The Turkish Competition Board’s MEDAŞ Decision: Abuse of a Dominant Position through Discriminatory Conduct and Exchange of Competitively Sensitive Information

Scope of the Investigation: MEDAŞ, the Relevant Market and Dominance

MEDAŞ is the designated electricity-distribution operator for the provinces of Aksaray, Karaman, Kırşehir, Konya, Nevşehir and Niğde. Pursuant to the decision of the High Council for Privatisation dated 30 April 2009 (No. 2009/16), MEDAŞ’s operating rights were transferred on 30 October 2009 to Alcen Enerji Dağıtım ve Perakende Satış Hizmetleri A.Ş. (“Alcen”). Besides Alcen, the shareholders of MEDAŞ include Cengiz Enerji Sanayi ve Ticaret A.Ş., Alarko Holding A.Ş. (“Alarko”) and Alarko Enerji A.Ş. Alcen itself is under the joint control of Cengiz Holding A.Ş. (“Cengiz Holding”) and Alarko.

The relevant product markets were defined as the “electricity distribution services” market and the “unlicensed electricity generation” market, while the relevant geographic market was defined as the region comprising the provinces of Konya, Aksaray, Niğde, Kırşehir, Nevşehir and Karaman, which constitute MEDAŞ’s area of operation.

In its dominance assessment, the Board found that electricity distribution in Türkiye is carried out on a regional basis by designated distribution companies; that, by its very nature, this activity constitutes a natural monopoly; and that each distribution company therefore holds a dominant position within its own region. In that light, the Board determined that MEDAŞ, operating in the distribution region comprising the provinces of Konya, Aksaray, Niğde, Kırşehir, Nevşehir and Karaman, has a statutory monopoly in the market for electricity-distribution services and, during the period at issue, was the sole undertaking empowered to evaluate applications for unlicensed generation and to manage the corresponding grid-connection processes.

Consequently, the allegations that MEDAŞ acted in a biased manner when assessing unlicensed-generation applications and allocating scarce transformer-substation capacity were examined under Article 6 of Law No. 4054 to determine whether its conduct amounted to an abuse of a dominant position.

Complaints that Brought MEDAŞ before the Turkish Competition Board

The first complaint filed with the Turkish Competition Authority (the “TCA” or the “Authority”) in the case file was submitted on 29 September 2015 by Göksu Enerji Elektrik Üretim ve Ticaret A.Ş. (“Göksu Enerji”). In its complaint, Göksu Enerji stated that, with respect to the unlicensed electricity generation connection requests for the Aksaray Transformer Substation, MEDAŞ had rejected Göksu Enerji’s own request, despite the availability of sufficient capacity, while approving those of several other companies located on the same feeder (line) and neighbouring parcels. Göksu Enerji claimed that MEDAŞ had made errors in its capacity calculations, that the technical grounds cited for rejecting its application were inadequate, and that the accepted companies were directly linked to Cengiz İnşaat Holding A.Ş. and Alarko Holding A.Ş., both shareholders of MEDAŞ.

The second complaint to the TCA was lodged on 19 January 2016 by Saturn. Saturn stated that the letters of invitation to conclude a connection agreement it had obtained from MEDAŞ for its solar-power-plant projects in the Konya Seydişehir Organised Industrial Zone (“OIZ”) were unlawfully revoked, and that the released connection capacity was re-allocated to undertakings forming part of the same economic entity as MEDAŞ. In its complaint, Saturn alleged that MEDAŞ, by exploiting its statutory monopoly as the regional distribution company, engaged in discriminatory conduct favouring undertakings within that entity and thereby abused its dominant position.

The third complaint, filed on 28 January 2016 by the solar-power-plant companies FRT-GES Enerji San. ve Tic. A.Ş., ŞFK-GES Enerji San. ve Tic. A.Ş., PAGES Enerji San. ve Tic. A.Ş., SAGES Enerji San. ve Tic. A.Ş. and SNM-GES Enerji San. ve Tic. A.Ş., alleged that MEDAŞ rejected the applications submitted to the Aksaray Substation on the grounds of insufficient technical capacity, whereas the applications filed for the same substation by other undertakings found to be affiliated with MEDAŞ’s shareholders were approved. In addition, the complainants contended that MEDAŞ delayed the review of their applications and, in contravention of the applicable legislation, applied a collective assessment procedure.

Earlier Board Decisions and Court Judgments in the MEDAŞ Case

By its decision dated 2 March 2016 and numbered 16-07/134-60, the TCB examined the allegations that MEDAŞ, in evaluating licence-exempt electricity-generation applications, had violated Article 6 of Law No. 4054 and resolved not to initiate an investigation. The 4^th Chamber of the Ankara Administrative Court annulled that Board decision by its judgments of 3 December 2018, numbered 2016/3512 E., 2018/1815 K. and 2016/5542 E., 2018/1816 K. The Court ruled that the Board’s decision not to open an investigation was unlawful on the grounds that (i) the companies linked to the applications rejected by MEDAŞ constituted a single economic unit, (ii) certain decisions had been adopted without official notification, and (iii) the explanations provided were not sufficient to dispel suspicions of discriminatory treatment.

