Summit Note

The Competition Summit conference, organized on the occasion of the 20th anniversary of the Competition Authority, was held in Istanbul between October 31 and November 3, 2017. We are very pleased that, with the participation of high-level officials from international competition organizations and national authorities as well as esteemed stakeholders from the business and education world to engage in a productive exchange of opinions, the Competition Summit achieved our objective - which was to provide a platform where current national and international developments and experiences in the fields of competition law, policy and related areas of regulation could be shared, as well as problems and solutions could be discussed.

The “Summit Note” herein was prepared to provide brief information on the subjects addressed as well as discussions and assessments made in the Competition Summit, the main theme of which was “The Effects of Competition Law and Policy on the Economy”.

(PRE-CONFERENCE PROGRAM)

The Competition Summit started on October 31, 2017, with the pre-conference program “Competitiveness and Competition Law in the Eurasian Countries,” organized in coordination with the Economic Research Foundation.

The first session of the pre-conference program was held under the moderation of Prof. Dr. Mehmet BARCA, President of the Social Sciences University of Ankara, with papers presented by Prof. Sudi APAK, President of the Istanbul Esenyurt University, Asst. Prof. Özgür ÖZTÜRK, from the İstanbul Technical University faculty, and Mr. Kürşat ÜNLÜSOY, Vice President of the Turkish Competition Authority. In his presentation titled “Development and Competition,” Sudi APAK focused on the fact that it is possible to ensure competitive superiority, a decisive factor for a country’s level of development, by means of production, marketing, price superiority, financial facilities, increasing foreign trade and developing education opportunities. Özgür ÖZTÜRK, in his presentation titled “Patent Rights and Their Effect on Competition” addressed the relationship between intellectual property and competition law, stating that the traditional view approaching the two branches of law were as if they were in conflict was replaced with the current view stating that they have similar goals. ÖZTÜRK emphasized that, within the framework of the aforementioned modern view, patent rights and competition rules held no precedence over each other, that special rules were not necessary to assess anti-competitiveness in the exercise of patent rights, and that their unity of purpose allowed patent implementations to broadly benefit from exemption. Kürşat ÜNLÜSOY presented a paper titled “Competition Policy and Competitive Power,” in which he pointed out that competition policies primarily required a sound regulatory framework, emphasizing that an efficient regulatory framework would serve to provide signals for determining areas with resource inefficiencies, to raise corporate awareness by spreading information and data, to secure return of investments by eliminating uncertainties, to function as a type of external restraint, and to “smooth” the market to prevent incumbent firms from gaining excessive advantages, thereby creating a virtuous cycle in the economy. ÜNLÜSOY stated that within the aforementioned framework, independency would not be sufficient to ensure the efficiency of regulatory authorities, and that these authorities must be accountable and must produce transparent institutional and qualitative outputs.

The second session of the pre-conference program was reserved for the panel titled “Competition and Competitiveness in Eurasian Countries: Challenges and Opportunities,” moderated by the President of the Austrian Competition Authority Mr. Theodor THANNER. The panelists were presidents, board members and high-level managers from the Eurasian countries Albania, Azerbaijan, Bosnia and Herzegovina, Georgia, Kyrgyzstan and Macedonia. They shared their experiences, discussed the challenges and opportunities related to competition policies and practices, and examined regional co-operation opportunities.

