj. gov/atr/public/reports/236681.pdf.

40 Today, the US Report is no longer a reference since it has been put aside. For further information, see HOWARD ROSENBLATT & HECTOR ARMENGOD, Lessons from a Death Report, in


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The new framework is based upon modern economic theories and definitions and

makes provision for a shift from the formalistic per se view of abusive dominant

positions to a rule of reason approach as well as a shift from the protection of com-

petition towards the protection of consumers.41 At the European level, the Com-

mission wants to avoid that the application of the formalistic approach results in

the condemnation of competitive behaviour which has no harmful effects on con-

sumer interests.42

3.1.1.2. The notion of consumer protection

I will first define the notion of consumer protection (a). Then I will deal with the

question of whether the reference to that notion can implement an efficient com-

pensatory system which could replace the traditional in abstracto – or normative –

view by the ‘rule of reason’ approach and whether such a step would be compa-

tible with the CJEU’s case law (b).

a. Definition

Even though consumer protection is defined neither by the Commission nor by the

CJEU,43 Article 169(1) TFEU refers to that notion, stating that «[the EU promotes]

a high level of consumer protection [through] protecting the health, safety and

economic interests of consumers». Therefore, consumer protection can be defined in terms of the consumers’ interests to products and services in a given area in light

of the presence of demand and supply substitutability. When such interests are

harmed, consumer welfare suffers.44

Neither harm to consumers nor inefficiencies created by market failures are

included in the criteria provided by Article 102 TFEU.45 However, in the Guidance,

Carl Baudenbacher (ed), Current developments in European and international competition law: 16th St. Gallen International Competition Law Forum ICF 2009, Basel/Geneva/Munich 2010, p. 215, 220.

41 CARLES E. MOSSO (fn 25), p. 13 ff; MARC AMSTUTZ/MANI REINERT, Erfasst Art. 4 Abs. 2 KG auch die überragende Marktstellung und die relative Marktmacht?, sic! 2005, p. 547 ff; MARC

AMSTUTZ & MANI REINERT, Vertikale Preis- und Gebietsabreden – eine kritische Analyse von Article 5 Abs. 4 KG, in Walter A. Stoffel/Roger Zäch, Die Kartellgesetzrevision 2003, Neue-rungen und Folgen, Zurich/Basel/Geneva 2004, p. 77 ff.

42 RICHARD WHISH & DAVID BAILEY (fn 25) p. 175. 43 European courts sometimes refer to the notion of ‘welfare of the final consumers’, although

without defining it. See eg Case T-168/01 GlaxoSmithKline Services v. Commission [2006] ECR II-2969, para. 118.

44 ROLAND BIEBER et al., Die Europäische Union: Europarecht und Politik, 7th edit., Baden-Baden 2006, p. 502 f.

45 However, the word ‘consumer(s)’ regularly appears in the text of the competition rules themselves. First, according to Article 101(3) of the Treaty on the Functioning of the European Union (TFEU), a restrictive agreement may escape prohibition if it contributes to improving the production or distribution of goods or promoting technical or economic progress while, inter alia, ‘allowing consumers a fair share of the resulting benefit’. Secondly, Article 102,


199

by including them in the assessment of possible abusive conduct, the Commission

defines efficiency and consumer protection as aims of its consumer policy in addi-

tion to the protection of competition itself.46 Hence, the Commission directly ad-

dresses the specific effects of particular conduct on the assessment of abuse

instead of relying only upon abstract assumptions.47 Accordingly, consumer harm

in the form of significantly higher prices, lower output and/or reduced quality

should be an essential element in the determination of whether abusive conduct

and efficiency effects brought about by such conduct could counterbalance its

harmful effects. Innovation can also be a relevant factor in the assessment of

whether the dominant firm’s practices are likely to have a material adverse effect

on consumer protection.

Even if consumer harm generally results from a restriction in output and is usually

associated with an increase in price and/or reduction in quality,48 increasing the

price without reducing the output is sometimes also considered as harmful. Such a

situation comes about, in large part, because of a pricing strategy that charges cus-

tomers different prices for the same product or service. There are other situations

where consumers are harmed, often indirectly. In its Commercial Solvents judg-ment, the CJEU confirms that «Article [102] covers abuse which may directly pre-

judice consumers as well as abuse which indirectly prejudices them by impairing

the effective competitive structure».49

which prohibits any abuse by undertakings of a dominant position, contains a (non-ex-haustive) list of examples of abuses. The second of these (Article 102(b) TFEU) is “limiting production, markets or technical development to the prejudice of consumers”. Third consu-mers feature in the Merger Regulation (Council Regulation No. 139/2004), Article 2 (1) (b) of which says that in appraising a merger the Commission shall take into account, inter alia, ‘[…] the interests of the intermediate and ultimate consumers, and the development of technical and economic progress provided that it is to consumers’ advantage and does form an ob-stacle to competition’.

46 ROGER ZÄCH, Wettbewerbsfreiheit oder Konsumentenwohlfahrt als Zweck des Kartell-gesetzes?, Schranken des Rechts, in Roger Zäch (ed), Schweizerisches Kartellrecht an Wen-depunkten?, Zurich/St. Gall 2009, p. 12.

47 ERIC ØSTERUD, Identifying Exclusionary Abuses by Dominant Undertakings under EU Competition Law: The Spectrum of Tests, Alphen aan den Rijn 2010, p. 307.

48 RENATO NAZZINI (fn 28), p. 257 ff; MICHAEL ADAM & FRANK P. MAIER-RIGAUD, The Law and Economics of Article 82 EU and the Commission Guidance Paper on Exclusionary Conduct, ZWeR 2009, p. 131, 137.

49 Cases C-6/73 and C-7/73 Istituto chemioterapico italiano and Commercial Solvents v. Commission [1974] ECR 223. It is worth adding that the Commission’s objective of avoiding conduct, which prevent the maximization of wealth, based on the assumption that consumer welfare could be maximized when total surplus - the amount that consumers save by being able to purchase a product for a price that is less than the highest amount they would be willing to pay - is maximized. See ROBERT O’DONOGHUE, Verbalizing a General Test for Exclu-sionary Conduct under Article 82 EU, in Claus-Dieter Ehlermann/Mel Marquis (eds.), European


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In light of these explanations, I can conclude that, according to the consumer wel-

fare based approach, conduct should be condemned as abusively exclusionary un-

der Article 102 TFEU only where it could be proved that the behaviour in question

has had, or is likely to have, harmed consumers. However, a dominant firm that is

able to defeat its rivals as a result of its greater efficiency ought not to be condem-

ned as acting abusively.

In case of condemnation, the Commission can impose a fine, as occurred in Micro-soft50 and Intel.51 Besides, according to Article 7 of Regulation 1/2003, the Com-

mission has explicit power to impose structural remedies. Finally, the injured

party may bring an action for an injunction and/or damages in a national court.52

b. The ‘rule of reason’ approach

Article 102 TFEU prohibits unilateral conduct of a dominant undertaking that

amounts to an abuse. At the European level, the notion of an undertaking covers

every entity engaged in an economic activity. Thus, entities, which are not invol-

ved in an economic activity, are not considered as an ‘undertaking’ for the pur-

poses of Article 102 TFEU, although their members carry out such activity.53

In the abuse assessment, the judge should first assess whether an undertaking en-

gaged in an economic activity has a dominant position. The CJEU defines domi-

nance as a position of economic strength enjoyed by an undertaking that enables it

to prevent effective competition being maintained on the relevant market by

giving it the power to behave to an appreciable extent independently of its compe-

titors, customers, and consumers (see the CJEU’s judgment in United Brands).54

Competition Law Annual 2007: A Reformed Approach to Article 82 EU, Oxford 2008, p. 327, 337.

50 Case T-201/04 Microsoft v. Commission [2007] ECR II-03601. 51 Case T-286/09 Intel v. Commission [2009] ECR II-12. 52 RICHARD WHISH & DAVID BAILEY (fn 25), p. 177. 53 In Wouters, the CJEU decided that the Dutch Bar does not qualify as an undertaking even if,

for the purposes of Article 101, its individual members are undertakings. See Case C-309/99 Wouters v. Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577, para. 112. In general, whether the undertaking which is involved in a commercial activity is state-owned or not does not play any role in the application of Article 102 TFEU. See Case C-113/07 SELEX Systemi Integrati SpA v. Commission [2009] ECR 000; Case C-49/07 Motosykletistiki Omospondia Ellados NPID (MOTOE) v. Ellinkio Dimosi [2008] ECR I-4863. The reason is that, according to Article 4(3) Treaty on European Union (TEU) and Article 106(1) TFEU, the fact that an undertaking’s market power has been created by State action is no defence to an action based on Article 102. Article 106(2) TFEU creates an exception to this rule: «undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the [competition] rules, [unless] such rules obstruct the performance, in law or in fact, of the particular tasks assigned to them».

54 See recently Case C-52/09 Konkurrensverket v TeliaSonera Sverige AB [2011] OJ C103/3, para. 23. See also Case C-280/08 P Deutsche Telekom AG v Commission [2010] OJ C346/4,


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Hence, a finding of dominance involves a two-level assessment: determining the

relevant market and determining what is meant by a dominant position.

The dominant position must be held within the internal market or within a sub-

stantial part of it. In Suiker Unie, in order to define what ‘substantial’ means, the

CJEU took into consideration the habits and economic opportunities of vendors

and purchasers: «[f]or the purpose of determining whether a specific territory is

large enough to amount to a ‘substantial part of the common market’ within the

meaning of Article [102 TFEU] the pattern and volume of the production and

consumption of the said product as well as the habits and economic opportunities

of vendors and purchasers must be considered».55

Therefore, a substantial part of the internal market does not simply mean sub-

stantial in geographic terms. In many cases involving particularly maritime trans-

portation, when consumer interests were of concern, the EU Commission consi-

dered relatively small areas as substantial. Take the Port of Roscoff judgment: «The

market for the supply of port services does not exist in isolation. If there was no

demand from consumers for transport services, there would be no demand for

port services from ferry operators. The market for transport services between

Ireland and Brittany must therefore be taken into account. The port services in

Brittany are essential for the operation of ferry services between a Member State,

Ireland, to which can be added part of another Member State, Northern Ireland

(around five million inhabitants in total), and an important region of another

Member State, Brittany (around three million inhabitants). These three regions

form a substantial part of the common market. For Ireland, also, the port of Ros-

coff is an important entry point to the continent and the rest of the Community. It

is already used by 25 per cent of ferry passengers between Ireland and France each

year».56

para. 170; Case T-321/05 AstraZeneca AB v Commission [2010] OJ C 221/33, para. 239. In the literature, see RENATO NAZZINI (fn 28), p. 327.

55 Joined cases 40–8, 50, 54–6, 111, 113, and 114/73 Coöperatieve Vereniging ‘Suiker Unie’ UA v. Commission [1975] ECR 1663, para. 371.

56 Irish Continental Group v. CCI Morlaix [1995] 5 CMLR 177. In Merci Convenzionali, a similar approach has been adopted by the CJEU, although the Court based its reasoning on ‘effective competition’. In the dominance assessment, the Court took into consideration the volume of traffic handled by the port of Genoa and held that the market «may be regarded as consti-tuting a substantial part of the common market». This interpretation requires that the do-minant undertaking must be able to harm competition on interstate trade. Case C-179/90 Merci Convenzionali Porto di Genova SpA v. Siderurgica Gabrielli SpA [1991] ECR I-5889, para. 15. See also Case C-266/96 Corsica Ferries France SA v. Gruppo Antichi Ormeggiatori del Porto di Genova [1998] ECR I-3949, para. 38.


