Prepared by: Berfu Yalçın, Serdarhan Güler

Recently, the Competition Board decided to impose a total fine of TRY 2.6 billion on BİM, CarrefourSA, Migros, A101 and Şok, and a fine of TRY 22 million on Savola Gıda, a liquid oil company, for violating Article 4 of the Law No. 4054. The decision regarding infringement in this matter, which has been on Turkey's agenda for some time regarding the price determination of chain supermarkets, is likely to be a topic of discussion in the Turkish public opinion for some time. In the Competition Board's statement[1] regarding the decision, it is stated that the above-mentioned undertakings engaged in an unlawful behavior through cartel-like agreements or concerted practices that also exhibit hub and spoke characteristics. Since the concepts such as "hub and spoke", "cartel" and "concerted practice" are similar to each other and it is difficult to determine the differences between them, we will briefly explain the considerations of these concepts in Competition Law.

In this context, cartels should be mentioned first. Cartels can be defined as explicit or implicit agreements that independent firms secretly conclude among themselves in order to limit or restrict competition unlawfully, which is the main source of the free market economy, in terms of goods or products with a certain market volume. Cartels exhibit behaviors contrary to the principle of free competition, which is the basis of a free market economy. A free market economy can survive thanks to competition because competition ensures that lower priced, higher quality products are offered to consumers with more options[2]. This creates a more efficient and effective market than monopoly markets. For the reasons explained, cartels are the most dangerous violations regarding competition that negatively affect economic life, harm the actors in the free market and have many other negative effects, and they are referred to as cancerous elements of the free market economy in doctrine and judicial decisions[3].

After cartels, another important concept violating competition under Article 4 of the Law on the Protection of Competition is concerted practices. In concerted practices, there is no written or verbal agreement or decision taken between the undertakings that violate competition. In this case, undertakings intentionally restrict competition by engaging in similar behavior. Since concerted practices are difficult to prove, the legislator has created a legal presumption. Accordingly; "In cases where the existence of an agreement cannot be proved, the fact that the price changes or the balance of supply and demand in the market or the regions of operation of the undertakings are similar to those in the markets where competition is prevented, distorted or restricted" constitutes a presumption that the undertakings are engaged in concerted practices.[4]

With the regulation of concerted practices, as stated in the Competition Board's Süt[5] decision, "not parallel pricing, but conscious parallels between firms are prohibited. Not all parallel behaviors are considered "per se" competition violations in the sense of Competition Law. In this respect, when we look over the bottled milk market, due to the characteristics listed below, we can talk about the existence of parallel behaviors that are seen in oligopolistic markets and can be explained on economic grounds, rather than concerted practices in the sense of competition law."

As can be understood from the decision, while conscious parallelism is required for the existence of concerted practices, it will not be possible for undertakings to mutually declare their will as in cartels. In fact, the purpose of concerted practices is to prevent undertakings from legitimizing anticompetitive practices through fraud against the law. As a matter of fact, in concerted practices, there is no agreement between the undertakings that can be evaluated within the scope of Article 4 of the LPCL (Law on the Protection of Competition), nor can the existence of such an agreement be determined.[6] In accordance with the above-mentioned Milk decision of the Competition Board, four elements must be present together for the existence of a concerted practice. Accordingly, "(a) There shall be at least two or more undertakings, (b) There shall be conscious parallelism, (c) These parallel behaviors shall not be explained on economic and rational grounds, (d) Competition shall be restricted." Therefore, acts that can be explained on economic and rational grounds shall not be considered as concerted practices.

After explaining the concepts of cartels and concerted practices, it is necessary to analyze anticompetitive agreements as horizontal and vertical agreements. This is because these concepts should also be known in order to understand the Hub&Spoke cartels. What is meant by an agreement in Competition Law is the mutual agreement of at least two parties to prevent competition. Therefore, the existence of a written agreement is not necessary.

First, horizontal agreements are agreements between competitors at the same level of the production chain and in the same market. What is meant by such agreements is essentially cartel agreements. Since cartel agreements do not have any positive effect on competition in any way, they are considered unlawful pursuant to the per se prohibition principle[7].

Vertical agreements are agreements between undertakings in the same goods or services market but operating at different levels of the market. For example, an agreement between a supplier and a retailer can be said to be a vertical agreement. It is important to note that vertical agreements are not per se prohibited. This is because while the negative impact of horizontal agreements on competition is not disputed, the impact of vertical agreements on competition is open to debate. Vertical agreements even have a group exemption due to this feature[8].