Further to that annulment, the Competition Board, by its decision dated 14 November 2019 and numbered 19-40/669-287, held that MEDAŞ had assessed the licence-exempt generation applications according to objective criteria, that no evidence of discrimination had been found and, therefore, that Article 6 of Law No. 4054 had not been infringed; it consequently resolved not to impose an administrative monetary fine. The Ankara 10^th Administrative Court, hearing an action for annulment brought by Saturn against the Board’s decision, quashed that decision on 17 May 2023 (Case No. 2020/822 E., 2023/1052 K.) on the ground that the Board’s investigation had been insufficient. The Authority’s appeal was dismissed by the 8th Chamber of the Ankara Regional Administrative Court on 5 April 2024 (Case No. 2023/1773 E., 2024/856 K.), which upheld the legality of the Ankara 10^th Administrative Court’s annulment judgment.

Following the Court’s Lead: The Board’s Abuse of Dominance Assessment

The Competition Board emphasised that the judgment of the Ankara 10^th Administrative Court dated 17 May 2023 (Case No. 2020/822 E., 2023/1052 K.), in which the court held that “it is clearly established that the defendant intervening undertaking abused its dominant position,” constitutes a final, binding decision on the merits pursuant to Article 28 of the Administrative Procedure Law No. 2577 and Article 138 of the Constitution. After this judgment reached the Authority’s records on 13 June 2023, the Board, by its decision dated 13 July 2023 and numbered 23-31/595-M, resolved to open an investigation.

In its assessment of the alleged abuse of dominance, the Board followed the reasoning set out in the Ankara 10^th Administrative Court’s judgment of 17 May 2023 (Case No. 2020/822 E., 2023/1052 K.), which had found that the Board’s earlier conclusion—contained in its decision of 14 November 2019 and numbered 19-40/669-287—that Article 6 of Law No. 4054 had not been infringed was unfounded.

According to the Ankara 10^th Administrative Court’s judgment, once the Ministry of Industry and Technology had issued a positive decision on the land allocation, the Seydişehir OIZ sought the Ministry’s opinion a second time, whereupon the Ministry rendered a negative decision. Although no official correspondence showed that MEDAŞ had been notified of this reversal, MEDAŞ nonetheless revoked Saturn’s project call letters. The Court recorded that Cengiz Holding, an undertaking directly and/or indirectly linked to MEDAŞ, filed a connection application one day after the revocation, even though the official documentation required for a valid application could not feasibly have been prepared in such a short time. The Court further found that the impending revocation had been known in advance, that MEDAŞ and Cengiz Holding had acted accordingly, and that, in solar power plant connection applications, MEDAŞ had given its own affiliated undertakings an advantage over rivals by sharing competitively sensitive information. While on-site inspections at MEDAŞ uncovered no documentary proof of communication between MEDAŞ and Cengiz Holding, the Court, relying on the chronology of events, accepted that the two entities had communicated regarding the capacity allocation and the revocation of the call letters. On that basis, it held that MEDAŞ had indeed shared competitively sensitive information with Cengiz Holding, thereby placing related companies in an advantageous position and abusing its dominant position. In addition, the Court treated MEDAŞ’s failure to await the outcome of Saturn’s actions challenging the annulment of the land allocation as a further indicator of MEDAŞ’s abuse of dominance.

According to the judgment of the Ankara 10^th Administrative Court, the Court inferred that MEDAŞ had prior knowledge of the impending cancellation of the land allocated to the Saturn group companies and, by sharing that competitively sensitive information with undertakings within the same economic entity, placed those undertakings at an advantage over rival firms. This inference was drawn from three facts taken together: (i) MEDAŞ revoked the call letters before it had been formally served with the Seydişehir OIZ Executive Board’s decision cancelling the allocation; (ii) the very next day applications submitted by legal persons belonging to the same economic entity as MEDAŞ were accepted; and (iii) it would have been impossible to compile the requisite application documents in so short a time.

In line with the reasoning set out in the Ankara 10^th Administrative Court’s judgment of 17 May 2023 (Case No. 2020/822 E., 2023/1052 K.), the Board unanimously determined that MEDAŞ abused its dominant position by engaging in discriminatory conduct when evaluating licence-exempt electricity-generation applications and, accordingly, decided to impose an administrative monetary fine of 10,594,866.94-TL based on its 2023 turnover on MEDAŞ.

In Lieu of a Conclusion: Assessment

The process culminating in the MEDAŞ decision lays bare the structural shortcomings of Türkiye’s electricity market. The case demonstrates, yet again, that the “liberalisation” expected to flow automatically from the privatisation of distribution services does not, by itself, generate competition. When regional distribution undertakings possessing natural-monopoly power confer advantages on undertakings within the same economic unity, serious competitive distortions can arise. As the MEDAŞ case shows, shifting capacity to affiliated companies and discriminating against third parties is symptomatic of a framework in which control of essential infrastructure translates directly into market dominance.

The difficulty, however, lies not only in MEDAŞ’s conduct but also in the structural setting that makes such conduct possible. Keeping network operators at an equal distance from both their own group companies and their rivals is a key test of the institutional independence and enforcement resolve of the regulatory authorities. Failing that, the assumption that competition will follow privatisation remains a merely formal liberal rhetoric, while, in practice, barriers to entry are maintained, no longer by the State, but by private monopolies.

In this respect, the MEDAŞ decision should be viewed not merely as an abuse of dominance infringement, but as a case study that lays bare the structural problems of Turkish electricity market.

[1] Attorney Gülce Korkmaz is the external competition law consultant of Baş | Kaymaz Law Firm. After completing her master’s degree at Bilkent University, she is currently pursuing her doctoral studies in the field of competition law at the Faculty of Law of Lüneburg Leuphana University (Germany) as a PhD researcher with the scholarship of the Joachim Herz Foundation.

[2] TCB Decision dated 16 January 2025 and numbered 25-02/72-40. For the Board’s reasoned decision on the case, please see here (only available in Turkish).

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