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Article 102 TFEU does not prohibit the dominance of the market by an under-

taking, but its abuse.57 In the literature, a distinction is commonly made between

‘exploitative’ and ‘exclusionary’ abuses. At first glance, a literal reading of Article

102 TFEU suggests that it only governs exploitative abuses.58 An exploitative abuse is conduct whereby the dominant undertaking takes advantage of its market

power to exploit its customers. However, in its Continental Can judgment, the

CJEU ruled that an exclusionary abuse is also subject to the prohibition.59 For the purpose of identifying an abuse, it is not required to prove that the undertaking

acted deliberately or in bad faith.60 Rather, it is sufficient to establish that such

exclusionary conduct impedes effective competition by excluding competitors.

In particular, the assessment of exclusionary abuses is a complex task for courts

and regulators. Since there is no single explanation for such an abuse, the ap-

proach towards appeals in Article 102 TFEU cases suggests that the potential abu-

sive conduct is assessed as a matter of policy.61 Since the EU Commission’s policy

has evolved over time, the criteria for a conduct to be qualified as abusive have

also evolved. It is possible to draw two principles from the CJEU’s decisions. First,

it is not an abuse itself for an undertaking to be dominant on the relevant market.

Such undertakings may gain market share at the expense of other undertakings on

the same market. Normal competition in products or services on the basis of the

transactions of commercial operators62 or competition on the merits63 is not an

abusive practice. Second, some practices that are generally considered as neutral

may be found abusive when adopted by a dominant undertaking. In Michelin I, the Court considered that the strong preference of Dutch dealers for Michelin tyres,

due to their superior technology and the wider range of Michelin products com-

pared to its competitors’ ranges, meant that «a dealer established in the Nether-

lands normally cannot afford not to sell Michelin tyres». The reason is that a domi-

57 However, in the literature, some authors argue that «the link between the abuse and the

dominant position that is required to establish a prohibition has become increasingly looser over time». See JEAN-YVES ART & PABLO IBANEZ COLOMBO, Judicial Review in Article 102 TFEU, in Frederico Etro/Ioannis Kokkoris (eds.), Competition Law and the Enforcement of Article 102, Oxford 2010, p. 99, 100. The authors quote as example the following cases: Case C-333/94, Tetra Pak v Commission (Tetra Pak II) [1996] ECR II-5951 and Case T-321/05 AstraZeneca v Commission [2010] OJ C 221/33.

58 RICHARD WHISH & DAVID BAILEY (fn 25), p. 202. 59 Case 6/72 Europemballage & Continental Can v. EV Commission [1973] ECR 215 [1973] CMLR

199. 60 Case T-321/05 AstraZeneca v Commission [2010] OJ C 221/33, para. 356. 61 RICHARD WHISH & DAVID BAILEY (fn 25), p. 192; JEAN-YVES ART & PABLO IBANEZ COLOMBO (fn 57),

p. 101. 62 Case C-85/76 Hoffmann-La Roche v Commission [1979] ECR 461, para. 91. 63 Case T-228/97 Irish Suger v Commission [1999] ECR II-2969, para. 111.


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nant undertaking has a special responsibility «not to allow its conduct to impair

genuine undistorted competition on the common market».64

An important question at this stage is whether the European courts assess the

potentially abusive practices in abstracto or in concreto on the basis of its actual impact in the specific market context in which it applies.65 In Hoffmann-La Roche, the CJEU considered loyalty rebates abusive because, according to the Court, such

a practice leads to the application of different prices to customers purchasing the

same quantities from the dominant undertaking and is designed to deny other

producers access to the market.66 The Court did not say much about the concrete

effects on the market of the conduct in question. However, the EU Courts have

recently tended to adopt a more concrete approach based on the ‘harm to

consumers’ criterion. Just one year after the Competition Commissioner Neelie

Kroes’s famous speech announcing that efficiency and consumer protection were

now the main goals of the new EU competition policy, in September 2006, in

GlaxoSmithKline, the EU General Court67 (CFI at that time) stated: «The objective

of the Community […] is to prevent undertakings, by restricting competition

between themselves or with third parties, from reducing the welfare of the final

consumer of the products in question […]».68 In a similar way, in Österreichische Postsparkasse AG, the General Court referred directly to the welfare of end-con-sumers.69

In Oscar Bronner,70 in his Opinion on which the CJEU based its decision, Advocate General Jacobs explains the reasons of this policy shift from an in abstracto to an in concreto approach based on the consumer welfare criterion: «In the long term it is

generally pro-competitive and in the interest of consumers to allow a company to

retain for its own use facilities which it has developed for the purpose of its

business. For example, if access to a production, purchasing or distribution facility

were allowed too easily, there would be no incentive for a competitor to develop

competing facilities. Thus while competition was increased in the short term it

would be reduced in the long term. Moreover, the incentive for a dominant under-

taking to invest in efficient facilities would be reduced if its competitors were,

upon request, able to share the benefits. Thus the mere fact that by retaining a

64 Case 322/81 Michelin v Commission (Michelin I) [1983] ECR 3461, para. 57. 65 JEAN-YVES ART & PABLO IBANEZ COLOMBO (fn 57), p. 102. 66 Case C-85/76 Hoffmann-La Roche v Commission [1979] ECR 461 para. 90. 67 The EU General Court is a jurisdictional instance of the CJEU. 68 Case T-168/01 GlaxoSmithKline Services v. Commission [2006] ECR II-2969, para. 118. 69 Joined Cases T-213/01 and T-214/01 Österreichische Postsparkasse AG and Bank für Arbeit

und Wirtschaft AG v Commission [2006] ECR II-1601, para. 103. 70 Case C-7/97 Oscar Bronner GmbH & Co. KG v Mediaprint Zeitungs- und Zeitschritenverlag

GmbH & Co KG [1998] ECR I-7791, [1999] 4 CMLR 112.


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facility for its own use a dominant undertaking retains an advantage over a com-

petitor cannot justify requiring access to it».71

Despite the EU Commission’s effort and some decisions of the CJEU in favour of

the ‘consumer harm’ criterion, it is too early to observe the extent to which this

approach will have an impact on the future of EU competition law.72 However, one

can expect that the impact on the application of Article 102 TFEU of the new com-

petition policy based on consumer interests will be felt more severely in the

coming years. Conduct having an appreciable effect on the `structure of compe-

tition` within the common market by, for instance, driving less efficient compe-

titors out of business should no longer be considered abusive, if it does not harm

consumers by affecting the price and quality of products.73 In accordance with the

EU Guidance, the recent case law of the CJEU has the tendency to consider abusive

«conduct of a dominant undertaking that, through recourse to methods different

from those governing normal competition on the basis of the performance of

commercial operators, has the effect, to the detriment of consumers, of hindering

the maintenance of the degree of competition existing in the market or the growth

of that competition».74 As some authors already observed, «this new emphasis

makes clear that a proper assessment of the conduct’s impact on competition can-

not depend on the narrow question of whether the degree of competition is redu-

ced (or that it would have increased faster but for the contested behaviour); ra-

ther, the assessment must consider how the reduction (or the artificial non-

growth) of competition harms consumers».75

3.1.2. Defences

According to the EU Guidance,76 if it is truly necessary for a firm to adopt conduct

which has had or is likely to have significant anti-competitive effects, such conduct

cannot be seen as an infringement. The necessity is based on «a weighing-up of

any apparent anticompetitive effects [of the conduct] against any advanced and

substantiated efficiencies» favouring consumer protection.77 Hence, a dominant

71 Opinion of Advocate General Jacobs in Oscar Bronner GmbH & Co. KG v Mediaprint Zeitungs-

und Zeitschritenverlag GmbH & Co KG, delivered on 28 May 1998, para. 57, available online via http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:61997C0007:EN:HTML.

72 LIZA L. GORMSEN, A Principled Approch to Abuse of Dominance in European Competition Law, Cambridge 2010, p. 75.

73 DAMIEN GERADIN, The Decision of the Commission of 13 May 2009 in the Intel case: Where is the Foreclosure and Consumer Harm?, Journal of European Competition Law and Practice (JECLAP) 2010, p. 112, 117 ff.

74 Case C-209/10 Post Danmark A/S v Konkurrencerådet [2012] ECR I-0000, para. 24. 75 EKATERINA ROUSSEVA & MEL MARQUIS, Hell Freezes Over: A Climate Change for Assessing

Exclusionary Conduct under Article 102 TFEU, JECLAP 2012, p. 1, 11. 76 Guidance (fn 26) para. 28 ff. 77 Id. para. 31.


205

position which has an appreciable adverse effect on competition allowing the

company to refuse to supply in full the orders of wholesalers, for instance, cannot

necessarily be qualified as abusive, if such a refusal can be considered necessary.

In its Guidance, the Commission states that necessity should be based on health or

safety considerations.78 These factors are external to the dominant undertaking. In

Hilti79 and Tetra Pak II,80 the General Court made it clear that setting and enfor-

cing health or safety considerations are among the Commission’s tasks. Moreover,

arguments to the effect that conduct which apparently forecloses competitors can

be defended on efficiency grounds. The Commission stipulates four cumulative

conditions which have to be met before an efficiency defence could succeed: 1) the

efficiencies have to be realised, or likely to be realised, as a result of the conduct in

question; 2) the conduct has to be indispensable to the realisation of those effi-

ciencies; 3) the efficiencies have to outweigh any negative effects on competition

and consumer protection in the affected markets; and 4) the conduct must not eli-

minate all effective competition.81

According to European judge-made law, defences based on either necessity or

efficiency considerations should be assessed according to the proportionality prin-

ciple. The CJEU’s British Airways judgment offers an example of the application of

the proportionality test. The EU General Court had first perceived bonus schemes

set up by British Airways to entice travel agents to maintain or increase their sales

of British Airways tickets as an illegal barrier to companies competing against Bri-

tish Airways on the UK air transport market as well as a barrier preventing co-con-

tractors «to choose between various sources of supply or commercial partners».82

The CJEU then confirmed the General Court’s application of the disproportionality

test which has to determine «whether the exclusionary effect arising from such a

system, which is disadvantageous for competition, may be counterbalanced, or

outweighed, by advantages in terms of efficiency which also benefit the custo-

mer».83 A very similar approach has also been adopted by the EU Commission. In

its recent Intel decision, referring to British Airways, the Commission stated that

«in order to objectively justify its conditional rebates, Intel would have to show

that there is an efficiency […], that the conduct is capable of achieving the legiti-

mate goal, that it had no equally effective alternative in achieving the legitimate

goal with a less restrictive or less exclusionary effect and finally that the conduct is

78 Id. para. 29. 79 Case T-30/89 Hilti AG v Commission [1991] ECR II-1439, [1992] 14 CMLR 16, paras. 347-390. 80 Case T-83/91 Tetra Pak International SA v Commission [1994] ECR II-755, [1997] 4 CMLR 726,

paras 136-140. 81 See also RICHARD WHISH & DAVID BAILEY (fn 25), p. 212. 82 Case T-219/99 British Airways v. Commission [2003] ECR II-5917. 83 Case C-95/04 British Airways v. Commission [2007] ECR I-2331, para. 30.


206

‘proportionate’, in the sense that the legitimate objective pursued by Intel should

not be outweighed by the exclusionary effect».84

These decisions are based on the concrete circumstances of the case assuming that

a conduct that raises obstacles to competition and thus creates no advantages in

terms of efficiencies which benefit the consumer is anti-competitive. Therefore,

the success of an efficiency plea depends on whether a conduct’s net effect for con-

sumers is positive or negative.85

3.2. Swiss and Turkish regulations and practice compared to EU law

First I will study Swiss and Turkish regulations and practice (3.2.1.), and then

present some comparative reflexions referring to the impact of EU law on these

regulations and practice (3.2.2.)

