The Board published its reasoned decision1 on the investigation initiated upon a complaint filed by Ünsped Gümrük Müşavirliği ve Lojistik Hizmetleri A.Ş ("Ünsped") (a customs brokerage and logistics company) against the Customs Brokers Association of Istanbul ("Association"). Ünsped alleged that the Association had violated Article 4 of the Law No. 4054 through its proposed protocol for the purpose of preventing unfair competition. The Association's protocol involved prohibitions for customs broker companies on (i) providing offers and contacting customers without a written request, (ii) advertising activities, (iii) undertaking to finance the costs arising from the customs brokerage activities by offering a payment plan, and (iv) collaborating with non-registered persons for such activities.

In its assessment of the relevant market, noting that the relevant product market may be defined as the market for "customs brokerage services," the Board nevertheless chose to leave the relevant product market definition open. The Board further held that geographic scope of the relevant market may be Turkey, since brokerage services are offered nationwide, and the competition conditions for such services would not differ among different regions of Turkey; however, the Board left the geographic market definition open as well.

With respect to the first prohibition, which stipulates that none of the members/customs broker companies would have any contact with potential customers, advertise its businesses, or provide them with potential offers without a written request, the Board noted that the objective of the Association's decision was to restrict competition among members in terms of gaining customers, which is indeed against the nature of competition. Given that the undertakings mainly compete to gain customers, the Board evaluated that this decision would aim to eliminate such competition.

Furthermore, the Board also considered that the Association's decision would pose a significant barrier to entry into the relevant market, given that new entrants would lack customer portfolios at the outset, and accordingly, would not be able to provide offers to customers in their competitors' portfolios by any possible means. The Board additionally stated that the undertakings would have no motivation to enhance the quality of their services, prices and other terms of trade, due to lack of competitive offers from competitors to the customers in their portfolios. In line with this reasoning, the Board ultimately held that the Association's decision amounted to a restriction of competition by object, as it aimed to eliminate competition and remove the motivation among undertakings to gain more customers.

With respect to the second prohibition, the Board considered that the first aspect of the prohibition related to the restriction of advertising activities. As customer-oriented information and marketing activities cannot be separately evaluated from competition, in light of the fact that the primary elements of competition are commercial terms, fundamentally including price and quality, the Board indicated that a prohibition on advertising may disrupt supply of better services (i.e., more convenient prices with a better quality). It also noted that such a prohibition would cause asymmetric information, which could hinder the customers' access to better services. The Board also added that this prohibition would adversely affect new entrants' ability to effectively compete against incumbent undertakings.

The Board evaluated the other aspect of the second prohibition as a ban on using commercial titles, which eliminates the ability of members of the Association to use their commercial titles, which were registered in accordance with the applicable laws and commercial practices. The Board held that this prohibition would lead to a monotype/standardization in the relevant market and that it would create a risk of lowering the benefits from competition, which the Board deemed to fall outside the main purpose of the prohibition.

In terms of the third prohibition, the Board held that prohibiting members from undertaking certain financing activities for costs arising from their services through payment plans would amount to a determination of sale conditions, which would be a violation of Article 4 of the Law No. 4054 by object.

As for the genesis of the Association's decision that entailed all these various prohibitions, the Board examined the evidence collected during the on-site inspections, and observed that the Association had been enforcing the same mles since 2006. Indeed, the Association had imposed sanctions in 2017 on a member who had failed to comply with the Association's decision.

Consequently, the Board examined whether the Association's decision could be granted an individual exemption under Article 5 of the Law No. 4054. As a result of this evaluation, the Board reiterated the negative consequences of the decision, and found that the Association's decision restricted the members' activities that might benefit their customers and prevented new entries to the market. To that end, the Board declared that the Association's decision could not be granted an individual exemption.

In light of the above, the Board decided unanimously that the Association had violated Article 4 of the Law No. 4054 through its decisions concerning the prohibitions regarding competitors' offers and advertising activities. Accordingly, the Board decided (by a majority) to impose an administrative monetary fine on the Association in the amount of TRY 31,076.89. For the sake of completeness, Prof. Dr. Ömer Torlak (the President of the Board at the time of the decision), issued a dissenting opinion in terms of the calculation of the administrative monetary fine based on the duration of the violation. To that end, the dissenting opinion stated that there was no evidence that could demonstrate that the decision of the Association had been enforced uninterruptedly between 2006 and 2018, given that all of the findings obtained within the scope of the investigation related to 2017 and 2018 and no other years prior to that.

This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in March 2020. A link to the full Legal Insight Quarterly may be found here


1 The Board's decision dated June 20, 2019, and numbered 19-22/352-158

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