The Authority recently published its reasoned decision concerning the fast-moving consumer goods (FMCG) sector. This publication was keenly anticipated, especially after the TCA's declaration that major suppliers and retailers—including Coca Cola, Doğanay Gıda, Frito Lay, GlaxoSmithKline, Haribo, Pepsi Cola, and Red Bull— violated Article 4 of Law No. 4054 through hub-and-spoke cartel arrangements and resale price maintenance practices1. The decision is significant as it involved both hub-and-spoke and RPM violations and featured dissenting opinions by Board members.

Background

This is the second investigation the Authority conducted in the FMCG sector based on allegations of hub-and-spoke and RPM arrangements. The first investigation, initiated during the COVID-19 pandemic, probed 29 undertakings comprised of major retailers and suppliers. Following this investigation, the Board imposed a total administrative fine of approximately TRY 2.6 billion on five major retailers and their common supplier of edible oils, Savola Gıda, for facilitating hub-and-spoke arrangements2. The Board also concluded that Savola had determined the resale prices for its retailers.

In the recent decision, the Authority examined 15 suppliers and retailers, imposing total fines of approximately EUR 44.3 million. Notably, the TCB refrained from sanctioning the supermarkets due to the principle of non bis in idem, as they had already been fined in the first investigation in 2021.

Key Takeaways from the Decision

The reasoned decision delved into the coordination among the investigated parties, determining that price transitions were facilitated through the indirect sharing of forward-looking, competition-sensitive information. Retailers, aware of this coordination, used the information in their forward-looking pricing strategies, and intervened in prices. The decision highlighted several significant issues:

Firstly, it touched upon the buyer power of the suppliers, noting that concentration could foster more favourable conditions for forming and maintaining a hub-and-spoke cartel. Citing the Preliminary Sector Inquiry Report Regarding the FMCG3 published on 5 February 2021, it emphasised that while national chain supermarkets possess significant buyer power, it does not legitimise indirect information sharing regarding future prices and price transition dates.

Secondly, the decision discussed the standard of proof/ evidence, referencing a precedent from the 13th Chamber of the Council of State, which stated that due to the secretive nature of cartels, evidence may not be available from every undertaking, and expecting such would reward those most adept at destroying evidence.

Dissenting Opinions

The decision is exceptional for containing more than five dissenting letters on various subjects, primarily concerning parties' involvement in hub-and-spoke and RPM violations, the standard of proof for hub-and-spoke cartels and RPM, and the proper implementation of the ne bis in idem principle. These discussions hint at the decision being a reference precedent for numerous future cases given the multifaceted nature of allegations and the academic discourse it encapsulates.

Conclusion

The decision underscores the Authority's increasing focus on hub-and-spoke and RPM behaviour in the FMCG sector, offering detailed discussions by various Board members on the hub-and-spoke cartel. It provides enlightening evaluations on the standard of proof/evidence, oligopolistic dependence, and countervailing buyer power, marking a significant step in the Authority's ongoing scrutiny of competition practices within the FMCG sector.

Footnotes

1. The Board's decision dated 15.12.2022 and numbered 22- 55/863-357.

2. The Board's decision dated 28 October 2021, No. 21-53/747-360

3. Please see. Preliminary Sector Inquiry Report Regarding Fast-Moving Consumer Goods (FMCG) Retailing, https:// www.rekabet.gov.tr/Dosya/geneldosya/htm-perakendeciligi-sektor-incelemesi-on-raporu-pdf.

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