3.2.1. Swiss and Turkish regulations and practice

It is beyond this contribution’s scope to discuss Swiss and Turkish regulations and

practice at length. However, in order to point out the features they share and those

that distinguish them, without going into detail, I examine the main points of

Swiss (3.2.1.1.) and Turkish (3.2.1.2.) rules on abuse of dominant position and

some representative cases on this subject.

3.2.1.1. Swiss regulation and practice

After reviewing Article 7 of the Federal Act on Unfair Competition (ACart) and

some other related rules which govern the abuse of dominant position (a), I will

consider the question of what is meant by objective justification in Swiss law (b).

a. The Article 7 ACart criteria

According to its Article 2(1), ACart «applies to private or public undertakings that

are parties to cartels, or to other agreements affecting competition, that exercise

market power or that participate in concentrations of undertakings». Thus, as in

EU law,86 the application of competition rules is neutral as to the ownership and

organizational form of undertakings (see Publigroupe).87

Article 49a ACart states that «any undertaking that participates in an unlawful

agreement pursuant to Article 5 paragraphs 3 and 4 or that behaves unlawfully

84 Case T-286/09 Intel v. Commission [2009] ECR II-12. 85 ERIC ØSTERUD (fn 47), p. 279. 86 Supra 3.1.1.2. 87 Comco, Publigroupe, DPC/RPW 2007/2, N. 60, p. 199 on which see ROLF H. WEBER & MICHAEL

VLCEK, Kartellrecht, Entwicklungen 2010, Bern 2011, p. 52 ff. See also the decision of the Swiss Federal Supreme Court (ATF) 137 II 199 (consid. 3.1).


207

pursuant to Article 7 shall be charged up to 10 per cent of the turnover that it

achieved in Switzerland in the preceding three financial years […] The amount is

dependent on the duration and severity of the unlawful behaviour. Due account

shall be taken of the likely profit that resulted from the unlawful behaviour».

Article 7 ACart provides criteria for a practice to be considered abusive:

“Dominant undertakings behave unlawfully if they, by abusing their position in the market,

hinder other undertakings from starting or continuing to compete, or disadvantage trading

partners.

The following behaviour is in particular considered unlawful:

a. any refusal to deal (eg refusal to supply or to purchase goods);

b. any discrimination between trading partners in relation to prices or other conditions of

trade;

c. any imposition of unfair prices or other unfair conditions of trade;

d. any under-cutting of prices or other conditions directed against a specific competitor;

e. any limitation of production, supply or technical development;

f. any conclusion of contracts on the condition that the other contracting party agrees to

accept or deliver additional goods or services”.

Article 4(2) ACart states that undertakings are dominant if they are able to behave

in a substantially independent manner from other market participants (competi-

tors, suppliers or buyers). This concept of dominance is almost identical to that

described in Article 102 TFEU. Article 4(2) ACart covers both individual and

collective dominant positions.88 In its Message of 7 November 2001 on the Revi-

sion of the ACart, the Federal Council made it clear that «data concerning the mar-

ket structure are not the only criteria for assessing the existence of a dominant po-

sition; consideration must also be given to the real links of dependence on the

market. In particular, a dominant position may exist when an enterprise has a pre-

ponderant place on the market or when other enterprises depend on it as custo-

mers or suppliers, for example».89 Therefore, particularly market share, product

differentiation and entry barriers determine whether or not there is a dominant

position in a specific market.90

88 BENJAMIN BLOCH & MANI REINERT, in Marc Amstutz/Mani Reinert (eds.), Kartellgesetz, Basler

Kommentar, Basel 2010, Article 4 para. 2, N 258 ff. 89 Feuille fédérale (FF) 2002, p. 1933. 90 JÜRG BORER, Kommentar zum schweizerischen Kartellgesetz, 2nd edit, Zurich 2005,

Article 2 KG, N. 14; EVELYNE CLERC, Commentaire Loi sur le marché intérieur, in Pierre Tercier/Christian Bovet (eds.), Commentaire Romand, Droit de la concurrence, Geneva 2002, Article 4 al. 2 LCart, N. 124-132.


208

The ACart does not set out a market-share threshold above which a company will

be presumed to be dominant.91 This has to be verified on a case-by-case basis.92

However, given the Swiss practice with regard to Article 7 ACart, one may assume

that a market share below 40 per cent will only raise concerns in exceptional cases

where a particular market structure does not allow for counter measures against a

market leader. A firm with a market share in the range of 40 per cent and 60 per

cent is in the grey zone.93 Thus, in such a case, further evidence regarding the en-

terprise’s behaviour towards other market participants is required to decide whe-

ther there is dominance. As the Swiss Competition Commission’s (Comco) judicial

practice illustrates in Des tarifs conseillés de l’Association fribourgeoise des écoles de circulation,94 in Fahrschule Grabünden,95 and recently in Publigroupe96 and in SIX Multipay AG,97 for market shares above 60 per cent, the market share alone gene-

rally suffices for an enterprise to be considered dominant because of the absence

of equally strong players in the market in question.

Even if some isolated decisions taken by the Comco (eg Coca Cola – Feldschlöss-chen)98 have been criticized for not being in line with the European approach of

91 JUHANI KOSTKA, Harte Kartelle, Internationale Entwicklung und schweizerisches Recht,

doctoral thesis (Fribourg), Zurich/Basel/Geneva 2010, N. 1612. 92 ATF 129 II 18 (consid. 8.3.2). 93 In Schlachtschweine (Comco, Markt für Schlachtschweine, DPC/RPW 2004/3, N. 73, p. 751),

where the undertaking’s market share was about 50 per cent, taking into consideration the particular features of the market in question, the Comco does not qualify 50 per cent market share as a strong indicator of a dominant position. However, in some other cases (eg Spitallisten bei Halbprivatversicherungen mit eingeschränkter Spitalwahlfreiheit; Virtuelle Ka-lenderfabrik Schweiz; SVIT-Honorarrichtlinien; Tarif de la Société vaudoise des régisseurs et courtiers en immeubles et en fond de commerce) where the undertaking’s market share is above 50 per cent, the Comco decided that the assumption of dominance should be refuted by particular features of the market in question such as head-to-head competition with another foreign market player or expected diminution of the undertaking’s market share in the near future. See Comco, Spitallisten bei Halbprivatversicherungen mit eingeschränkter Spitalwahl-freiheit, DPC/RPW 1999/2, N. 60 ff, p. 231 f; Comco, Virtuelle Kalenderfabrik Schweiz (VKFS), DPC/RPW 1998/1, N. 32 f, p. 25; Comco, SVIT-Honorarrichtlinien, DPC/RPW 1998/2, N. 37 ff, p. 295; Comco, Tarif de la Société vaudoise des régisseurs et courtiers en immeubles et en fond de commerce, DPC/RPW 1998/2, N. 18 f, p. 187 f.

94 Comco, Des tarifs conseillés de l’Association fribourgeoise des écoles de circulation (AFEC), DPC/RPW 2000/2, p. 172.

95 Comco, Fahrschule Grabünden, DPC/RPW 2003/2, p. 286 ff. 96 Comco, Publigroupe, DPC/RPW 2007/2, p. 209. 97 Comco, SIX/Terminals mit DCC, DPC/RPW 2011/1, p. 96 ff. 98 The EU Commission found that Coca Cola had a dominant position in various national markets

for carbonated drinks and focused its attention on the company’s undertakings. However, the Comco closed its investigation after four years without having taken any action against Coca Cola and without having reached an amicable settlement with the company. See www. news.admin.ch/NSBSubscriber/message/attachments/14229.pdf.


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dominance,99 in general, its approach in assessing dominance, which takes into

account the extent to which market parties are dependent on the dominant firm, is

not far from that of the CJEU. It is worth remembering that, in United Brands, the latter defined the dominance as the ability to act independently to an appreciable

extent of competitors, customers and consumers.100 Besides, in British Petrol, the Court distinguished between a refusal to supply ‘occasional’ or ‘traditional’ custo-

mers, implying that a refusal to supply the former is scrutinized less harshly than a

refusal to supply the latter.101

The Swiss Federal Supreme Court stressed that the mere fact of being or striving to

become dominant by means of internal growth is not unlawful (see Swisscom Mobile Phone Termination Fees).102 However, as in EU law,103 if dominance is

achieved by means of an abusive practice, such conduct is prohibited under the

Swiss competition law regime. Both exploitative and exclusionary practices may

constitute an abuse of dominant position under the ACart.104

According to the wording of Article 7(1) ACart and to judge-made law,105 practices

are deemed unlawful if dominant enterprises, by abusing their position on the

market, prevent other enterprises from entering or competing in the market (eg

SIX Multipay AG)106 or if they injure trading partners. The following behaviour, in particular, may constitute unlawful practices: refusal to deal (eg Freiburger Elektri-zitätswerke (EEF);107 Elektra Baselland Liestal (EBL);108 Sellita);109 discrimination of

trading partners with regard to prices or other terms of trade (eg Eskamed AG;110 Publigroupe);111 imposition of unfair prices or other unfair terms of trade (eg Com-

co’s Swisscom Mobile Phone Termination Fees decision which was annulled by the Federal Administrative Court);112 predatory pricing; and restriction of production, output or technical developments. Price-squeezing practices are not explicitly

99 CHRISTIAN BOVET, Recent Developments in Swiss Competition Law, RSDA/SZW 2005/2, p. 87. 100 Case C-27/76 United Brands v. Commission [1978] ECR 207. 101 Case C-77/77 British Petrol v Commission [1978] ECR 1513, para. 32. 102 ATF 137 II 199 (consid. 4.3.4). 103 Supra 3.1.1.2. 104 MARC AMSTUTZ & BLAISE CARRON, in Marc Amstutz/Mani Reinert (fn 88) Article 7, N 43 ff. 105 ATF 129 II 497 (consid. 6.5.1). 106 Comco, SIX/Terminals mit DCC, DPC/RPW 2011/1, p. 96 ff. 107 Comco, Freiburger Elektrizitätswerke (EEF), DPC/RPW 2003/4, p. 925 ff. 108 TF 2A.492/2002/sch. 109 Comco, Sellita, DPC/RPW 2002/4, p. 593 ff. 110 Comco, Eskamed AG, DPC/RPW 2004/2, p. 449 ff. 111 Comco, Publigroupe, DPC/RPW 2007/2, p. 218. 112 Comco, RPW 2007/2, p. 241 ff; Media Release, Federal Administrative Court, B-2050/2007, 9

March 2010; ATF 137 II 199 (consid. 4 and 5).


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mentioned in Article 7(2) ACart. They may, however, be covered by the general

clause set forth by Arts. 2, 3 or 7(1) ACart (eg Preispolitik Swisscom ADSL).113

b. The legal requirements for an objective justification plea

Parties may avoid a sanction only if they 1) rebut the presumption which is set

forth in Article 5(3 and 4) ACart by proving that some competition remains114 and

2) justify the conduct on the basis of economic efficiency, as Article 5(2) ACart

explicitly mentions, or on the basis of legitimate business reasons, something

which can be inferred from Article 7(1) ACart.115 In its Cablecom decision, the Federal Supreme Court pointed out that the existence of legitimate business rea-

sons must be closely reviewed on a case-by-case basis.116 Since, in Swiss competi-

tion law, abuse and any potential economic benefit do not need to occur in the

same market – they may also occur on upstream or downstream markets – , neigh-

bouring or closely connected markets should also be assessed to determine if there

are possible reasons for an objective justification.

