Newsletter-21

125 COMPETITION LAW Passing-On Defense Definition Goods and services pass through stages of the supply chain until they are offered to end consumers. The undertakings that increase their prices illegally at any stage of this supply chain cause damage to pur- chasers or end consumers who have bought these goods and services at a higher price. Compensation for this damage is regulated under Art. 57 of the Competition Act. Accordingly, anyone who prevents, distorts, or restricts competition via practices, decisions, contracts or agreements that are contrary to the Competition Act, or abuses his dominant position in a particular market for goods or services, and is obliged to compensate any damages suffered. In this vein, the under- takings faced with lawsuits filed in line with Art. 57 may claim that the claimants actually passed their damages on to their purchasers; in other words, the passing-on defense. Within this possibility, claimants do not have the right to file a lawsuit since they did not suffer any dam- age. The passing-on defense is only applicable for the infringements that result in price increases, such as agreements or excessive pricing; it is not in question for the anti-competitive practices that result in ex- clusion from the market, such as refusal to deal or predatory pricing 1 . If the passing-on defense is deemed acceptable, this raises the question of whether or not the indirect purchasers who suffered the damages may bring an action for compensation. Given that the sup- ply chain is considered as a whole, the group of indirect purchasers expands to include distributers, retailers and end consumers. In these cases, it is considerably difficult to prove how much of, and to whom, the damage is passed on. On the other hand, if such defense is rejected, the compensation claims of direct purchasers who may have been passing on their damages and, therefore, did not suffer any harm, are accepted, this results in the indirect purchasers not being able to claim damages 2 . Therefore, the passing-on defense and indirect purchaser rule are closely connected. 1 Murat Şahin . Rekabet Hukukunda Tazminat Talepleri, April 2013, Istanbul, p. 32. 2 Richard Whish/David Bailey . Competition Law, 7. Edition, 2012, p. 300.