As of today, the Turkish Competition Board has announced its final decision (in short form) on its web page regarding its investigation over Booking.com’s activities.
As is known, the Board was investigating as to whether or not Booking.com’s activities relating to so-called most-favoured customer clauses (best price guarantee) in its contracts with the undertakings infringed Article 4 and/or 6 of the Act No. 4054 on the Protection of Competition (i.e. the articles on the prohibition of anticompetitive agreements, concerted practices, and abuse of dominant position, which are the reflections of Article 101 and 102 of the Treaty on the Functioning of the EU).
Booking.com has faced similar investigations/actions of the competition watchdogs in the world such as Germany, Australia, France, Sweden, and Italy. As is known, Expedia, another competitor active in the market, has also faced with similar proceedings. The case have been closely followed by antitrust practitioners in Turkey, since we were to understand the Turkish Competition Authority’s approach after the EU watchdogs’ actions over most-favoured customer clauses.
The Board held in its decision that the clauses on price and quota parities imposed by Booking.com within the scope of its contracts (agreements) with the undertakings providing accommodation were anticompetitive agreements as per Article 4 of the Act No. 4054, and it therefore proceeded with exemption assessment. The Board firstly determined that Booking.com could not benefit from the block exemption for vertical agreements, given the fact that it enjoys a market share more than 40%. The Board also concluded that the agreements neither fulfil the conditions of individual exemption. In conclusion, the Board determined the infringement (i.e. anticompetitive agreements between undertakings – Article 4 of the Act No. 4054).
In determining the administrative fine, the Board submitted that the Turkish affiliate of Booking.com B.V. (i.e. Bookingdotcom Destek Hizmetleri Limited Şirketi) did not involve in the infringement and therefore held Booking.com solely liable. The Board concluded that the infringement did not amount to a cartel, accordingly it is within the scope of “other violations”, for which the base fine can be determined between 0.05% and 3%. The Board also increased the fine by half determining that the violation lasted more than 1 year and less than 5 years. The Board did not clarify the percentage of the fine applied over the annual turnover, but simply stated that the fine amounted to TRY 2,543,992.85. It is neither possible to understand as to whether the Board has taken into account Turkish turnover of Booking.com B.V. or its global turnover. On the other hand, in the light of our experience in former Board decisions on foreign companies, we estimate that the national turnover could be taken into account.
In determining percentage of fine, the Board shall take into account the year preceding the year of the final decision held, and if it was not possible to determine an annual turnover, the preceding year shall be considered. Considering the fact that the decision held on 05.01.2017, i.e. at the very beginning of the year, the Board has taken into account the annual turnover generated in 2015 for Booking.com B.V..
Please note that the Board’s decision on Booking.com B.V. has not finalized yet, and it is possible for the parties having interest to initiate annulment lawsuits before the administrative courts of Ankara.
Booking.com Decision of the Turkish Competition Board paves the way for a stricter scrutiny regarding most favoured customer clauses. We therefore highly recommend reviewing such closes in vertical agreements to avoid potential Board fines.
Att. İsmail Ünal Doğan, LL.M.