Such a justification can be shown by the effects of the conduct on rivals and custo-

mers. In Swisscom Mobile Phone Termination Fees, legitimate economic reasons

presented as objective justification for high prices have been examined from the

point of view of rival companies.117 A termination fee is the fee that mobile net-

work providers charge other providers for routing calls through their network. It is

paid directly by other service providers. In 2007, the Comco decided that, from 1

April 2004 to 31 May 2005 1) Swisscom occupied a dominant position in the

market; 2) according to Article 7(2)(c) ACart, Swisscom had violated its position

by charging unreasonably high termination fees compared to the fees charged in

other countries; 3) any unilateral reduction of the termination fee of Sunrise and

Orange, the two smaller competitors, would have reduced their revenues to a

113 Comco, Preispolitik Swisscom ADSL, DPC/RPW 2010/1, p. 116 ff. For a detailed analysis of

this decision, see MARC AMSTUTZ, Wirtschaftsregulierung durch Kartellrecht? Anmerkungen zum margin squeeze im Lichte des Entscheids Preispolitik Swisscom ADSL, in Marc Amstutz et al. (eds.), Die Praxis des Kartellgesetzes im Spannungsfeld von Recht und Ökonomie, Zurich 2011, p. 151, 153-154; CHRISTIAN BOVET & ADRIEN ALBERINI, Recent developments in Swiss competition law, RSDA/SZW 2010/2, p. 148, 151.

114 DPC/RPW 2000/4, p. 588 ff. For a detailed analysis, see WALTER A. STOFFEL, Humour et efficacité économique, in Peter Gauch/Pascal Pichonnaz (eds.), Figures juridiques: mélanges dissociés pour Pierre Tercier à l’occasion de son soixantième anniversaire, Zurich/Basel/Geneva 2003, p. 93. See also WALTER A. STOFFEL, Swiss Competition Law: Where From and Where To, in Peter Gauch et al. (eds.), Mélanges en l’honneur de PIERRE TERCIER, Geneva 2008, p. 677, 683.

115 DPC/RPW 2007/2, p. 283; MARC AMSTUTZ/BLAISE CARRON, in Marc Amstutz/Mani Reinert (fn 88) Article 7, N 63; Roland von BÜREN et al., Immaterialgüter- und Wettbewerbsrecht, 3rd edit, Bern 2008, N 1517.

116 DPC/RPW 2003/4, p. 916. 117 Comco, Swisscom Mobile Phone Termination Fees, DPC/RPW 2010/2, p. 242 ff. For an

analysis see ROLF H. WEBER & MICHAEL VLCEK (fn 87), p. 49 ff.


211

disproportionate extent and therefore benefited the main competitor only. There-

fore, the Comco fined Swisscom the sum of CHF333 million, a decision which was

later overruled by the Administrative Court.118 The Comco appealed to the Federal

Supreme Court to have the fine reinstated. However, in April 2011, the Federal

Supreme Court confirmed the Federal Administrative Court’s decision.119

In this case, Swisscom provided a legitimate business reason for its behaviour and

based the justification of its high prices on the two-sided market theory.120 A mar-

ket is two-sided «if the platform can affect the volume of transactions by charging

more to one side of the market and reducing the price paid by the other side by an

equal amount».121 In a case of telephony, the mobile network provider (eg Swiss-

com) is the platform allowing the exchange of communication between senders

and receivers through its network. Hence, the two-sided market theory relies on

the concept that money can be made by charging two end-users who interact in

some way. When both caller and callee pay, the platform usually charges a fee in a

way that optimizes usage for both parties. On the basis of this idea, Swisscom ar-

gued that its termination fees were optimally priced as they brought economic

benefits to callers as well as receivers. However, as the Comco pointed out, in

Switzerland, only callers pay, which makes it hard for the platform to maximize

the joint benefit. The receiving operator’s termination fee is passed to and charged

to the originating operator who fully passes it on, as calling charges, to the end-

consumers. Moreover, with high termination fees, network providers are enticed

to extend their subscribers’ base to generate greater termination revenues. Thus,

termination fees are used as a tool to maximize one’s profit and inhibit compe-

tition.

The Federal Supreme Court’s decision confirming the Administrative Court’s judg-

ment, which annulled the fine imposed by the Comco, does not refer to the two-

sided market theory, but rather to the potential effect of the conduct on competi-

tion. It clearly states that Article 7 ACart cannot be violated merely because of the

strengthening of a dominant position; there must also be an abuse. It is not

abusive conduct for an undertaking to freely determine the price of its services or

products provided the undertaking 1) does not breach any rule, regulation or law

applicable (eg a price regulation) and 2) does not force its customers to buy its

services or products at this price. If the customers are able to reach similar services

118 Media Release, Federal Administrative Court, B-2050/2007, 9 March 2010. For a review of the

decision, see CLAUDIA SEITZ, Urteilsbesprechung, PJA/AJP 2010, p. 650 ff. 119 ATF 137 II 199 (consid. 4 and 5). 120 See DPC/RPW 2007/2, p. 283. 121 JEAN-CHARLES ROCHET & JEAN TIROLE, Two-Sided Markets: An Overview, p. 40, available online

via <http://faculty.haas.berkeley.edu/hermalin/rochet_tirole.pdf>; BEJAMIN BLOCH & MANI REI-NERT, in Marc Amstutz/Mani Reinert (fn 88) Article 4 para. 2, N 202.


212

or products in the relevant market, there is no forcing, which, according to the

Supreme Court, was the case in Swisscom Mobile Phone Termination Fees.122

3.2.1.2. Turkish regulation and practice

After reviewing art 6 of the Act on the Protection of Competition (TCA) and some

other related rules, which govern the abuse of dominant position (a), I will con-

sider the question of what is meant by objective justification in Turkish law (b).

a. The Article 6 TCA criteria

According to the well-established Turkish judicial practice, like in the EU and

Swiss laws, the ownership structure of an undertaking does not play a role in the

determination of the scope of application of the TCA.123 Like companies under

private law, state-owned companies and state majority-owned companies are

covered by the TCA, unless their conduct is purely regulatory in nature.124 The

difference between Swiss and Turkish laws, in that regard, is that, in Turkey, the

TCA’s application to state-owned companies derives from judge-made law,

whereas, in Switzerland, it is anchored in the ACart itself (cf. Article 2(1)).

Article 1 TCA defines the purpose of the TCA, which is «to prevent agreements,

decisions and practices preventing, distorting or restricting competition in markets

for goods and services, and the abuse of dominance by the undertakings dominant

in the market, and to ensure the protection of competition by performing the

necessary regulations and supervisions to this end».125

Article 6 TCA, which governs the abuse of dominant position, provides that:

“The abuse, by one or more undertakings, of their dominant position in a market for goods

or services within the whole or a part of the country on their own or through agreements

with others or through concerted practices, is illegal and prohibited.

Abusive cases are, in particular, as follows:

a) Preventing, directly or indirectly, another undertaking from entering into the area of

commercial activity, or actions aimed at complicating the activities of competitors in the

market,

122 ATF 137 II 199 (consid. 5.5). The Supreme Court’s decision has been hotly debated in Swiss

literature. See WALTER A. STOFFEL, Contrainte et liberté – l’affaire prix de terminaison en télé-phonie mobile devant les juges, in Jean-Babtiste Zufferey et al. (eds.), L’homme et son droit, Mélanges en l’honneur de Marco Borghi, Zurich/Basel/Geneva 2011, p. 545 ff.

123 TCB, Decision No. 01-12/114-29, 13.03.2001. 124 KEREM C. SANLI & SAHIN ARDIYOK, The Legal Structure of Competition Policy in Turkey, in

Tamer Çetin/Fuat Oğuz (eds.), The Political Economy of Regulation in Turkey, New York/Heidelberg 2011, p. 75, 85.

125 Official translation, available online at www.rekabet.gov.tr/index.php?Sayfa=sayfaicerik&icId= 165&Lang=EN.


213

b) Making direct or indirect discrimination by offering different terms to purchasers with

equal status for the same and equal rights, obligations and acts,

c) Purchasing another good or service together with a good or service, or tying a good or

service demanded by purchasers acting as intermediary undertakings to the condition of

displaying another good or service by the purchaser, or imposing limitations with regard to

the terms of purchase and sale in case of resale, such as not selling a purchased good below a

particular price,

d) Actions which aim at distorting competitive conditions in another market for goods or

services by means of exploiting financial, technological and commercial advantages created

by dominance in a particular market,

e) Restricting production, marketing or technical development to the prejudice of

consumers”.

Undertakings have a dominant position if their power in a particular market

«determines economic parameters such as price, supply, the amount of production

and distribution, by acting independently of their competitors and customers» (see

Article 3 TCA). Market share, product differentiation, entry barriers, vertical inte-

gration, and substitutability of the relevant product determine whether or not

there is a dominant position in a specific market.126

The criteria determining the existence of such a power vary according to the cir-

cumstances of the case. In Belko, the Turkish Competition Board (TCB), the deci-

sion making organ of the Competition Authority,127 interpreted the notion of do-

126 CEVDET İLHAN GÜNAY, Rekabet Kanunu Şerhi [Commentary on the Turkish Cartel Act], Ankara

2010, p. 980 ff; N. AYŞE ODMAN BOZTOSUN, Tek Yanlı Davranışlara Nasıl Yaklaşalım? [How to Approach Unilateral Conduct], Rekabet Dergisi, 2010, p. 131, 157 ff; ORÇUN SENYÜCEL & HALUK

ARI, Dominant Position and Its Abuse: The Practice in Turkey, Ankara Avrupa Çalışmaları Dergisi 2004/2, p. 81, 89. For an in-depth study see KEREM C. ŞANLI, Hakim Durumun Kötüye Kullanılması [Abuse of Dominant Position], Istanbul 2011.

127 In order to protect competition by ensuring necessary regulation, Article 20 TCA empowers the Turkish Competition Board to apply the TCA: «The Competition Authority having a public legal personality, and an administrative and financial autonomy is established in order to ensure the formation and development of markets for goods and services in a free and sound competitive environment, to observe the implementation of this Act, and to fulfill the duties assigned to it by the Act. (Amended: 24.10.2011- Statutory Decree 661 Article 53) The Ministry to which the Authority relates is the Ministry of Customs and Trade. The Authority is independent in fulfilling its duties. No organ, authority and person may give commands and orders to influence the final decision of the Authority. The central office of the Authority is based in Ankara ». The TCB may investigate undertakings it believes to have committed a breach of Article 6 TCA. Where the TCB finds that a violation of Article 6 TCA has been committed, it can issue a decision ordering the undertaking to put an end to the abuse and can even, where certain conditions are met, impose structural remedies. Besides, according to Article 16(3) TCA, the TCB can impose an administrative fine that amounts to up to ten percent of the annual gross revenues of an undertaking, which have been generated by the


214

mination as «the power to externalize the competition in the market or to control

prices».128 In Uzay Gıda, the TCB refined its analysis by basing its reflection on both quantitative and qualitative criteria.129 Quantitative assessment takes into

consideration the market shares of both the concerned company and that of its

rivals. In Turkcell, the TCB qualified market share as a «marker with prime impor-

tance», and high market share as «a strong indicator of a dominant position»,130

just as the CJEU did first in Hoffmann-La Roche131 then in Akzo.132 If a company

holds 60 per cent or more of the market share and fulfils some additional criteria,

the TCB usually presumes that it occupies a dominant position.133 However,

holding more than 60 per cent of the market share alone is not always enough to

prove the existence of a dominant position. As to the qualitative assessment, it

consists in analysing barriers such as sophisticated technology, high cost, lack of

consumer demand, IP rights, vertical integration and the number of companies

having entered the sector in question within the last 15 years. In some decisions,

the popularity of the brand and consumer dependence are also examined in the

assessment of dominance.134

Like Article 102 TFEU and 7 ACart, Article 6 TCA does not make dominance of the

market illegal, but its abuse. The main goal of Article 6 TCA is the protection of the

competitive process and of consumers (see arts. 6(1); 6(2)(e) TCA) against

unilateral conducts of such dominant undertakings that amount to an abuse. The

reason behind this provision is, like in the EU and Swiss laws, the belief that domi-

nant firms are capable of 1) imposing directly unreasonable terms and conditions

(exploitative abuses) or 2) altering indirectly the structure of the market to their

advantage (exclusionary abuses).

