The Turkish Competition Authority (“TCA”) has launched a comprehensive investigation into Visa and Mastercard, focusing on alleged exclusionary practices in Turkey’s card scheme and digital wallet services markets. This case influences not only competition policy but also the development of the developing fintech ecosystem in Turkey.
Overview of the Investigation
Visa and Mastercard, as global leaders in payment technology, play a central role in enabling electronic payments and financial transactions. In Turkey, their operations span two key markets under scrutiny:
- Card Scheme Services Market: This encompasses the frameworks that facilitate card-based transactions.
- Digital Wallet Services Market: This involves services that enable electronic payments through mobile and online platforms.
The TCA’s investigation targets specific behaviors in these markets that may hinder competition and innovation.
Allegations Under Review
Card Scheme Services Market
In the card scheme services market, the inquiry focuses on whether the discount and incentive systems offered by Visa and Mastercard to card-issuing entities (banks) create de facto exclusivity in the market. The TCA will assess whether these practices, either individually or cumulatively, restrict market access for competitors.
Digital Wallet Services Market
In this relevant market, the TCA is investigating two main allegations:
- Predatory Pricing by Mastercard: It is alleged that Mastercard has adopted pricing strategies designed to eliminate competitors by making it financially unviable for them to compete effectively.
- Non-Competition Clauses by Visa: Visa’s agreements with merchants allegedly include obligations that prevent these businesses from using competing service providers, raising concerns over the anti-competitive nature of such practices.
TCA’s possible approach to the case: More effect-based
While the European Union is actively debating presumption-based guidelines for competition cases, the TCA is expected to assess this investigation using its established 2014 Guidelines on the Assessment of Exclusionary Abusive Conduct by Dominant Undertakings. This approach prioritizes evaluating the actual effects of the alleged behaviors on competition within the relevant markets, rather than relying on presumptive criteria.
The Broader Impact
The TCA’s decision could have far-reaching implications for Turkey’s fintech sector, which is both highly innovative and rapidly evolving. The unique characteristics of fintech markets add another layer of complexity to the investigation. The TCA, which has the authority to impose behavioural and structural measures, is likely to have a lasting impact on the market. In markets with technological innovation and dynamic market players, regulatory intervention shapes the trajectory of emerging ecosystems. Unfortunately, it is impossible to predict whether this shaping will lead to further market growth, increased innovation or greater consumer benefit. However, a proper understanding of complex market structures will have a decisive impact on the success of the intervention.
As the global payment technology industry continues to integrate with local ecosystems, this investigation serves as a critical test case for balancing competition policy with the need to encourage growth in emerging markets. The outcome will likely reverberate across Turkey’s digital economy, shaping the future of payments and digital wallets in the region.
