Competition Authority Concludes Investigation into Trendyol
The Competition Authority has decided to terminate the investigation initiated against Trendyol. With the decision dated 19.10.2023 and numbered 23-49/940-M, the Competition Authority launched an investigation to determine whether the automatic pricing mechanism offered to sellers in the multi-category e-marketplace by DSM Group Consulting Communication and Trade Inc. (Trendyol) violated Article 4 of the Law No. 4054 on the Protection of Competition.
In a statement from the Competition Authority, it was mentioned, "While the investigation period was ongoing, Trendyol requested to submit commitments. The commitments presented by Trendyol were deemed proportional to the competition issues, suitable for resolving these issues, implementable in a short time, and effective. Therefore, the commitments submitted under Article 43 of the Law No. 4054 became binding, and it was decided to terminate the investigation against Trendyol with the decision dated 03.10.2024 and numbered 24-40/950-409."
The statement provided the following information: "The automatic pricing mechanism implemented by Trendyol at the end of 2021 is essentially a system designed to automate the competition among sellers for placement in the buybox. Since there are thousands of sellers on e-marketplaces, it is inevitable for the same product to be sold by multiple sellers. When a user searches for a product they want to buy, the simultaneous display of hundreds of stores can complicate the shopping experience, prompting marketplaces to develop the buybox application. The buybox, in its simplest description, aggregates products from multiple sellers when several sellers offer the same product. Thus, with the specified algorithm metrics, both the seller that wins the buybox and maximizes customer benefit appears first when that product is searched. When a user clicks on the “Add to Cart” or “Buy Now” button in the ranked seller list, the product of the seller that has won the buybox is added to the cart. Therefore, for sellers active on the marketplace, having a place in the buybox is extremely significant in terms of visibility and sales. Within the automatic pricing mechanism, sellers are provided with options such as “Match Buybox Price,” “Stay Below Buybox Price,” and “Stay Above Buybox Price,” allowing them to automatically update their prices through these options if they wish. The determination process of each rule is at the discretion of the sellers, and the price of the seller who wins the buybox is taken as a reference price.
The concerns addressed in the investigation focused on the possibility of reduced retailer price differentiation and potential price rigidity in listed product prices on platforms, as a result of the future expansion of the seller population using the automatic pricing mechanism, specifically the “Match Buybox Price” rule, and the mechanism's ability to operate optimally while achieving the desired outcomes.
During the investigation period, Trendyol requested to submit commitments, which were deemed sufficient to resolve competition issues and thus made binding as per Article 43 of the Law No. 4054, concluding the investigation against Trendyol with the decision numbered 24-40/950-409 dated 03.10.2024.
In the framework of the commitments presented, Trendyol will:
- Not mandate the use of the automatic pricing mechanism for sellers and will continue to avoid offering any incentives that would lead to the same outcome as a requirement.
- Ensure that when defining rules under the automatic pricing mechanism, targeting specific sellers will not be permitted.
- Remove the "Match Buybox Price" option from the automatic pricing mechanism and offer only the "Stay Below Buybox Price" and "Stay Above Buybox Price" options to sellers. Additionally, it will ensure that these options do not provide the same result as the "Match Buybox Price" option through measures such as restricting the parameters (e.g., not allowing to remain %0 or 0 TL below or above).
- Not consider the use of the automatic pricing mechanism as a criterion in the workings of the algorithm based on the buybox criteria.
- Inform sellers about the features of the automatic pricing mechanism but will continue not to share data belonging to other sellers concerning the use of the automatic pricing mechanism.
- Provide training content regarding the operation of the automatic pricing mechanism to sellers and will offer staff training on competition law concerning the concerns raised in the investigation and the commitments made.
- Report to the Competition Authority for three years to ensure compliance with the commitments.
The commitments will be implemented within 60 days following the notification of the short decision to Trendyol and will remain valid for the duration the automatic pricing mechanism is in operation."