Competition Law Violations in the Banking and Finance Sector

1) Introduction: Why is the Banking and Finance Sector Considered “High Risk”?

Market structure and transparency: Sub-markets such as deposits, loans, card payments, clearing and custody, POS acquisition, retail/commercial lending, and derivatives coordination risks due to high market share or multi-channel network effects of a small number of large players.
Abundance of sensitive data: Information such as interest/profit share, commission, margin, risk weighting, credit allocation criteria, limit policies, campaign dates, POS fees, interchange/merchant service fee (MSF), and incentive models can become evidence of concerted action when shared promptly and at the firm level
Intermediate platforms and "hub" actors: Payment institutions, card schemes, BKM (Interbank Card Center), clearing and custody organizations, gateway and marketplace interfaces; these increase the "hub-and-spoke" risk.
The intersection of regulation and competition: Supervision Agency (BDDK), the Central Bank of Turkey (TCMB), and payment services legislation limit certain parameters; however, the existence of regulation does not eliminate competition law oversight. The approach of "I am regulated, therefore I am outside of competition law" is incorrect.
Digitalization and open banking: APIs, data access, screen scraping, and portability issues raise discussions about equal access , non-discriminatory conditions , and inclusive design

2) Legislation and Fundamental Principles

2.1. Framework of Law No. 4054

Article 4 (cartels/concerted actions/vertical restrictions): Agreements/concerted actions that restrict competition, such as price, fee, commission, margin, limit, discount, campaign or customer sharing, between banks, financial institutions and payment service providers are prohibited.
Article 6 (Abuse of Dominant Position): Exclusionary/discriminatory practices are prohibited when one or more undertakings establish dominance in areas such as payment infrastructure , card schemes , POS acquisition , data access , or essential facilities
Article 7 (Mergers/Acquisitions): Concentrations in the financial sector prior notification/authorization thresholds. Transactions that are likely to significantly reduce may be prohibited or commitment .

2.2. Secondary Tools

Horizontal/Vertical Guidelines: These frameworks frame the analysis of information exchange, joint ventures, and vertical constraints (especially MFN, exclusivity, recommended price).
De Minimis Circular: Agreements with small market share and turnover thresholds, and which do not constitute serious infringements, may be given lower priority in investigations; however, serious infringements (e.g., bare price fixing) are excluded.
Leniency, Settlement, and Commitment Mechanisms: Penalty reductions in cartel cases; effective closure of processes under Articles 4/6 is possible through settlement and commitment

3) Market Definition and Specific Economic Characteristics

Product market: Deposits, personal/commercial loans, credit cards/BNPL (installment payments), POS acquisition, merchant acquiring, virtual POS, payment initiation/account information services, securities custody, clearing/collateralization, etc.
Geographic market: Most sub-markets are national ; however, regional/international influences can be seen in cross-border payment schemes and digital services
Network effects and multilateral platforms: Two-sided market dynamics (number of merchants ↔ card payment volume) in card schemes and the POS market are critical for competitive analysis

4) Horizontal Violations: Cartels, Concerted Action and Information Exchange

4.1. Cartels and Concerted Action Patterns

Price/commission/interest/profit share determination: Parallel increases in deposit interest rate ceilings, loan interest rate lower limits, POS fee adjustments, card fees, and EFT/wire transfer fees "bare" price coordination .
Client/region sharing: For large corporate clients (e.g., holding companies), a "I'll focus on this sector, you focus on that sector" approach is a clear violation.
Bidding and promotion coordination: Collusion in bidding or sharing of bid parameters in public/private salary promotion tenders.

4.2. Information Exchange – Red Lines for “Sensitive” Data

At the firm level, current and forward-looking information (future interest/commission plans, pricing engine rules, target margin, risk weighting thresholds, limits, campaign dates/timing) is undesirable.
Hub-and-spoke exchange: If a card scheme, BKM (Interbank Card Center), marketplace, consultant, or software supplier becomes a channel where horizontal competitor information is collected and redistributed "centrally," indirect coordination .
Benchmarking and market research: Risk is reduced if prepared by an independent third party with sufficient lag (e.g., ≥3 months), adequate aggregation (firm identities masked, at least 5 players, none exceeding 25% share), and historical data

4.3. Dynamics of Proof and Evidence

Convincing set of evidence: Meeting notes, email/message transcripts, calendar records, parallel price movements + lack of an alternative explanation.
Parallelism vs. concerted action: Legitimate alternative explanations, such as regulatory shocks, publicly available macroeconomic data, or cost synchronization, can weaken the inference of concerted action.

