Turkey: Competition Law Assessment Of Football Tribune Card System, Passolig: The Board Granted Yet Another Individual Exemption To The Long-Term Exclusive Agreements For The Passolig System

Competition Law Assessment Of Football Tribune Card System, Passolig: The Board Granted Yet Another Individual Exemption To The Long-Term Exclusive Agreements For The Passolig System And Decided Not To Initiate A Full-Fledged Investigation Against Aktifbank

The Board published its reasoned decision¹ on the individual exemption application regarding (i) the Financial Establishment Agreement ("FEA") concluded between the Turkish Football Federation ("TFF") and Aktif Yatırım Bankası A.Ş. ("Aktifbank"), (ii) the System Integrator Agreement ("SIA") executed between TFF and E-Kent Teknoloji ve Ödeme Sistemleri San. ve Tie. A.Ş/Netaş Telekomünikasyon A.Ş. Consortium ("E- Kent/Netaş"), and (iii) the Intermediary Services for Ticket Sales Agreement ("ISTSA") executed between Aktifbank and the football clubs (together with the FEA and the SIA, referred to hereinafter as the "Agreements").

For the purposes of its analysis, the Board defined the relevant market as "the market for electronic cards used for the ticket sales of football games," "the market of intermediary services for the ticket sales of football games," and "the banking services market," which are in line with the Board's previous Passolig decision of 2014², where the Board had granted an individual exemption to the relevant agreements executed between TFF, Aktifbank and E-Kent/Netaş, and the ISTSA executed between Aktifbank and the football clubs, until the end of the 2016-2017 football season. Although TFF and Aktifbank raised an objection against the Board's definition of the relevant market as "the market of intermediary services for the ticket sales of football games" and argued for a broader definition encompassing "the provision of intermediary services for the electronic sales of event tickets through a platform" in parallel with the Board's Biletix decision of 2013³, the Board ultimately rejected this argument on the grounds that the supply and demand substitution of intermediary services for football games distinguishes and separates such football-specific services from other events, due to the existence of specific legislative regulations.

In the end, the Board unanimously decided that:

• The FEA and the ISTSA fell under the scope of Article 4 of the Law No. 4054, and that they could not benefit from a negative clearance decision.
• The FEA and the ISTSA did benefit from an individual exemption, since they satisfied all the conditions stipulated under Article 5 of the Law No. 4054.
• A negative clearance decision could be granted to the SIA.

In addition, the Board also examined the alleged tying practices of Aktifbank, and decided that Aktifbank was in a dominant position in the market for "electronic cards used for the ticket sales of football games" and for "intermediary services for the ticket sales of football games." However, the Board determined that, although Aktifbank tied its credit cards with its electronic cards, both products were also separately available to consumers, and therefore, this practice did not result in the foreclosure of the market for banking services. Furthermore, in terms of football clubs, the Board concluded that it was unlikely that receiving intermediary services from a single undertaking would lead to any competitive concerns. The Board therefore decided not to initiate a full-fledged investigation against Aktifbank.

In its individual exemption analysis, the Board referred to the assessments in its Passolig decision of 2014⁴, which can be summarized as follows: (i) services could be supplied more securely by (a) using the e-card system and electronic ticketing, and (b) implementing security measures in stadiums and creating relevant software databases, (ii) these systems would also lead to more security for football clubs in terms of protection from potential damages that might arise from violent incidents during football matches, (iii) the procurement of such services exclusively from a single supplier would create cost advantages for the football clubs, (iv) utilizing a single integrated system would provide enhanced safety and security in terms of data collection, and enable the monitoring of cardholders for security reasons, (v) multiple system integrators would generate additional costs and hinder the operability and functioning of such a system. To that end, the Board concluded that there were no new developments or changes that would require the Board to alter its previous analysis regarding the Passolig System and stated that the Agreements fulfilled the conditions listed under Article 5/l(a) of the Law No 4054.

Regarding the "consumer benefit" condition of the individual exemption rules, the Board referred to its previous assessments in its Passolig decision of 2014⁵, and concluded that a single integrated system would result in (i) a more secure system, and (ii) cost advantages that would prevent virtual price increases on the tickets stemming from the establishment of multiple systems. All in all, the Board deemed (i) the ability of consumers to procure products at the value/price determined by the football clubs, and (ii) the creation of certain cost advantages, to constitute consumer benefits generated through the investigated practice.

The Board also assessed complaints that the Passolig system (i) had decreased attendance (i.e., spectator numbers) at stadiums, (ii) had not prevented violent incidents, and (iii) had not personalized penalties. The Board concluded that there was no direct causal link between the complaints and the operation of the Passolig system by a single undertaking. The Board stressed that determining whether the prevention of violence in sports had reached its targeted levels or whether penalties were sufficiently personalized were not questions that were in its jurisdiction. Furthermore, the Board decided there were no new developments that would require it to modify its previous analysis on that front. The Board therefore concluded that the Agreements fulfilled the conditions listed within Article 5/l(b) of the Law No. 4054.

As for the Board's analysis on whether the Agreements eliminated competition within a considerable portion of the relevant market, the Board stated, first of all, that for the system to function in the most effective manner (both financially and technically speaking) under the Law No. 6222 on the Prevention of Violence and Disorder in Sports, the clubs and the federations must work in practice with a single provider. The Board proceeded to say that it is therefore important to ensure that there is competition within the market during the process of determining that provider. In this context, the Board noted that the tenders are publicly held and that competition within the market is secured through this tender process. The Board also stated that the revenues from the Passolig system are not expected to counterbalance or offset the investments for the remaining term of the Agreements, due to the high investment costs of the system, and therefore, exclusivity in the FEA is required to be implemented for the next six (6) football seasons by the date of this decision. The Board further found that, considering the specific requirements of the system, the "market for electronic cards used for the ticket sales of football games" and the "market of intermediary services for the ticket sales of football games''' should be considered and examined as a whole. On that note, the Board also took into account that football clubs generally prefer to conclude agreements related to intermediary services for ticket sales with the same undertaking, as Aktifbank is authorized to operate the e-card system exclusively.

Finally, the Board assessed whether the Agreements' exclusivity clauses restricted competition more than necessary for achieving the goals set out in paragraphs (a) and (b) of Article 5 of the Law No. 4054, and determined that these clauses were necessary for the targeted benefits. To that end, the Board unanimously decided to grant an individual exemption to the Agreements.

Footnotes

1 The Board's decision dated September 12,2018, and numbered 18-31/532-262.

2 The Board's decision dated November 26,2014, and numbered 14-46/834-375.

3 The Board's decision dated November 5,2013, and numbered 13-61/851-539.

4 The Board's decision dated November 26,2014, and numbered 14-46/834-375.

5 Ibid.

This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in March 2019. A link to the full Legal Insight Quarterly may be found here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.