  • Chairwoman of the Albanian Competition Authority Prof. Juliana LATIFI provided information on the organizational structure and operation of the authority in her presentation, defining the strengths of the authority as its quasi-judicial independent status and its efficient intra-authority experience sharing and information management, while stating that its challenges were the inadequate number of personnel and the difficulty of establishing coordination between the Authority and the courts. LATIFI evaluated the close relationship with the Parliament and the international collaboration possibilities as the opportunities of the Albanian Competition Authority, and gave information about the ongoing collaborations of the Authority.
  • Deputy Head of the Azerbaijan Antimonopoly State Service Mr. Araz ALİYEV provided information on the development of competition law in Azerbaijan, areas of responsibility and the operations of the Anti-Monopoly Service, and pointed out the fact that cooperation between competition authorities became even more important in the current globalization environment. He stated that, in this context, while collaborations mostly took the form of adopting the competition legislation and exchanging experiences in the 1990s, today they were in the form of information exchange, coordinated parallel activities or joint investigations and adoption of general decisions. He underscored the fact that the fight against international cartels, protection and development of competition in cross-border goods and services markets, implementation of agreed parallel measures for fighting anti-competitive conduct, and the improvement of merger control mechanisms based on international agreements were of vital importance in improving this type of cooperation.
  • Lejla ŠAKOVIĆ KARIĆ, Competition Advisor of the Bosnia and Herzegovina Competition Council, provided information on the development of competition law in Bosnia and Herzegovina as well as on the organizational structure and operation of the Competition Council. She called attention to the importance of international collaborations and collaborations between sector regulators, trade chambers, bar associations, entrepreneur associations, universities and other educational institutions within the country.
  • In his presentation, Deputy Chairman of the Georgian Competition Authority David CHICHINADZE provided information on the development of competition law in Georgia, the organizational structure of the authority, and its operation. He identified the main challenges the authority is trying to overcome as improving the current legal framework, increasing the institutional capacity, difficulties in coordinating with judicial authorities and limited competition awareness in the country. On the other hand, he stated that the important opportunities facing the Georgian Competition Authority were the project conducted with the direct support of the Commission as part of the European Union membership process, the collaborations with the national competition authorities of various countries, and the activities jointly organized with the universities in Georgia.
  • Director of the Kyrgyzstan Anti-Monopoly Agency Shukhrat SABIROV, provided information on the development of competition law in Kyrgyzstan, the organizational structure of the authority, and its operation. He stated that the Agency is reviewing its activities and making the necessary regulations in order to adapt to the changes rising with globalization and attaches special importance to international cooperation.
  • In her presentation, Department Head of the Macedonian Competition Commission Karolina ANDONOVSKA provided information on the development of competition law in Georgia, the organizational structure of the authority, and its operation. She defined the primary challenges before the authority as insufficient budgetary and personnel resources and problems in the judicial processes concerning the decisions. She emphasized that international cooperation possibilities were important opportunities for the Authority and gave information about them.

The pre-conference program was concluded with a presentation titled “The Improvement of Investment Environment via Competition Law Enforcement”, given by Prof. Adem ŞAHİN, President of the TOBB University of Economics and Technology. In his presentation, ŞAHİN emphasized that an efficient competition policy is an important element of the investment climate, and touched upon the importance of contextualizing the aims and objectives of the competition policy as well as its effect on the investment climate within a cause and effect relationship.

 (MAIN EVENT)         

The main event of the Competition Summit was held under the title “the effects of competition law and policy on the economy”  between November 1 -3, 2017.

The first day of the Competition Summit started with the keynote speech by one of the leading names in the area of competition law and policy, Prof. William KOVACIC, Director of George Washington University Competition Law Center. KOVACIC stated that in order to ensure the efficiency of competition laws and policies, competition authorities might use seven steps for each project/activity to be assumed and the following questions will form those steps (i) What is the aim of the project? (ii) What are the risks of the project? What will be the costs on the authority in case of failure? (iii) How does the project in question fit in the overall projects of the authority? (iv)Who will be responsible for the project? (v)What is the cost of resources to be devoted to the project? (vi) How long will it take to complete the project? (vii) How can the authority confirm that the project has achieved its objectives?  KOVACIC also mentioned possible sub-questions for each step.

The first day continued with the presentation by Prof. Murat TAŞDEMİR from Istanbul Medeniyet University on “The Effects of Anti-competitive Behavior in Turkish Banking Sector on Consumer Welfare”. The presentation showed the results of the economic study on 2013 decision of the Competition Authority about the banking sector. The study sought answers for “How did the anti-competitive behavior affect the market?” and “to what extend the intervention by the Competition Authority increase consumer welfare?” The study concluded that the decision in question made a contribution of respectively 27 billion and 143 billion TL on the basis of consumer loans and total loans.  

The first day of the main event ended with an international panel on “The Effects of Competition Law and Policy on Economy”, where the panelists discussed the effects of competition law and policy on economy, tools and institutional structures that will make competition law more efficient as well as different approaches related to those in developing and developed countries in light of theoretical and empirical studies and their experiences. The said panel was moderated by Ms. Maria Teresa MOREIRA, head of UNCTAD Competition and Consumer Protection Policy Branch and the speakers were the heads of the competition authorities of Georgia, Kazakhstan, Pakistan, Peru, Romania and Zambia. The outstanding points in the panel can be summarized as follows:

  • Nodar KHADURI, the Chairman of the Competition Agency of Georgia, stated that it was understood in the 25-year process after Georgia gained its independence again that competition law and policy is an important cornerstone for smaller economies like Georgia and emphasized that the assertions that “competition infringements restrict economic growth” and “competition is the basis of success” are valid and proven by experience.
  • In his presentation, Mr. Azamat MAITIYEV, Deputy Chairman of Kazakhstan Ministry of National Economy National Monopolies Regulation and Competition Protection Committee provided information about the development of the competition law as well as the organizational structure and operation of the Competition Commission in Kazakhstan and highlighted the importance of structuralization of competition law tools according to international standards and their efficient use.
  • Vadiyya Shahnazgul KHALIL, Chairperson of Pakistan Competition Commission made a presentation on the development of the competition law as well as the organizational structure and operation of the Competition Commission and pointed out that competition policies are applied with similar principles in not only developed countries but also developing countries in order to ensure entry to and independent functioning of markets. She added that competition law has expanded globally, the rules have been harmonized and converged thanks to the encouragement of international competition agencies such as UNCTAD, OECD and ICN; therefore, the differences in implementation among countries have been eliminated considerably.
  • Ivo GAGLIUFFI, the Chairman of the National Institute for the Defense of  Free Competition and the Protection of Intellectual Property (INDECOPI) provided information about the development of the competition law as well as the organizational structure and operation of INDECOPI and emphasized that competition enforcement practices are established to a large extent and differences in practices among countries have been decreasing in time.
  • Bogdan Marius CHIRITOIU, President of Romanian Competition Council, highlighted that impact assessment regarding competition law and policy is one of the most important tasks of Romanian Competition Council. Mr. CHIRITIOU stated that they conducted studies about total competitive pressure index in 2013, Competition Assessment Project between 2014-2016 with the cooperation of OECD and the measurement of competition policy impact in 2017 within this framework, and gave information about the result of those studies.
  • Kelvin Fube BWALYA, the Chairperson of the Zambia Competition and Consumer Protection Commission Board, stated that the principal effect of competition law policies is to ensure that consumers can reach new and various products at affordable costs and thus to increase welfare. He added that even if the ultimate goal of competition policies are the same, the priorities in designating those policies may vary because of the differences in level of development between developing and developed countries.

The second day of the main event started with the presentation “the Effects of Competition Law Enforcement on Turkish Economy: Competition Authority’s Perspective”  by Ms. Müge ÖZERCAN PAŞAOĞLU, Coordinator at the Economic Analyses and Research Department of Competition Authority. In her presentation Ms. PAŞAOĞLU shared the results of the Impact Analysis, which examines the interventions of the Competition Authority to anti-competitive agreements and practices as well as anticompetitive mergers and acquisitions according to the Act No. 4054 between 2014-2016 in order to measure the direct effects in terms of consumer benefits for showing the contributions of competition law and policy to Turkish economy. The said Impact Analysis covers the measurement of foreseen static consumer welfare created by nine Board decisions about anti-competitive agreements between undertakings, seven decisions about abuse of dominant positions and seven decisions about mergers and acquisitions not authorized or conditionally authorized during the period between 2014 and 2016. Within this framework, it was concluded that the intervention by the Competition Authority created consumer welfare contribution of totally 1.06 billion TL (annual average 335 million TL) when minimum estimation methodology is used; of totally 9.9 billion TL (annual average 3.3 billion TL) when OECD methodology is used.

The second day followed with the panel on “The Effects of Competition Law Enforcement on Business” moderated by Prof. Ömer TORLAK. High level managers from Anadolu Group, Eczacıbaşı Holding, Enerjisa, Koç Holding, Turkish Cement Manufacturers' Association (TÇMB) and Turkish Industry and Business Association (TÜSİAD). The speakers shared their observations about the approaches to competition law and policy in their companies, compliance programs made as well as other outstanding issues related to competition and ensuring competitiveness in their sectors in light of technological developments and outlined the following points:

  • Referring to urbanization, digitalization and healthy nutrition trends that affect the retail sector, Mr. Özgür TORT, General Director of Anadolu Group Migros, stated that those trends are shaping the sector as well as the competitive process and highlighted that consumer choices are important in the sector and interactive learning process may work with the cooperation of public and private sector in order to eliminate the problems encountered with respect to consumer choices. Mr. TORT added that digitalization has removed the limits in the retail sector and this process forces companies to be strong in terms of economic efficiency, Turkey has a dispersed structure different from the concentrated structure in developed countries; therefore, the forthcoming period is open to mergers and acquisitions. Emphasizing that the competition between big firms is huge, which leads to lower prices and efficiency, he stated that growth in the sector requires investment and the process of investments should be fast and in this respect the cooperation of public institutions such as the Competition Authority is important.
  • Elif ÇELİK, the head of Eczacıbaşı Holding Health Group stated that health and pharmaceutical sector in Turkey experienced important competition inquiries, it took time to gain competitive awareness in the sector and in this sense the decisions of the Competition Board is informative, and their company has issues related to competition law enforcement in their orientation programs. ÇELİK added that the digital transformation process in economies has both transformed sectors and created new sectors and emphasized that it would be useful if competitive effects of new business models are analyzed by common working groups formed by the Competition Authority and relevant institutions in the sector and possible entry barriers in front of entrepreneurs in the transformation process could be decrease with the help of the Competition Authority in this process.
  • Kıvanç ZAİMLER, CEO of Enerjisa, emphasized that Turkey is in the right direction with respect to liberalization process carried out to create a competitive structure in the energy sector, in this process the Competition Authority has adopted a proactive role, the liberalization process in the sector is closely related to what extend liberalization is realized in each market segment and coordination between shareholders in the sector is necessary in order to ensure this. He added that digitalization has created important opportunities in the energy sector like other sectors and it is necessary that the private and public sector take initiative and extend their areas of cooperation to reveal the potential in our country.
  • Highlighting that fast technological change and transformation environment in the economy has altered the game rules rapidly, Mr. Cenk ÇİMEN, the head of Koç Holding Automotive Group, stated that cooperation between the public and the private sector is important to direct this destructive transformation successfully. He added that automotive is one of the most affected areas by the said transformation and there are three main concepts in the sector that leads the investments and affects competitive conditions: electric vehicles, autonomous and mobility. He also pointed out that it is not possible to adapt to this environment which is changing as a result of technological developments and this is true for both private and public sector; thus, all shareholders in the sector should be in a closer work and cooperation.
  • Şefik TÜZÜN, the chairman of TÇMB Board of Directors pointed out that the reports in which the Competition Authority shares sector inquiries and their results as well as the meetings where those reports are discussed with sector shareholders are guiding for the sector and exchanging views about the problems and searching solutions together would be useful.
  • Stating that TÜSİAD’s relation with the Competition Authority has always been based on dialogue since its establishment, Mr. Murat ÖZYEĞİN, the Vice President of TÜSİAD referred to the importance of the proactive role of the Competition Authority for the success of the process and it is important for the business world that this approach should be kept alive, uncertainty should be reduced and predictability should be increased. He added that they are in the center of technological transformation and TÜSİAD formed two different roundtables under the title of digital economy and entrepreneurship. He also expressed his belief that their cooperation between the Competition Authority in this process would be useful.

At the end of the second day, the international panel on “The Effects of Competition on Economy” was held. The said panel was moderated by Mr. Antonio GOMES and the participants were high level managers from Austria, Holland, Malaysia, Portugal and Russia. The outstanding points in the panel can be summarized as follows:

  • Theodor THANNER, the Director General of Austrian Competition Authority, emphasized that competition law and policies have direct effects such as dispersion efficiency, production efficiency, innovation and ultimately increase in consumer welfare shown by theoretical and empirical studies as well as indirect effects related to direct effects such as economic growth, increase in job opportunities and fair distribution of income. Within this framework, he highlighted that many studies have shown that “Competition Policy Index” which is used to measure the competitiveness level of markets are directly proportional to efficiency increases in relevant markets. He stated that the study by Austrian Competition Authority found that an efficient merger/acquisition regime contributes significantly to consumer welfare.
  • Jarig Van SINDEREN, Chief Economist of Netherlands Consumer and Market Agency, pointed out that impact analysis studies related to competition law and policies are a conventional practice of Netherlands Consumer and Market Agency and shared information from such studies and stated that the efficiency of competition law enforcement have positive effects on economic indications.
  • Nasarudin Bin ABDUL RAHMAN, Commissioner of Malaysia Competition Commission provided information about competition law enforcement in Malaysia and stated that the results of the study made by Malaysia Competition Commission have shown that when social awareness about competition law enforcement increases, applications to the Commission and inquiries become more qualified.
  • Nuno ROCHA DE CARVALHO, member of the Board of Portuguese Competition Authority provided information about competition law enforcement in Portugal as well as the organizational structure and operation of the Competition Authority; stated that the relation between competition and consumer welfare in terms of lower prices, high innovation and product variety is recognized in economics literature and Portuguese Competition Authority is working on the basis of this fact. He added that Portuguese Competition Authority attaches priority to certain enforcement areas based on the projected potential effects on economy and in this sense, fight against competition infringement in public procurement is one of those areas that the Authority sees as a priority.
  • Vice Chairman of Russia Federal Antimonopoly Service, Mr. Anatoly GOLOMOLZIN provided information about the development of competition law in Russia as well as the organizational structure and operation of Federal Antimonopoly Service and put emphasis on the importance of international cooperation for competition authorities to maintain and increase efficiency in this era, when digitalization and globalization are transforming economies.

The last day of the main event was devoted to the presentations by Mr. Mustafa PARLAK, former president of the Competition Authority and Mr. İsmail Hakkı KARAKELLE, Consultant of the Competition Authority in an atmosphere to freshen institutional memory and remember 20-year experience and reminiscence.