Turkish Cement Sector & Competition Issues
The cement sector in Turkey has always been under a special attention of the Turkish Competition Authority (“TCA”) considering its importance for the country’s economy, as well as special market characteristics that facilitate the implementation of anticompetitive practices and collusion. No surprise that the cement sector in Turkey is one of the most fined sectors when it comes to competition law violations, and the number of complaints about the anticompetitive behaviour in the sector continues to increase.
To understand the dynamics of the Turkish cement market the TCA launched in 2014 the analysis of the cement market in Turkey and completed it with the recently published Report of the cement sector. The Report includes economic analysis of several issues regarding the Turkish cement sector, such as demand-price, efficiency-price, and cost-price comparison, as well as market allocation and profit maximization in relation to possible anticompetitive indicators.
The TCA found that horizontal price fixing, customer and market allocations, refusal to deal and abuse of dominant position in the ready-mixed concrete market are among the most common competition law issues in the cement sector in Turkey. In its latest Decision No 16-02/44-14 – Aegean Region Cement Producers – dated 14.01.2016 the TCA fined 6 cement producing companies for a total amount of TRY 70 million (USD 23,5 million) for a violation of competition law by way of market allocations and price fixing.
Overall, the TCA concluded that the cement sector in Turkey bears anticompetitive characteristics. The product and market structure of the cement sector facilitate the implementation of anticompetitive practice and collusion. The TCA has not taken any action as a result of the Report yet. However, it may be anticipated that the economic activities of the cement companies in Turkey will continue to be under a special scrutiny of the TCA in order to deal with the current/potential competition problems and improve competition climate in the cement market.
*by Ayberk KURT, ACTECON, in collaboration with Dr. Hanna Stakheyeva, Bogazici University.