Since Article 6(1) TCA defines abuse in general terms, its formulation allows the

TCB to determine the existence of an abuse from various points of view according

to the kind of behaviour in question.135 The Board has chosen «excessive pricing»

end of the financial year closest to the date of the decision. Pursuing to Article 16(5), «when deciding on an administrative fine […], the Board shall take into consideration issues such as the repetition of infringement, its duration, market power of undertakings or associations of undertakings, their decisive influence in the realization of infringement, whether they comply with the commitments given, whether they assist with the examination, and the severity of damage that takes place or is likely to take place».

128 TCB, Decision No. 09-32/703-163, 08.07.2009. 129 TCB, Decision No. 24866, 04.09.2002. 130 TCB, Decision No. 25176, 22.07.2003. 131 Case C-85/76 Hoffman-La Roche v Commission [1979] ECR 461, [1979] 3 CMLR 211, para. 41. 132 Case C-62/86 Akzo v Commission [1991] ECR I-3359, [1993] 5 CMLR 215, para. 60. 133 TCB, Decision No. 24866, 04.09.2002; Decision No. 24824, 23.07.2002. 134 TCB, Decision No. 24866, 04.09.2002. 135 The TCB's decisions can be considered as semi-judicial decisions granted by an administrative

body. This status is similar to that of the European Commission. Thus, the TCB’s decisions are subject to the appeal procedure before the State Council which is the supreme administrative


215

as the legal basis of most of its decisions condemning abusive behaviour.136 In

practice, the difficulty is to define the standards which determine at what point a

price is abusive because it has no reasonable relation to the economic value of the

product.

Article 6(2) TCA lists other possible abuses of a dominant position. This list is

meant to give examples but, like in European and Swiss laws, is not exhaustive.

Abuses include creating entry barriers, impeding the activities of other under-

takings already in the market, discrimination among peer buyers, tying, limiting

resale conditions, taking actions to obstruct competition in a market using a domi-

nant position in another market, and restricting marketing or technical progress in

a way that hurts consumers.137

In order to assess the potentially abusive character of a refusal to supply other

businesses, in Eti, the TCB examined whether the customer making a request for

goods to the dominant company was a permanent buyer or whether it was acting

under the control of the dominant company.138 In Aski, an unfair pricing case, the TCB compared the total costs of production to the price of the product in question,

the prices of similar products in the relevant market and in neighbouring mar-

kets.139 In Teleon, the TCB assessed the abusive character of tying practices by determining whether the tied product was a component of the main product, whe-

ther customers were forced to buy the product and whether this practice gave a

sister company the upper hand in the relevant market.140

b. The legal requirements for an objective justification plea

According to Article 4 sub-sec. 3 TCA, «each of the parties may relieve itself of the

responsibility by proving they did not engage in concerted practice, provided that

it is based on economic and rational facts». The application of this provision re-

quires the TCB to determine whether the conduct has an objective justification or

whether it contributes to enhance the dominant firm’s internal efficiency. In

practice, the possible objective justification defences and efficiency considerations

are taken into account under the proportionality principle (see the TCB’s decision

court. Finally, it is worth adding that, since many TCB decisions have been appealed before the State Council, in 2004, a special chamber was created in the State Council to deal with appeals against TCB decisions so as to gain specialist knowledge and to cope with the volume of cases.

136 ÇIĞDEM ÜNAL, Rekabet Hukukunda Tek Taraflı Sömürücü Davranışlar [Unilateral Exploitative Conduct in Competition Law], Rekabet Dergisi 2010/4, p. 111, 152.

137 In some cases, an undertaking may take a dominant position through protection provided by laws. For instance, industrial and commercial property rights provide such a protection. These rights should not be used to prevent competition in any way.

138 TCB, Decision No. 00-50/553-295, 21.12.2000. 139 TCB, Decision No. 01-12/114-29, 13.01.2001. 140 TCB, Decision No. 99-42/447-281, 14.09.1999.


216

in Frito Lay).141 The proportionality test assesses whether there is an equitable ba-lance between the professed goal, the means to achieve it and the potential effects

of the conduct on the market and consumers. On the one hand, this approach is in

line with the CJEU’s practice which, in United Brands, made it clear that «even if

the possibility of a counter-attack [by the dominant firm] is acceptable [that attack

must still be proportionate to the threat] taking into account the economic

strength of the undertakings confronting each other».142

On the other hand, it is not possible to argue that the TCB systematically takes into

account the objective justification defence and efficiency considerations. The re-

cent Sanolfi case provides a good example to illustrate this. Sanolfi Avantis Drugs

Co. Ltd is a dominant company, which has 64 drugs on the market, 31 of which

have no generics. The firm required warehouses to pay their bills in full prior to

maturity which was limited to a period of 60 to 180 days (depending on the

reliability of the warehouse) for purchases over TL250.000 (about CHF130.000), and a period of 15 days for monthly purchases remaining below this figure.143 The

TCB determined that sales conditions put into practice by Sanofi directly affected

the activity and profitability of distribution channels in the sector creating

significant barriers to market entry for small-scale warehouses.

On the one hand, it is likely that, without the intervention of the TCB, this practice

would have negatively affected the consumers’ ability to have access to Sanolfi

drugs, particularly in small towns, where there is no big pharmaceutical ware-

house. On the other hand however, as Sanolfi argued, such a practice contributed

to decreasing the transportation costs of Sanolfi, guaranteeing the speed and

security of the supply, which in turn led to price cuts in the drug market, since

small-scale warehouses in small towns had been eliminated. The TCB neither pro-

ceeded to a systematic analysis of the possible effects of such a practice on end-

consumers nor adopted an approach based on the disproportionality test in spite

of the dissenting opinion of the Board’s president.

Indeed, in the TCA, the only clause mentioning harm to consumers is subpar. (e)

of Article 6 qualifying «restricting production, marketing or technical development

to the prejudice of consumers» as an abuse. Other dispositions of Article 6 TCA contain a non-exhaustive list of abusive practices harming effective competition,

but not necessarily consumers. That is why the TCB has an indirect welfare-based

approach: consumer harm sufficient to establish an infringement is inferred indi-

rectly from harm to competition.

141 TCB, Decision No. 00-9/89-44, 29.02.2000. 142 Case C-27/76 United Brands v. Commission [1978] ECR 207, para. 190. 143 TCB, Decision No 09-16/374-88, 20.04.2009.


217

The Karbogaz case provides a clear example of this approach.144 Karbogaz was a

dominant firm in the market of liquid carbon dioxide and concluded long term

exclusive contracts with its clients. When accused of abusing its dominant position

in this market, the firm based its defence on the fact that establishing constant

relations by way of exclusive contracts was important for its investments in the

market. For Karbogaz, this was legitimate business behaviour. In order to respond

to this plea, the TCB assessed whether the firm increasing the market share via

long-term exclusive contracts creates any efficiency gains. According to the TCB,

dominant undertakings have special responsibilities unlike those that are not

dominant. Thus, dominant undertakings are expected to predict the effects of

their conduct in the relevant market and have a duty not to limit their rival’s

power to enter into agreements. The Board decided that long-term exclusive con-

tracts concluded by a dominant undertaking limit considerably the freedom of

buyers to choose alternative suppliers.

3.2.2. Comparative reflections

One can draw a parallel between the EU, Swiss, and Turkish substantive rules

governing the abuse of dominant position. There is no doubt that Article 7 ACart

and Article 6 TCA are modelled on Article 102 TFEU. However, even if the Swiss

and Turkish rules governing the abuse of dominant position are formulated in a

similar way, in practice, the Swiss and Turkish judge-made laws vary significantly.

This phenomenon is particularly obvious when assessing defences brought by

dominant firms in order to relieve themselves of the responsibility (see Article 5(3

and 4) ACart and Article 4 sub-sec. 3 TCA).

In Swisscom Mobile Phone Termination Fees and Karbogaz, the Comco and the TCB

adopted similar approaches and condemned the dominant firms for their abusive

behaviour. In Karbogaz, the TCB decided that long-term exclusive contracts

concluded by a dominant undertaking considerably limited the freedom of buyers

to choose alternative suppliers and foreclose the market to competition for these

buyers. This decision is based on an indirect welfare-based approach: consumer

harm sufficient to establish an infringement is indirectly inferred from harm to

competition. However, in Swisscom Mobile Phone Termination Fees, siding with Swisscom, the Swiss Federal Supreme Court based its judgment on a different ap-

proach: if the customers have access to similar services or products in the relevant

market, there is no forcing. Since the TCB145 and the Swiss Supreme Court146 use

different methods to define the availability of similar services or products in the

relevant market, their decisions inevitably vary.

144 TCB, Decision No 2-49/634-257, 23.08.2002. 145 Supra 3.2.1.2. 146 Supra 3.2.1.1.


218

The reason why Turkish authorities are keener than the Swiss Federal Supreme

Court to find abuse might be explained by the different formulations of Swiss and

Turkish legislations. ‘Harm to consumers’ is not included in the criteria provided

by Article 7 ACart. ‘Absence of such harm’ is neither mentioned in Article 5 ACart

as objective justification. This should be one of the reasons why, in Swisscom Mo-bile Phone Termination Fees, without taking into consideration consumers’ inte-

rests, the Federal Supreme Court ruled that freely determining the price of its

services or products is not abusive conduct for an undertaking provided the latter

does not breach any rule or regulation and does not force its customers to buy its

services or products at this price.147

In Turkish law, however, Article 6(e) TCA provides that «restricting production,

marketing or technical development to the prejudice of consumers» are abuses. Since the Turkish legislature referred, as the EU Commission in its Guidance,148 to

the harm to consumers standard,149 at first sight, one can assume that Turkish le-

gislation is more in line with EU law than Swiss law. However, it is worth remem-

bering that, at the European level, the standard proposed by the EU Commission,

«no-harm to consumers», serves a different purpose and aims at avoiding the ap-

plication of the per se approach resulting in the condemnation of competitive be-

haviour which has no harmful effects on consumer protection.150 In Turkish law,

the «harm to consumers» standard has been used to define the abuse, but not the

objective justification.

