In the decision of the Competition Board dated 26.08.2021 and numbered 21-40/590-287, the “allegation that Trakya Cam Sanayi A.Ş. made unfair price increases in flat glass products and violated Law No. 4054” was examined. The relevant product market is defined as “flat glass market” and the relevant geographical market is defined as “Turkey”.
Flat glass is subjected to processes such as tempering, coating and laminating in order to add additional features such as durability, durability, light transmittance, etc. after its production. In addition to customers who buy float glass and resell it without any processing, there are also customers who process the glass into other products and sell it.
The main customer groups of float glass products as considered in the Decision are as follows
- Wholesale Companies: Resellers that buy flat glass products in relatively high quantities and resell them at wholesale level to different customer groups.
- Retailer Companies: Firms that deliver flat glass products purchased from wholesalers to final consumers.
- Industrial firms: Medium and large-sized companies that are direct customers of glass producers or wholesalers and can meet their glass needs through direct imports when necessary.
The investigation committee examined ŞİŞECAM’s flat glass sales network: ŞİŞECAM sells float glass to Authorized Dealers (YES) operating at the wholesale level, as well as to Industrial Customers (SM) and Insulating Glass Authorized Producers (IYÜ). However, SM and IYÜs can also procure products from importing enterprises or YESs. It is observed that through YES, SMs and IYUs, flat glass is processed or sold wholesale to lower level enterprises that supply products to sectors such as automotive, construction and furniture. Therefore, in ŞİŞECAM’s distribution system, there are undertakings that purchase the product and distribute it at the wholesale level (YES), as well as undertakings that process the glass and make it ready for use in sectors such as automotive, furniture, and construction through various processes such as lamination and coating (SM, IYÜ).
ŞİŞECAM products are not sold at the fixed prices stated in the published price list, but at various discounts that vary according to criteria such as purchase quantity, type of product purchased, variety of products purchased, and type of customer (YES, IYÜ, SM). While some of the discounts are applied at the time of purchase, it is also possible to apply discounts retroactively at a later date. These premium systems are designed to incentivize customers to make more purchases, to have a wider variety of products, and to sell through different sales channels.
Determination of dominant position: ŞİŞECAM has been determined to be in a dominant position considering its market share of more than 40%, high production capacity, brand recognition, product range and diversity, market entry barriers such as import quotas, decreasing import rate, high financing power, low buyer power.
An Economic Value Test (EVT) was conducted for the excessive pricing analysis and the opinion of the Economic Analysis and Research Department (EAAD) of the RK was obtained in this context.
Within the scope of the Price-Cost Test, which is the first stage of the EVT, since the glass prices announced in the price lists are not the final prices applied to ŞİŞECAM’s customers, average unit prices were calculated by deducting the aforementioned premium and discount prices from the sales revenues obtained by ŞİŞECAM in the first stage in order to make a healthy comparison. In addition, total cost items incurred by ŞİŞECAM for flat glass production in the 2017-2020 period were calculated. In this framework, the revenues and expenses, average prices and costs, and average profits obtained by ŞİŞECAM from all flat glass products for the period 2017-2020/9, which was determined as the analysis period by revealing the profitability status of ŞİŞECAM, were analyzed. Then, taking inflation into account, real prices, average costs, and average profits were calculated. Accordingly, when unit prices and unit costs calculated in TL are compared with unit prices calculated in USD, it is observed that unit prices in USD followed a relatively fluctuating course rather than a continuous increase, while costs generally followed an upward trend, In this context, unit profits calculated in USD decreased from the second quarter of 2017 to the third quarter of 2018, increased slightly in the third and fourth quarters of 2018, followed a flat course from the first quarter of 2019 to the first quarter of 2020, and dropped to the lowest level in the analysis period in the second and third quarters of 2020. In addition, it was determined that the mark-up and profit margin applied by ŞİŞECAM for all of its glasses tended to decrease during the analysis period, with the highest profit margin calculated in 2017 and the highest mark-up in 2017. After this date, profitability ratios have been steadily decreasing. In 2020/9, the lowest profit margin and mark-ups in the analysis period were realized.
In the second stage of the EVT, Price Comparison Analysis, ŞİŞECAM’s prices were compared with DÜZCE CAM and average import prices, and then ŞİŞECAM’s profitability indicators were compared with DÜZCE CAM’s profitability indicators. Finally, the prices applied by ŞİŞECAM domestically and the prices applied by its foreign facilities were analyzed. On a yearly basis, in 2017, ŞİŞECAM’s average prices were above the average prices of DÜZCE CAM, but below the average prices of imported products; in the period from 2018 to the first three quarters of 2020, ŞİŞECAM’s average prices It has been determined that the average prices of ŞİŞECAM and DÜZCE CAM are almost the same as the average prices of the imported products, while they are below the average prices of imported products. In the following section, the revenues, sales volumes, average prices, unit profitability, and mark-up ratios of ŞİŞECAM and DÜZCE CAM on the basis of main product groups were analyzed quarterly in the period 2017-2020/9. Comparisons were also made between geographical markets. Accordingly, it is taken into consideration that ŞİŞECAM competes with NSG, SAINT GOBAIN and AGC in Italy; SAINT GOBAIN, ASAHI and Gold Plus Glass in India; and AGC, SAINT GOBAIN and GUARDIAN in Russia. Accordingly, ŞİŞECAM’s domestic and international average prices (USD) were compared.
In addition, it has been evaluated that it would be appropriate to analyze whether the dealership system implemented by ŞİŞECAM between 2018 and 2020 has an impact on pricing behavior. In this framework, it has been determined that the quantitative analysis does not support the allegations of excessive prices. In addition, it could not be statistically demonstrated that the dealership system had an impact on pricing behavior. On the other hand, within the scope of the file, 200 randomly selected undertakings operating as customers of the CEPs were asked their opinions on whether the authorized dealership system implemented by ŞİŞECAM as of 2016 led to any changes in parameters such as price, quality, service, etc. in the sector. A healthy response was received from 122 undertakings. 86 of the responding undertakings stated that the authorized reseller system did not lead to any change in the relevant market. While 10 of the undertakings stated that there were positive changes in the market after the implementation of the system, 24 of them stated that there were negative changes. Two of the undertakings stated that the system had both positive and negative aspects. While most of the undertakings have the view that the authorized reseller system does not have any benefit or harm, there are also some undertakings with positive and negative views. It was observed that the undertakings operating in the market gave quite contradictory answers. Moreover, the undertakings that expressed an opinion on whether the authorized reseller system has an impact on prices were unable to provide concrete data to support their claims, regardless of their views. Therefore, it was not possible to draw a sound general conclusion from the statements of these undertakings alone. In conclusion, in light of the findings of the EAAD report and other data and findings in the file, it has been concluded that the authorized reseller system implemented by ŞİŞECAM did not have a clear impact on the pricing behavior of the undertaking.