Understanding Dominant Position under Competition Law
In competition law, dominant position refers to a situation where an undertaking has the power to act independently of its competitors, customers, and ultimately consumers in a given market. Dominance itself is not prohibited; what is prohibited is its abuse.
Article 6 of Law No. 4054 on the Protection of Competition explicitly forbids the abuse of a dominant position, which includes practices such as:
- Imposing unfair purchase or selling prices or trading conditions,
- Limiting production, markets, or technical development,
- Applying dissimilar conditions to equivalent transactions (price discrimination),
- Tying contracts to unrelated obligations, and
- Refusing to supply essential goods or services without justification.
The Turkish Competition Authority (TCA) evaluates dominance by considering market share, entry barriers, buyer dependency, financial power, and control over distribution networks. Once dominance is established, the next step is to assess whether the undertaking’s conduct constitutes an abuse without objective justification.
Categories of Abuse: Exploitative, Exclusionary, and Discriminatory
In Turkish and EU competition law, abuses of dominance generally fall into three broad categories:
- Exploitative Abuse – When the dominant firm exploits customers or suppliers directly (e.g., excessive pricing).
- Exclusionary Abuse – When the firm uses its power to exclude competitors (e.g., predatory pricing, margin squeeze).
- Discriminatory Abuse – When equivalent partners are treated differently without justification, distorting competition.
Selective Pricing as an Abuse of Dominance
Selective pricing, sometimes called targeted discounting or discriminatory pricing, is one of the most debated forms of abuse in modern competition law.
It occurs when a dominant undertaking charges different prices to different customers in a way that cannot be justified by cost savings or legitimate commercial reasons.
Unlike predatory pricing, selective pricing does not necessarily involve prices below cost. The distinguishing factor is intent and effect—if pricing differences are designed to steal competitors’ customers or hinder their operations, the conduct may qualify as abuse.
Key Takeaways and Compliance Recommendations
To ensure compliance, dominant undertakings operating in Turkey should:
- Conduct periodic competition law audits, especially in pricing and discount strategies.
- Document the economic justifications behind price differentiation (e.g., cost savings, volume efficiency).
- Train commercial teams to recognize the boundaries between competition and exclusion.
- Seek legal advice before applying targeted discount campaigns in markets with limited competitors.
Failure to comply can result in severe administrative fines (up to 10% of annual turnover), reputational damage, and potential follow-on civil claims.
The prohibition of abuse of dominance under Article 6 of Law No. 4054 remains one of the cornerstones of Turkish competition law.
Selective pricing, while often appearing as legitimate competition, may cross the line into abuse when used to undermine competitors or distort market structure.
For businesses with strong market power, understanding this balance is critical.
By aligning pricing strategies with objective justifications and transparent market behavior, undertakings can secure both competitive advantage and regulatory compliance within Turkey’s evolving competition framework.
