Market Analyses in Electronic Communications Markets in Turkey
Foreword
Turkey’s regulatory framework has been established on the same pillars of the European
Union based on liberalization and competition enhancing regulatory mechanisms.
The so-called regulatory mechanisms are based on a number of EU Directives, Regulations
and Recommendations which constitute the EU Regulatory Framework.
Historical Background of the Market Analyses in Turkey

Within the scope of Law no. 406, 2813, ICTA -formerly Telecommunication
Authority- paved the way for liberalized telecommunications market in Turkey.

Besides the general provisions in relevant laws, SMP Communiqué and Dominant
Position Communiqué formed the legal background for market analyses

ICTA has been equipped with the competences towards designation of undertakings
with SMP and imposition of necessary ex ante obligations on those undertakings
under the referred Communiqués.

In 2005 and 2006 first round of market analyses was launched and the related
documents were opened to the public for consultation. Taking the Commission’s 2003
Recommendation into account, ICTA has completed the first round of the market
analyses. Moreover, ICTA has also taken the utmost account of the Commission’s
SMP Guidelines (2002 C 165 03). By doing so, ICTA defined the relevant markets
and analyzed the competition level in the relevant markets. ICTA concluded market
analysis documents culminating with the determination of the undertakings with SMP.
As to the obligations, former Access and Interconnection By-law and Tariff By-law
envisaged the automatic imposition of the specific obligations on the SMP
undertakings. That is to say, once an undertaking was designated as having SMP,
obligations were to be imposed on those undertakings automatically.

In order for alignment with the EU Regulatory Framework, a new SMP By-law was
published in 2007. This By-law clearly set out the market analysis procedure
predominantly on the basis of market definition and SMP determination criteria stated
in the SMP Guidelines.
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
Upon the approval of the new Electronic Communications Law no. 5809, and in order
to ensure the alignment with the Commission’s 2007 Recommendation, in September
2009, ICTA has introduced the new SMP By-law which is in full harmony with the
Commission’s SMP Guidelines and 2007 Recommendation.

ICTA regularly asks Competition Authority to render its opinion for each market
analysis in accordance with the relevant provisions of the SMP By-law.

Furthermore ICTA publishes every market analysis documents in its website in order
to launch the public consultation process as it is required to do so in the SMP By-law.
Current Market Analysis Procedures
According to 2009 By-law, ICTA completes market analysis in line with the current EU
Regulatory Framework. The basic flowchart of the market analysis procedure envisaged in the
SMP By-law is demonstrated below1.
1
TEZEL, F. (2011). Assessment of Market Analyses and Remedies as Ex Ante Regulatory Tools from
Competition Perspective: Country Experiences and Turkey. Ankara: Information and Communication
Technologies Authority.
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As shown in the above flowchart, market analysis is commenced with the definition of the
relevant market. Supply and demand substitutability plays the main role in the delineation of
the product market and geographic market. In order to analyze the substitutability ICTA refers
to the hypothetical monopolist test (SSNIP) as well as the functionality of the probable market
products.
Once the relevant market is defined, market analysis procedure continues with the latter stage,
namely the “evaluation of the need for regulation”. In this second stage, ICTA applies the
three criteria test in order to satisfy the need for ex ante regulation. Three criteria test seeks to
affirm whether specific prerequisites cumulatively exist in the relevant market or not. The
three criteria test is applied for all market analyses conducted in Turkey whereas in the EU
member states it is only applied to markets outside the scope of 2007 Recommendation. In the
three criteria test ICTA has to ensure that the following three criteria are cumulatively met:
(a) the presence of high and non-transitory barriers to entry. These may be of a
structural, legal or regulatory nature;
(b) a market structure which does not tend towards effective competition within the
relevant time horizon. The application of this criterion involves examining the state of
competition behind the barriers to entry;
(c) the insufficiency of competition law alone to adequately address the market
failure(s) concerned.
Where the three criteria are cumulatively met, market analysis procedure continues with the
third stage, which is called the “competition assessment”. In this stage some indicators
particularly the market shares, concentration level, barriers to entry and countervailing buyer
power are analyzed. According to these parameters, the undertakings with the “significant
market power” are determined. Since the SMP refers to a market power enabling the
undertakings whether individually or jointly to behave independently of their competitors,
customers and ultimately consumers, SMP determination could be concluded with single or
joint dominance.
However in a broader perspective “competition assessment” stage has mainly two possible
conclusions which depend on the competition level of the market. If the relevant market has
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been found competitive, no SMP is determined and existing obligations (if any) are
withdrawn and the market analysis procedure is finalized. On the contrary, if the relevant
market is found uncompetitive, then in the final stage necessary ex ante obligations are
imposed on the undertakings with SMP. Once the document is finalized, it is published at
ICTA’s web page for public consultation at least for one month.
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