5) Vertical Violations: MFN, Exclusivity, Tipping, and Others

5.1. MFN/ENF (Most-Favoured Nation) Provisions

In card acceptance and POS acquisition: At businesses using digital platforms or multi-banking, broad MFN clauses such as "you won't offer better commission/terms anywhere else" can stifle price flexibility and deter new entrants.
The distinction between narrow and broad MFNs: Only channel-specific (narrow) MFNs may appear proportionate under certain conditions; broad MFNs (all channels) raise concerns about competition.

5.2. Exclusivity, Targeted Discounts, and Loyalty Discounts

Businesses and large corporate clients: A single POS agreement, a payroll/collection relationship with a single bank, and high-target retroactive discountscompetitors from scaling up .
“Pay-for-placement” and access priority: In wallet applications, exclusivity/semi-exclusivity in exchange for promotion; “self-preferencing”, Article 6 may come into play.

5.3. Binding, Packaging and Wholesale Package Sales

Mandatory element and umbrella product: If access to a basic payment infrastructure is conditional on the purchase of another product/service (e.g., virtual POS + insurance/additional package), a linkage test is performed.
Technology-related context: API access, software SDKs, or integration keys may have an exclusionary effect if they are not open to third parties under equivalent conditions

6) Abuse of Dominant Position (Article 6)

6.1. Foundations of Sovereignty

Network impacts and data scale: Card scheme, clearing and custody, core banking interfaces, extensive merchant network, and massive user data.
Vertical integration and gatekeeper roles: Both operating the scheme and providing POS/payment services; or being both a wallet and a marketplace.

6.2. Types of Abuse

Discrimination: Different prices/access to similar businesses under the same conditions ; without clear, objective criteria.
Margin tightening: The wholesale (scheme/exchange)-retail (acquisition) margin is tightened to a level where independent competitors can no longer effectively compete.
Access restrictions: Failure to provide appropriate/non-discriminatory conditions in infrastructure equivalent to the essential facility .
Self-preferencing: Developing a payment solution in a given marketplace that prioritizes algorithmic/design-based strategies to exclude competitors.
Binding/Packaging: Binding access to core functions to another product condition (see 5.3).

7) Open Banking, Fintech, and Interoperability

Data portability and access: Fair, reasonable, and non-discriminatory (FRAND-like) conditions are important in data sharing based on customer consent
API standardization: Access fees, speed, margin of error, maintenance windows, and service quality (SLA) criteria must be applied equally to competing fintech companies.
Screen simulation vs. official API: Uneven and unequal access during the transition to the official API could create a exclusionary effect for competitors
Wallet interoperability: Imposing exclusive protocols on QR standards and money transfer interfaces could lead to platform shutdown.

8) Mergers and Acquisitions (Article 7): Effect and Review

8.1. Competition Concerns

Consolidation and coordination risk: Mergers of large banks can facilitate coordination.
Vertical/congenic effects: The potential for integrated structures such as card scheme + acquisition; wallet + marketplace; exchange + POS to make it difficult for competitors to gain access .
Data accumulation: The cumulative effect of customer and transaction data from merging parties can increase barriers to market entry.

8.2. Solutions and Commitments

Structural commitments: Transfer of specific assets, sale of shares.
Behavioral commitments: Prohibition of discrimination, access obligations, FRAND-like API fees, prohibition of MFN (Mobile Access Failure) , and datawalls.
Temporary measures: “Clean team”, “hold separate”, and firewall implementations.

9) Investigation Process, Defense Strategies and Remedies

9.1. Process Flow

Preliminary Investigation → Investigation → Written Defense → Oral Defense → Board Decision.
On-site investigation (digital copying, keyword scanning), evidence evaluation , and extensions are critical steps.

9.2. Strategic Tools

Leniency: In cartel cases, the first responder has the option of receiving the full or reduced administrative fine .
Settlement: Acceptance of evidence and legal circumstances leading to a reduction in sentence and early closure.
Commitment: Measures to address the competition issue under Article 4/Article 6 prospectively

10) Typical Risk Scenarios and Application Examples (Hypothetical)

POS Acquisition and Commission Coordination

Following industry meetings, major acquisition banks in the near future and at similar rates .
Evidence: Meeting notes, correspondence containing phrases like "let's reduce it to %X next month.".
Risk mitigation: Independent association meetings should not discuss firm-specific pricing/plans for the upcoming period ; only delayed and aggregate data should be presented.