At this stage, an important question is whether or to what extent national autho-

rities will – or should – follow the more economic approach.151 Indeed, the

adoption of the effects-based approach would modify the traditional in abstracto view in two ways. First, the Commission – or the national authority taking the

effects-based approach as a model – would be asked to demonstrate, with a strong

economics-based analysis, that the presumably abusive conduct caused ‘consumer

harm’. Secondly, the new approach wants to grant defendants the faculty to plead

an ‘efficiency’ or ‘necessity’ defence against a finding of abuse.152 Whether these

changes will be adopted by the Swiss and Turkish competition authorities and

147 ATF 137 II 199 (consid. 5.5). 148 Guidance (fn 26) para. 19. 149 Article 6(e) TCA. 150 RICHARD WHISH & DAVID BAILEY (fn 25), p. 175. 151 ROGER ZÄCH & ADRIAN KÜNZLER, Freedom to Compete or Consumer Welfare: The Goal of

Competition according to Constitutional Law, in Roger Zäch et al. (eds.), The Development of Competition Law, Cheltenham/Northampton 2010, p. 61 ff; CHRISTIAN KIRCHNER, Fusions-kontrolle und Konsumentenwohlfahrt, Eine rechtswissenschaftliche und ökonomische Auseinandersetzung, Zeitschrift für das gesamte Handels- und Wirtschaftsrecht (ZHR) 2009, p. 775, 776 ff; ADRIAN KÜNZLER, Effizienz oder Wettbewerbsfreiheit?, Zur Frage der Aufgabe des Rechts gegen private Wettbewerbsbeschränkungen, Tübingen 2008, p. 15 ff.

152 Supra 3.1.2.


219

courts in the years to come remains to be seen. At the moment, in Switzerland, the

academic discussion deals with the issue of whether Articles 94(2) and 96(1) of

the Constitution of the Swiss Confederation favour the freedom to act (die Handlungsfreiheit/la liberté d’action)153 or the maximisation of the social welfare

(die Maximierung der sozialen Wohlfahrt/la maximisation du bien-être social).154 In Turkey as well, one of the most debated issues is the adoption of the «more

economic approach» and its possible effects on the definition of the standard that

should be used to distinguish legal conduct from abusive one.155

4. Some thoughts on improving the application of existing rules

The European institutions stress the fact that economic freedom of competition –

or action – and consumer protection should complement each other, making both

of these the two main purposes of their competition policy.156 However, an imme-

diate implementation of the consumer welfare balancing test or the effects-based

approach, before any improvement in end-consumers damages actions, is ques-

tionable from many points of view. In order to establish consumer protection as

one of the goals of European competition policy, I think it is necessary to remedy

the legal uncertainty as to the role of the effects-based approach (4.1.) and to

adopt some structural and procedural mechanisms which may improve the appli-

cation of the existing rules governing end-consumers’ access to compensatory

justice (4.2.).

4.1. Remedying the legal uncertainty

Since the effects-based approach relies on a couple of notions working at the hazy

intersection between law and economics, its adoption by the Commission has

153 MARC AMSTUTZ & MANI REINERT (fn 41) p. 69; ADRIAN RAASS, Eine Frage der Erheblichkeit: Zur

Interpretation eines Schlüsselbegriffs im Kartellgesetz, sic! 2004, p. 911, 917 ff; YVO

HANGARTNER, Selektive Vertriebssysteme als Problem des Wettbewerbsrechts, sic! 2002, p. 321, 322 ff.

154 JONAS PRANGENBERG, Aktuelle Fragen des Schweizer Kartellrechts, in Jusletter 24. September 2012, p. 6; ANDREAS THIER, Schweizerische Kartellrechtstradition und 'more economic ap-proach', Zur bundesgerichtlichen Rechtsprechungspraxis 1896-1960, in Rolf Sethe/Andreas Heinemann/Reto M. Hilty/Peter Nobel/Roger Zäch (eds.), Kommunikation, Festschrift für Rolf H. Weber zum 60. Geburtstag, Bern 2011, p. 621, 622 ff; PETER STRAUB, Das Rechtsprinzip des wirksamen Wettbewerbs und seine normative Wirkkraft im Spannungsverhältnis von Kartell-recht und Immaterialgüterschutz in der Schweiz und der Europäischen Union, Zürich 2009, p. 25 ff.

155 SEVILAY UZUNALLI, Avrupa Birliği Rekabet Hukuku Işığında Yıkıcı Fiyat Uygulamaları ile Hakim Durumun Kötüye Kullanılması [Abuse of Dominant Position through Predatory Pricing in the EU Competition Law Regime], Rekabet Dergisi 2010/4, p. 59, 64 ff.

156 Guidance (fn 26) para. 19.


220

prompted a variety of reactions. Some scholars criticized the arguments put for-

ward by the Commission, saying that the primary purpose of cartel bans is to

uphold the market actors’ freedom of action. In their opinion, this policy is hardly

compatible with economic welfare. Hence, they see a conceptual contradiction

between the two approaches. Zäch and Künzler ask «why should cartel law be geared exclusively towards economic efficiency?» In their opinion, the questions which concern the values of competition policy such as «freedom, optimum satis-faction of needs, fair rewards for effort, and limitation of power […] have to be ad-dressed on a normative level».157 For other scholars, however, harm to consumers

necessarily entails harm to competition. O’Donoghue and Padilla, for example,

argue that there is «no case for intervention under competition law where there is harm to the competitive process but none to consumers».158

Although it may be criticized for the difficulties linked to its administrability,159

the effects-based approach, as I see it, can be used as a tool to improve the forma-

listic in abstracto approach to unilateral conduct, and thus contribute to the mo-

dernization of the enforcement of Article 102 TFEU. The effects-based approach

can play a role particularly in evaluating in concreto how dominance may possibly

affect the dominant undertaking’s competitors and consumers in the specific

market context. Such an approach would be useful in particular when assessing

strategic behaviours which do not immediately harm consumers, but which, in the

long run, may turn out to be harmful. When intellectual property rights are con-

cerned, for instance, strategic behaviour intended to capture and preserve the lar-

gest possible number of consumers is a well-known business strategy that is far

more complex than price competition. Even if companies still compete on price,

their principal strategies to maximize profits, to attract their competitors’ consu-

mers or to keep their own consumers loyal to the firm’s products include nume-

rous other variables such as product variety, higher quality, updates, extra fea-

tures not offered by the competitors’ product and increased utility thanks to the

product’s compatibility with a large number of complementary products.

Another field where competition is directly linked to innovation is electronic com-

merce. Companies with strong network effects such as on-line file-sharing service

providers, or companies active in software engineering or e-commerce fix a fairly

low price for their goods or services or might even offer them for free in order to

157 ROGER ZÄCH & ADRIAN KÜNZLER, Efficiency or Freedom to Compete? Towards an Axiomatic

Theory of Competition Law, ZWeR 2009, p. 269, 286. 158 ROBERT O’DONOGHUE & JORGE PADILLA, The Law and Economics of Article 82 EU, Oxford 2006,

p. 221-222. 159 On which see MARINA LAO, Defining Exclusionary Conduct under Section 2: The Case for Non-

Universal Standards, in Barry E. Hawk (ed), Fordham Competition Law Institute: International Antitrust Law & Policy, Huntington 2007, p. 448; DOUGLAS MELAMED, Exclusionary Conduct under the Antitrust Laws: Balancing, Sacrifice, and Refusals to Deal, Berkeley Technology Law Journal 2005, p. 1247, 1249.


221

induce consumers to continue using their goods or services in spite of the advent

of superior products provided by other – often newer – companies. Consumers

often find themselves locked in to the product, since they risk losing the compa-

tibility with their other products or with other consumers, if they agree to switch

to the new product.160 From this point of view, the Commission’s new policy which

takes into account not only existing profit gains but also other factors limiting

quality or reducing consumer choice increases the chance of the effects-based

approach, as defined by the Commission, to gain credibility.

However, even though the EU Commission mentions broad consumer-protection

requirements like consumer health or safety in order to justify consumer welfare

as one of the goals of European competition policy, the CJEU still favours safe-

guarding an effective competitive process and keeps consumer welfare which is

actually a tool to promote consumer welfare.161 According to some authors, the

Court is reluctant to redefine competition in a straightforwardly welfarist way

because such a policy shift would make the competitive process meaningless and

turn it into a populist ‘slogan’.162

In my opinion, there is no doubt that the trend towards analysing the effects of

possibly abusive conduct on the basis of Article 102 TFEU is established and is

unlikely to be reversed.163 Nevertheless, I do not suggest that administrative au-

thorities or courts need to systematically conduct a thorough comparison of a con-

duct’s probable precompetitive benefits and its probable anticompetitive harms in

every case, particularly when the burden of proving an infringement is on the

party or the authority alleging the infringement.164 Hence, the role of the effects-

based approach should be limited to complementing the existing rules by helping

assess the position of dominant undertakings which have an adverse impact on

consumer protection particularly when reducing quality or limiting consumer

choice. The fact that the EU Commission recognizes that hampering competition is

a relevant factor in determining whether a conduct is capable of harming consu-

160 EMANUELA AREZZO, Is There a Role for Market Definition and Dominance in an Effects-Based

Approach?, in Mark-Oliver Mackenrodt et al. (eds.), Abuse of Dominant Position: New Interpretation, New Enforcement Mechanisms, Berlin/Heidelberg 2008, p. 21, 50; TAWFIK

JELASSI & ALBRECHT ENDERS, Strategies for e-business: creating value through electronic and mobile, Edinburgh 2005, p. 145.

161 ANCA D. CHIRITĂ, Undistorted, (Un)fair Competition, Consumer Welfare and the Interpretation of Article 102 TFEU, WOCO 2010, p. 417, 423.

162 PINAR AKMAN, Consumer Welfare and Article 82 EU: Practice and Rhetoric, WOCO 2009, p. 71, 72.

163 For a similar view see RICHARD WHISH & DAVID BAILEY (fn 25), p. 201. 164 ANDREAS FUCHS, Effizienzorientierung im Wettbewerbs- und Kartellrecht, in Holger Flei-

scher/Daniel Zimmer (eds.), Effizienz als Regelungsziel im Handels- und Wirtschaftsrecht, Frankfurt on the Main 2008, p. 69, 88.


222

mers reinforces the idea that, without replacing it, the effects-based approach can

improve the in abstracto approach by rendering it more explicit.165

4.2. Complementing the effects-based approach by structural and procedural mechanisms

Even if the effects-based approach may, to some extent, remedy the legal uncer-

tainty resulting from the in abstracto view, there are some important reasons to

think that its administrability may pose problems (4.2.1.). Besides, it has to be

complemented by structural and procedural mechanisms, particularly by class

action lawsuits (4.2.2.).166 Another issue which concerns us is the passing-on

defence (4.2.3.).

4.2.1. The issue of administrability

Firstly, determining whether inefficiencies have occurred or are likely to occur

requires a sophisticated quantitative economic analysis in a situation where not all

the facts are known and as such constitutes a heavy burden for enforcement

officials and judges.167 According to Article 2 of the Council Regulation 1/2003

(later on: CR 1/2003), this burden is on the party or the authority alleging the

infringement. However, even if administrative authorities possess large staffs of

economists, competition boards often cannot start investigating the allegations of

suspected conduct before the end of the predation.168 By then the dominant firms

have started to make up for their losses, since their rivals have left the market. In

such a situation, indirect end-consumers who do not have an easy and efficient

access to compensatory justice end up absorbing the difference between a normal

retail price and the higher retail practice. This problem related to the burden of

proof is somewhat mitigated in some countries (eg Turkey),169 since the competi-

165 Guidance (fn 26) para. 19. 166 WALTER A. STOFFEL (fn 114), p. 687. For a comparative study, see HARUN GÜNDÜZ & TUĞÇE

KOYUNCU, ABD, AB ve Türk Rekabet Hukukunda Tazminat Davalarının Önündeki Usuli Engeller [Procedural Barriers to Damages Claims in the US, EU and Turkish Competition Law], Rekabet Dergisi 2011/3, p. 85 ff.