Although the content of the Hub&Spoke concept, which is the last of the concepts that constitute the subject matter of our article, has not yet been clarified, it is possible to reveal the elements of the concept in light of the studies published so far and a limited number of court decisions[9]. An important decision in clarifying this concept is the Board's Tesco decision[10]. According to the decision, five elements shall be cumulatively present in the concrete case for the existence of a Hub&Spoke cartel:

"1. Retailer A shares its future sales pricing intentions with supplier B,

2. A makes this disclosure with the intention and expectation that B will use this information to influence market conditions by sharing it with other retailers,

3. B does indeed share this information with other retailers, e.g. C,

4. C knows and can predict the intentions with which information is given from A to B, and

5. C actually uses the information it obtains to make its own pricing"

As can be understood from this, at least three undertakings, one vertical and two horizontal, are required for the existence of Hub&Spoke. In Hub&Spoke cases, horizontal actors try to come together among themselves, and when they cannot, they benefit from a vertical actor with whom they have a contractual relationship and who has the market power to make this horizontal relationship possible, and they share with each other the information of their undertakings that can be considered as qualified[11]. Due to this vertical actor, it becomes possible for them to take concerted actions with the qualified information that should normally be kept confidential.

Although Hub&Spoke cartel and concerted practices were mentioned in the Competition Board decision that inspired this article, the reasoned decision has not yet been announced. However, in the statement regarding the decision, it was stated that the relevant retail undertakings "shared competition-sensitive information such as future prices, price transition dates, periodic activities and campaigns directly or through joint suppliers. They intervened in the prices of undertakings that had reduced prices or had not yet increased prices during the period when prices increased across the market through suppliers, thereby increasing these prices to the disadvantage of consumers. In the event that competitor prices do not increase, compliance with the collusion between the undertakings was continuously monitored through price reductions that are rapidly implemented on a product and/or region-specific basis and/or penalization strategies such as issuing a refund invoice to the supplier;".

Accordingly, the Board concluded that the retail undertakings subject to the investigation have violated Article 4 of Law No. 4054 through agreements or concerted practices in the nature of a cartel, which also exhibits hub and spoke characteristics, for the purpose of fixing retail prices.

Within the framework of Hub and Spoke activities, it has been determined that the supplier undertaking "violated Article 4 of Law No. 4054. This violation occurred through agreements or concerted practices that have the appearance of a hub and spoke cartel with the explicit purpose of fixing retail sales prices. The purpose was to ensure and maintain collusion/coordination between the retailers in question regarding shelf prices and price transitions in terms of their own products. Additionally, the supplier mediates the sharing of competition-sensitive information such as future prices and price transition dates of retailers within this framework. These actions were in a breach of Article 4 of Law No. 4054 through agreements or concerted practices that have the appearance of a hub and spoke cartel with the explicit purpose of fixing retail sales prices by means of the sharing of hub and spoke information".


Since the aforementioned decision has not yet been announced, it is not known at this stage which actions violate the competition law rules in the context of the concrete case and for what reasons. However, some undertakings, which are the recipients of the administrative fine imposed by the Board, announced that they would apply for the necessary legal remedies immediately after the announcement of the decision. We will see how the court will decide on this sensational fine and the related developments in the coming days.

[1]Explanation of the Final Decision Regarding the Investigation Conducted Against Chain Markets Engaged in Retail Trade of Food and Cleaning Products and Undertakings at Manufacturer and Wholesaler Level and 1 Association Pursuant to Article 49 of the Law No. 4054 on the Protection of Competition. 

[2] Decision of the Competition Board dated 29.03.2018 and numbered 18-09/180-85, pp. 30-32.

[3] ERGÜN Aslı, Rekabet Hukukunda Kartelleşmenin Hukuki Yaptırımları, Yüksek Lisans Tezi, Ankara-2019, s.7.

[4] ERGÜN Aslı, Rekabet Hukukunda Kartelleşmenin Hukuki Yaptırımları, Yüksek Lisans Tezi, Ankara-2019, s. 30 vd.

[5] Decision of the Competition Board dated 23.03.2000 and numbered 00-11/109-54.[6] CANBOLAT, İrfan Uraz, Rekabet Hukuku Açısından Anlaşma ve Uyumlu Eylem Ayrımı ve Hukuki Sonuçları, İstanbul-2006, s.113.

[7] Per se rules are accepted in cases where experience reveals that certain behaviour will cause serious anti-competitive consequences and can hardly be justified. In this respect, per se rules have the advantage of economical use of limited judicial resources and providing clearer guidance to undertakings regarding lawful behaviour. Under the per se approach, the anti-competitive effects of the practice do not have to be shown. In this framework, for example, it is sufficient to prove the existence of a cartel; it is not necessary to examine whether there is a decrease in competition and whether damage has been caused.

[8] Group Exemption Communiqué on Vertical Agreements (Communiqué No: 2002/2), Official Gazette 24815 (14.7.2002).

[9] DEMİR Koray, Hub&Spoke Kartelinin Özellikleri – Uygulamanın Yeniden Satış Fiyatının Belirlenmesine Yönelik Tartışmalar ile İlgisi, Türk-Alman Üniversitesi Hukuk Fakültesi Dergisi, Yıl 2019, Cilt 1, Sayı 1, 3 - 16, s. 1.

[10] Tesco Stores Ltd. v. OFT (2012-CAT 31), s. 23, prg. 57.

[11] Tesco Stores Ltd. v. OFT (2012-CAT 31), s. 23, prg. 57.