Synchronizing Campaign Calendar with Hub-and-Spoke

While the card scheme/payment platform doesn't directly share the dates of upcoming campaigns it collects from banks, it signals this through a "summary report."
Assessment: Indirect information flow coordinated action .
Precaution: Platform data reports masked, delayed , and sufficiently comprehensive ; individual bank calendars should not be shared.

Blocking New Entrants Under MFN Regulation

The large wallet app a wide MFN ( : “I get the best commission on every channel.”
Impact: The space for competing wallets better deals is reduced; the barrier to entry is increased.
Solution: Transition to a narrower MFN (Money Fact- Finding) system, with transparent and proportionate conditions; waiver of MFN in certain circumstances .

Discrimination in API Access

The bank provides its own fintech subsidiary with API access at higher speeds and limits , while offering independent competitors delayed/paid access
Analysis: Dominant position + discrimination; self-preferencing.
Commitment: Equal SLA, transparent fee schedule, independent audit, and complaints mechanism.

11) Compliance Program: Checklist for Banks and Financial Institutions

Management and Organization

Competition law risk appetite should be determined at the board level ; the compliance program should be embedded in the internal audit plan .
A Competition Compliance Officer and cross-business unit managers (legal, risk, sales, IT, data) should be appointed.

Politics and Education

Information exchange policy: Which data sensitive should be identified with clear examples.
Protocol for participation in meetings/associations: Agenda, minutes, and for leaving the meeting .
Training and testing: Annual mandatory training, role-based case studies.

Process and Control

Contracts with third parties: “No-exchange” clauses regarding data flow with consultants, associations, card schemes, BKM (Interbank Card Center), and software providers , as well as guarantees .
MFN and exclusivity review: contract patterns , duration and market share thresholds.
API and access: Technical-legal equality and transparent pricing; publication of SLAs.
Internal communication hygiene: Avoid phrases like "Let's boost the market together," and "Agreed?"; legitimate reasons should be documented.
Early warning system: The legal department should be alerted when simultaneous and unexplained similarities in price increases are detected.
On-site inspection plan: IT preparation for digital search, keyword lists, legal privilege limits, and routing.

Incident Management

Internal investigation protocol: A swift, documented, and independent investigation when an allegation/complaint is received.
Regret/compromise assessment: Timing, risk, and benefit analysis.

12) Sectoral Intersections

Regulation and competition alignment: BDDK/TCMB measures do not completely eliminate competition analysis; even with price/ceiling decisions, sharing forward-looking firm data is against the rules.
GDPR and data sharing: Explicit consent and data minimization alone do not guarantee compliance with competition law; independent must be conducted.
Sustainability and green finance: When establishing common goals (e.g., “green loan criteria”) , coordination involving future pricing/margin plans should be avoided; standard-setting should be transparent, openly participatory, and non-discriminatory .

13) Common Mistakes and “Red Flags”

Upcoming interest rates/commissions are discussed at association/workshop meetings .
Emails like, "The market leader is doing it this way, so we should adopt it too.".
Fresh, company-specific data from third-party benchmark reports
Broad MFN terms becoming the default in standard contracts
Implicit privileges in favor of affiliates in API access .
In large tenders, "pretending to bid," implicitly withdrawing , or sharing the profits.

14) Practical Adaptation Plan for Banking and Finance (90-Day Roadmap)

First 30 Days

Scanning contract templates: MFN, exclusivity, package, binding clauses.
Data mapping: What sensitive information is shared with whom, how often, and through what means?
Meeting/association calendar and representative list: Agenda and "early departure" rule.

31–60 Days

API/SLA transparency report; equal treatment control for affiliate and independent fintech companies.
Training and case simulations; examples of "hub-and-spoke".
Internal search and keyword cleaning; documentation standards.

61–90 Days

Revision and commitment templates for hazardous materials .
Early warning indicator panel: Price/commission parallel movement alarms.
Incident management (regret-reconciliation) protocol and management presentation.

15) Conclusion

The banking and finance ecosystem is one of the areas where competition law risks are highest due to multilateral markets , network effects , and data density . Articles 4, 6, and 7 of Law No. 4054 strictly regulate horizontal/vertical relationships, platform behavior, and concentrations. The key to compliance is managing sensitive information flow , structuring vertical conditions such as MFN/exclusivity and packaging in a measured way, providing equitable and transparent API and infrastructure access , ensuring contractual and correspondence hygiene , and strategically using leniency/settlement/commitment tools in incident management. These steps reduce not only the risk of penalties but also the risk to reputation and business continuity

Law No. 4054, banking, finance sector, legal consultancy, Istanbul lawyer, competition law, competition authority, RKHK

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