167 R. DANIEL KELEMEN, Eurolegalism – The Transformation of Law and Regulation in the European Union, London 2011, p. 171; ROBERT PITOFSKY, Policy Objectives of Competition Law and Enforcement, in Claus-Dieter Ehlermann/Isabela Atanasiu (eds.), The European Competition Law Annual 2003: What is an Abuse of a Dominant Position?, Oxford 2003, p. 127; DOUGLAS MELAMED (fn 159), p. 1249.

168 On this issue from the point of view of Swiss law, see WALTER A. STOFFEL, Spezifitäten des schweizerischen Wettbewerbsrechts: Rückblick und Ausblick, in Marc Amstutz et al. (eds.), Die Praxis des Kartellgesetzes im Spannungsfeld von Recht und Ökonomie, Zurich 2011, p. 137, 142.

169 See Article 59 TCA: «Should the injured submit to the jurisdictional bodies proofs such as, particularly, the actual partitioning of markets, stability observed in the market price for quite a long time, the price increase within close intervals by the undertakings operating in the


223

tion law of these countries, unlike the TFEU, shifts the burden to the dominant

companies who have to show on economic and rational grounds that they in fact

are acting independently. Nevertheless, this does not solve all the practical issues.

The second issue is that, even if, in spite of all difficulties, competition authorities

manage to investigate unilateral conduct in a timely manner,170 they will still have

a hard time proving the infringement if the defendant argues that the claimant has

not suffered any loss, since he passed the price increase on to his customers.171 The

effects-based approach suggested by the Commission does not specify either how

the likelihood of efficiencies or the extent to which the price increase resulting

from the overcharge is passed on should be assessed. Besides, the calculation of

these costs is seldom recorded by firms in their usual business life and requires

economic expertise.

Moreover, it is very difficult to assess in an accurate way how a current practice

will, in the future, affect consumer welfare as a whole.172 The problem is linked to

the difficulty resulting from the necessity to assess and balance the short-run

effects of the conduct in question against other effects that are likely to appear in

the long run. Such an evaluation is rendered even more difficult by the fact that

short-term effects are often in favour of consumers who, thanks to the unilateral

conduct, benefit from a lower price (as in predatory pricing and bundling) or from

a better product as, for instance in Microsoft, where consumers got a product that

was better than the initial one without it being more expensive). The rough and

tumble of courtroom practice based on discovery, legal research and experience

may turn this task into a long and expensive process for both defendants and

plaintiffs.173

Finally, even if the Commission suggests some significant improvements in the

consumer’s access to compensatory justice, there are still many obstacles barring

end-consumers’ access to compensatory justice. Hence, in order to achieve a co-

herent European competition policy, improving the traditional approach through

the effects-based approach would be a significant step, but it is not sufficient in the

market, which give the impression of the existence of an agreement, or the distortion of competition in the market, then the burden of proof is for the defendants that the under-takings are not engaged in concerted practice».

170 As Stoffel mentioned, that may be possible only if the «arguments and information detained by the parties are brought up timely». See WALTER A. STOFFEL (fn 114), p. 687.

171 EU Commission, White Paper on Damages Actions for Breach of the EU Antitrust Rules, COM (2008) 165, p. 7-8.

172 See, ROGER ZÄCH, Gefährdung des wirtschaftlichen Wohlstands durch ergebnisorientierte Wirtschaftsordnung, WuW 2010, p. 139. For more information on this topic see ADRIAN

KÜNZLER (fn 151), p. 323. 173 JOSEPH FARRELL & MICHAEL L. KATZ, The Economics of Welfare Standards in Antitrust,

Competition Policy International 2006 (Autumn), p. 3, 25 ff.


224

absence of any significant change making it easier for consumers to gain access to

compensatory justice.

4.2.2. Access to compensatory justice by way of class action lawsuits

In Switzerland, Article 12 ACart provides that only persons who are impeded by

an unlawful restraint of competition from entering or competing in a market may

seek damages under the ACart, Unlike Article 12 ACart, Article 58(1) TCA allows

any injured person to bring an action to recover damages. However, the TCB and

courts are very reluctant to grant standing to indirect purchasers to sue for

damages.

In Switzerland and in Turkey, it is necessary to remove the obstacles barring end-

consumers’ access to compensatory justice, when, for some reason, administrative

authorities are not able to identify the abusive practice. At this point, one can

argue that public enforcement by competition authorities and private enforcement

through damages actions by private parties should be subjected to different types

of assessments, since they do not pursue the same objectives.174 Nevertheless, no-

body can deny that they also complement each other. Anti-competition acts protect consumers from unfair commercial practices promoting consumer well-being and

compensation laws offer remedies to consumers who have been harmed despite

the existing anti-competition laws. The well-functioning of a competition policy

depends on the ease with which consumers can have access to compensatory

justice.175 If end-consumers’ access to compensatory justice were facilitated, other-

wise undetected infringements of competition law could be uncovered since, in

general, victims of infringements have better access to first-hand information than

public authorities.176

174 JACQUES H. J. BOURGEOIS & STÉPHANIE STRIEVI, EU Competition Remedies in Consumer Cases:

Thinking Out of the Shopping Bag, WOCO 2010, p. 241 ff. 175 JAMES REARDON, Consumer Collective Redress Mechanisms in Competition Law, doctoral

thesis (Fribourg) 2014, p. 400 ff; SILVIA PIETRINI, L’action collective en droit des pratiques anticoncurrentielles, Brussels 2012, N. 116 ff; JOCHEN BERNHARD, Kartellrechtlicher Indivi-dualschutz durch Sammelklagen, Tübingen 2010, p. 63; KARSTEN SCHMIDT, Kartellprivatrecht – Zivilrechtswissenschaft und Kartellrechtswissenschaft: Herrin und Magd? Magd und Herrin? ZWer 2010, p. 15, 33.

176 ANDREAS HEINEMANN, Kartellzivilrecht, in Roger Zäch/Rolf H. Weber/Andreas Heinemann (eds.), Revision des Kartellgesetzes – Kritische Würdigung der Botschaft 2012 durch Zürcher Kartellrechtler, Zurich 2012, p. 137, 144; MARCEL MEINHARDT & NADINE BLÄTTLER, Private Enforcement – Swiss Perspective, in Carl Baudenbacher (ed.), Current Developments in European and International Competition Law, Basel/Geneva/Munich 2009, p. 247, 249.


225

Unfortunately, despite the Courage177 and Manfredi178 judgements, in which the

CJEU stressed the importance of judicial remedies in private party actions, there

are still many obstacles preventing national compensatory systems from working

efficiently. End-consumers who have suffered loss are highly unlikely to take in-

dividual actions against companies engaged in anti-competitive behaviour. A soda

cartel that adds 50 Cents to the price of a litre of soda may derive a monopoly

profit of hundreds of millions of Euros a year, but a consumer who drinks 2 litres a

week is unlikely to commence proceedings for the recovery of €50! To convince

individuals and small businesses who have suffered fairly low damage to bring

individual actions, in spite of the expenses, delays, uncertainties, and other en-

cumbrances involved in anticompetitive actions, the EU Commission suggests two

remedies: representative actions and opt-in collective actions.179 The former

makes it possible for consumer associations, trade associations, state bodies and

other qualified entities, which can either be officially designated in advance or cer-

tified by a Member State for a particular case, to bring actions on behalf of some or

all of their members.180 The second means that, instead of being automatically

included in a class action, which would be the case with an opt-out class-action,181

victims actively choose to join their individual claims for particular harm into a

single damages action.182

According to some lawyers, the introduction of an opt-in class action into the

European legal system would suppress an important obstacle preventing end-

consumers from suing. Besides, for them, such a step respects the right to be heard

177 Case C-453/99, Courage v Crehan, [2001] ECR I-6297. See also the Opinion of Advocate

General Van Gerven in Case C-128/92, H.J.Banks & Co Ltd v. British Coal Corporation, [1994] ECR I-1209.

178 Joined Cases C-295/04 to C-298/04 Manfredi v Lloyd Adriatico Assicurazioni [2006] ECR I-6619.

179 See White Paper (fn 171) p. 4. On this topic in Turkish law, see HARUN GÜNDÜZ & TUĞÇE KOYUNCU (fn 166), p. 108 ff.

180 On the one hand, similarly, in Switzerland the Federal Supreme Court’s case law (ATF 86 II 21) recognizes a sort of quasi-class action which is limited to declaratory relief and allows the judge to order the end of the unlawful behaviour. On the other hand, in this legal system, damages and other injunctive reliefs can be pursued only by individuals.

181 In an opt-out system, a potentially affected person who falls within the definition of the group will be deemed to be bound by the final judgment without being required to take any positive step. If such a person does not want to be bound by the judgment, he or she should take a positive step to leave the group. See RACHAEL MULHERON, The Case for an Opt-out Action for European Member States: A Legal and Empirical Analysis, CJEL 2009, p. 409, 415 ff.

182 White Paper Impact Study ‘Making Antitrust Damages Actions More Effective in the EU: Welfare Impact and Potential Scenarios’ DG COMP/2006/A3/012, p. 299. From the continental law point of view see JOCELYN G. DELATRE, Beyond the White Paper: Rethinking the Commis-sion’s Proposal on Private Antitrust Litigation, The Competition Law Review 2011/8, p. 29, 34 ff.


226

by legal authorities.183 They argue that opt-out collective actions are contrary to

many Member States' legal orders and violate the rights of any victims who might

participate in the procedure unknowingly and yet be bound by the court's deci-

sion.184 Moreover, they highlight the difficulties, in opt-out cases, to provide the

defendant with an unambiguous definition of the size of the group so that he or

she can estimate the extent of his or her liability for damages.185 These arguments

make many authors think that the opt-in collective action model is preferable to

the opt-out collective action model.186

However, some doubts remain regarding the appropriateness of the opt-in princi-

ple instead of the opt-out. Statistics carried out in the Danish, Dutch, Norwegian

and Swedish law systems187 show that with the first solution, only 5 to 10 per cent

of European consumers would actually opt-in, whereas with the second solution,

over 95 per cent would not opt-out.188 This reveals the inefficacity of opt-in class

action. Besides, since the class representative - officially appointed by the Court at

the time the lawsuit is certified as a class action - represents the interests of all the

members of the class action,189 the violation of the right to be heard is not a very

solid argument to prefer opt-in class action to opt-out class action. Moreover, op-

183 AYHAN KORTUNAY, AB Rekabet Hukukunda Tazminat Davalarına Yönelik Reform Çalışmaları ve

Türk Hukuku Bakımından “De Lege Ferenda” Düşünceler [The Damages Actions Reform in the EU Competition Law and “De Lege Ferenda” Thoughts], Rekabet Dergisi 2009/1, p. 81, 127; ASTRID STADLER, Collective Action as an Efficient Means for the Enforcement of European Competition Law, in Jürgen Basedow (ed.), Private Enforcement of EC Competition Law, Alphen aan de Rijn 2007, p. 202, 211.

184 See eg NIKKI TAIT, EU rules to ease burdens on antitrust victims, The Financial Times (26 June 2009) available at <www.ft.com/cms/s/0/aa75d416-61b3-11de-9e03-00144feabdc0,dwp_ uuid=70662e7c-3027-11da-ba9f-00000e2511c8.html?nclick_check=1>; VÉRONIQUE MAGNIER, Class Actions, Group Litigation and Other Forms of Collective Litigation, French national report on collective actions submitted under the auspices of the project ‘Globalisation of Class Actions’, Oxford 2007, p. 17-18.

185 DIMITRIOS-PANAGIOTIS L. TZAKAS, Effective Collective Redress in Antitrust and Consumer Protection Matters: A Panacea or a Chimera? CMLR 2011, p. 1142. For an in-depth study see WILLEM VAN BOOM & GERHARD WAGNER (eds.), Mass Torts in Europe, Cases and Reflections, Berlin/Boston 2014; CHRISTOPHER HODGES, The Reform of Class and Representative Actions in European Legal Systems, A New Framework for Collective Redress in Europe, Oxford 2008.

186 Supra fn 183. 187 The European Consumers’ Association, European Group Action Ten Golden Rules, available

online at www.beuc.eu. 188 ROBERT GAUDET, Turning A Blind Eye: The Commission's Rejection of Opt-Out Class Actions

Overlooks Swedish, Norwegian, Danish and Dutch Experience, ECLR 2009, p. 107 ff. See also HANS W. MICKLITZ & ASTRID STADLER, The Development of Collective Legal Actions in Europe, Especially in German Civil Procedure, EBLR 2006, p. 1473 ff.

189 For opt-out rights (particularly opt-out rights as a check on class counsel and class repre-sentative performance), see THEODORE EISENBERG & GEOFFREY P. MILLER, The Role of Opt-Outs and Objectors in Class Action Litigation: Theoretical and Empirical Issues, Vanderbilt L. R. 2004, p. 1529, 1534.


227

ting out of a collective action is always possible. Finally, opt-out collective actions

are more appropriate than opt-in collective actions to deprive the infringers of

their anticompetitive gains and deter future unlawful practices.

It seems that, whether opt-out or opt-in, in the coming years, class action will be

one of the most debated topics both at national and European levels. On 28 Sep-

tember 2012, in her speech on ‘EU Law-Making’ during a conference organized by

the European Law Institute in Brussels,190 Diana Wallis, former Member of the

European Parliament, confirmed this. She said that, in April 2012, the UK Depart-

ment for Business, Innovation and Skills issued a consultation paper on private

actions in competition law, which, if enacted, would represent a radical reshaping

of the competition litigation landscape in the UK, including introducing for the

first time a UK opt out class action for competition law claims. She also added that

similar projects at the European level are high on the EU Parliament’s agenda.191

On 2 February 2012, the European Parliament indeed adopted a resolution on

‘Towards a Coherent European Approach to Collective Redress’, which aims at

identifying common legal principles on collective redress and warning against the

risks of abusive litigation.192 The resolution proposes no punitive damages,193 no

forum-shopping,194 no contingency fees,195 no third-party financing of collective

cases,196 and maintaining the ‘loser pays’ rule.197 Moreover, according to the Reso-

lution, any European approach should be based on the opt-in principle.198 In other

words, the Resolution would allow judges to manage a large number of similar

abuse of dominant position cases only if 1) victims are clearly identified, and 2)

they have expressly indicated their wish to take part in the procedure.

4.2.3. Abolition of the passing-on defence

Any anti-competitive behaviour leading to an increase in price (eg price fixing) in

one market harms not only the direct purchasers, but also indirect purchasers at

all levels of the supply chain.199 Theoretically, both direct and indirect purchasers

may sue the infringer for damages. However, direct purchasers passing on the

190 Opening keynote lecture at the Royal Flemish Academy of Belgium for Science and the Arts. 191 For more information on this topic see Rachael Mulheron (fn 181) p. 409 ff. 192 European Parliament Legislative Observatory Procedure File: 2011/2089(INI) available at

www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P7-TA-2012-21.

193 Id. para. 20. 194 Id. para. 26. 195 Id. para. 20. 196 Id. para. 20. 197 Id. para. 20. 198 Id. para. 20. 199 Commission Staff Working Paper, Annex to the Green Paper on Damages action for breach of

the EC antitrust rules, SEC(2005) 1732, para. 159.


228

price increase to their own customers do not usually bring such an action since

they have actually not suffered any loss. Real difficulties arise when an indirect

purchaser (often an end-consumer) claims to have suffered harm as a result of the

passing-on of price increases. On the one hand, because they are so remote from

the infringement, it is difficult for them to prove the existence as well as the extent

of the illegal passing-on of the overcharge.200 It is highly complex for an end-con-

sumer to estimate the extent of pass-on using a statistical study.201 An inability to

prove the existence as well as the extent of the illegal passing-on of the overcharge

implies that the end-consumer will not be compensated. On the other hand, in

Courage, the CJEU hold that «Community law does not prevent national courts

from taking steps to ensure that the protection of the rights guaranteed by Com-

munity law does not entail the unjust enrichment of those who enjoy them».202

In an effort to find a remedy to this issue, the Commission suggests relaxing the

application of the rules which place the burden of proof on the end-consumer.203

In the Commission’s opinion, indirect purchasers ought to be able to rely on the

presumption that the illegal overcharge was entirely passed on to them.204 Fur-

thermore, according to the Commission’s opinion, courts should use all the

possible mechanisms under national, Community and international law to avoid

under-compensation as well as over-compensation when purchasers at various

levels of the distribution chain bring joint, parallel or consecutive actions.205 In my

opinion, the Commission’s proposal to shift the burden of proof of the pass-on

does not imply a very meaningful change in national laws. Some European coun-

tries have already shifted the burden towards the defendant when the latter is in a

better position to prove his or her innocence or when it is difficult for the plaintiff

to prove various elements of liability, in particular a causal link and existence of an

infringement. In any event, the proposal does not always provide the optimal

solution, since in many cases it is very difficult to determine to what extent direct

customers passed on damages to the indirect customers.

200 See eg the judgment of the UK High Court in Arkin v Bochard Lines Ltd [2003] EWHC 687,

paras. 489 ff printed in RICHARD WHISH & DAVID BAILEY (fn 21), p. 311. In this case, the Court could not find causation between the potentially abusive practice and the harm suffered by the plaintiff. On this issue see also DAVID ASHTON & DAVID HENRY, Competition Damages Actions in the EU – Law and Practice, Cheltenham 2013, p. 69 ff; ASSIMAKIS P. KOMNINOS, Private Enforcement in the EU with Emphasis on Damages Actions, in Damien Geradin/Ioannis Lianos (eds.), Research Handbook on European Competition Law, Cheltenham 2013, p. 251.

201 Commission Staff Working Paper (fn 199) paras. 161 ff. 202 Case C-453/99, Courage v Crehan, [2001] ECR I-6297, para. 30. 203 See White Paper (fn 171) p. 7-8.On the new developments which appeared after the redaction

of the main text, see ERDEM BÜYÜKSAGIS, Standing and Passing-on in the New EU Directive on Antitrust Damages Actions, RSDA/SZW 2015/1, p. 13 ff.

204 Id. at 8. 205 Id.


229

In the EU, unlike in the US,206 there is as yet no direct ruling on this matter. At the

national level, an interesting solution to that problem can be found in the Berlin

Court of Appeals’ decision of 1 October 2009.207 The Court provided two impor-

tant parallel judgments on damages claims of cartel customers. It held that both

direct customers as well as indirect customers may claim damages against mem-

bers of a cartel. Cartel members may not invoke the so-called passing-on defence

in relation to their direct customers, even if the direct customers might have pas-

sed on a price increase to the indirect customers. Rather, direct customers and in-

direct customers are so-called joint creditors in terms of § 428 BGB. According to

the Court’s decision, the direct customers fulfil a damage-allocation-function,208 a

solution to passing-on issue which merits to be discussed in more details.209

Here, let me simply point out that such a solution is in line with the CJEU’s settled

case-law which addresses the compensation issue. Even though in Courage210 and Manfredi211 it did not specifically deal with the passing-on issue, the Court stated that any individual has the right to claim damages for loss caused to him or her by

conduct which is liable to restrict or distort competition. This approach, which has

recently been confirmed by the CJEU in Pfleiderer AG,212 lends support to the idea that indirect as well as direct purchasers should be able to sue.213 It is not expected

that the Court will depart radically from that policy and follow the US Supreme

Court’s approach baring indirect purchaser claims.214

5. Conclusion

Even if neither Switzerland nor Turkey is a member of the EU, their legal order is

increasingly governed by European rules and regulations. The impact of European

206 The US Supreme Court bars indirect purchaser claims. See Hanover Shoe Inc. v United Shoe

Machinery Corp., 392 US 481, 477-78, 88 S. Ct. 2224, 20 L.Ed.2d 1231 (1968); Illinois Brick Co. v Illinois, 431 US 732.

207 District Court of Berlin (Kammergericht Berlin), Transportbeton II, WuW 2010, p. 189. 208 HANS-GEORG KAMANN & STEFAN OHLHOFF, Gesamtgläubigerschaft als Lösung des Passing-On-

Problems?, ZWeR 2010, p. 303, 320. 209 At the European level see THEON VAN DIJK & FRANK VERBOVEN, Implementing the Passing-on

Defence in Cartel Damages Actions, Global Competition Litigation Review (GCLR) 2010/III, p. 98 ff; CARLO PETRUCCI, The Issues of the Passing-on Defence and Indirect Purchasers, ECLR 2008, p. 33 ff; Commission Staff Working Paper Accompanying the White Paper on Damages Actions for Breach of the EC Antitrust Rules COM (2008) 404, paras. 201 ff; JAKOB RÜGGEBERG & MAARTEN P. SCHINKEL, Consolidating Antitrust Damages in Europe: A Proposal for Standing in line with Efficient Private Enforcement, WOCO 2006, p. 395, 406.

210 Case C-453/99, Courage v Crehan, [2001] ECR I-6297, paras. 24 and 26. 211 Joined Cases C-295/04 to C-298/04 Manfredi v Lloyd Adriatico Assicurazioni [2006] ECR

I-6619, paras. 59 and 61. 212 Case C-360/09 [2011] ECR I-000, [2011] 5 CMLR 219. 213 RICHARD WHISH & DAVID BAILEY (fn 25), p. 301. 214 Supra fn 206.


230

law upon the Swiss and Turkish legal landscapes has brought significant changes

in the daily lives of their citizens, consumers, workers, farmers, businesses and

legal structures.

In this paper, I first provided a brief overview of the general influence of European

law on the recent Swiss and Turkish legislative frameworks. In light of the current

European developments, particularly the effects-based approach, I then analysed

the impact of EU competition law on the Swiss and Turkish definitions of abuse of

dominant position.

The effects-based approach has recently been promoted by the EU Commission’s

Guidance on Article 102 TFEU Enforcement Priorities. One of its aims is to use

competition to protect consumers more efficiently. To this end, unlike the tradi-

tional in abstracto – or normative – view, the effects-based approach proposes to

study in concreto how dominance may possibly affect consumers in the specific

market context. Such a method is not totally unknown to the Swiss and Turkish

legal frameworks. Efficiency considerations are one of the factors Article 5(2)

ACart takes into account, while Article 6(2)(e) TCA relies on the notion of consu-

mer interests when assessing abuse.

Nevertheless, my study shows that two major issues stand in the way of an

effective application of the effects-based approach in Switzerland and in Turkey.

Since they often do not have enough time and funds, administrative authorities

and courts are not able to proceed, in every single case, to a systematic and

detailed analysis of a conduct’s probable pro-competitive benefits and its probable

harm to consumers’ interests. The second issue concerns consumers’ access to jus-

tice. In other words, how to overcome the practical issues making it very difficult

for end-consumers to take individual actions against companies engaged in anti-

competitive behaviour?

The introduction of class action for competition law claims and the prohibition for

cartel members to invoke the passing-on defence or the limitation of its applica-

tion to exceptional cases may increase the end-consumers’ motivation to sue. The

way the administrative authorities and courts will deal with the application of the

effects-based approach will probably be one of the determinant factors for the

creation of an effective private enforcement system.

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