Legal Journal

ERP Software And Relevant Market In Terms Of Competition Law

Computer program (“Software”) is a general term for the various kinds of platforms that must exist in all computers and enable other programs to operate on and that control the operation of the computer and its interaction with its peripherals (infrastructure) and standard programs created to meet specific needs using such infrastructure (application packages) or programs developed to meet a specific need or programs created by compiling particular program segments (specific applications).

Software is divided into two categories on the first level: software for individual users and software for enterprise users. There are two subcategories of enterprise software: infrastructure software and application software. Main types of application software are personal productivity applications which facilitate performance of specific tasks such as word processing, personal database management, spreadsheet, graphic presentation software, and enterprise application software which enable effective performance of basic business functions.

Enterprise Application Software is divided into subcategories based on their functions. EAS differs from consumer software designed to meet individual needs in following aspects: EAS is designed to meet a broader and more detailed range of needs, price, requirement of additional services such as consulting, training or support prior to or post purchase. With the recent technological developments, organizations and companies use information technologies and software that are an integral part of these technologies to automatize their business processes from production to customer relations, and to plan and manage enterprise resources. The main categories of Enterprise Application Software (EAS) are as follows:

• Enterprise Resource Planning/ERP
• Customer Relationship Management/CRM
• Supply Chain Management/SCM
• Operation and Manufacturing Application/OMA
• Business Analytics/BA

The Competition Authority has adopted the foregoing classification in its decision no. 10-56/1089-411 dated 26.8.2010.

With the rapidly developing technology, these basic software categories are divided into smaller subfields and new fields begin to emerge. In addition, software modules can turn into separate products, expanding the product range under EAS every day. Therefore, as can be observed in EU Directives, product segments cannot always be definitely and clearly defined.

In terms of demand, how the users purchase enterprise application software and which factors they consider while purchasing such software is important. Enterprise users meet their software needs;

• Directly through software developers or dealers/distributors/solution partners
• From companies providing consultancy services in this area
• By outsourcing (software is hosted on hardware belonging to someone else)
• Or by having software developers design or develop new software based on the company’s software needs.

Both during the acquisition of Intellectual and Industrial property rights or the transfer process of a Company holding such rights, if necessary, the first stage of the “Product Market” analysis will be conducted in accordance with the foregoing general principles. In a Competition Authority examination regarding a software product, it will be necessary to evaluate separately in each case whether the market segment of the product will be the main market segment, that is EAS, or sub segments like ERP, CRM, SCM.

This matter was also mentioned in the Competition Authority decision no.K:10-56/1089-411 and enterprise software is divided into submarkets such as enterprise resource planning, customer relations management and supply chain management.

However, as stated in the Authority decision dated 28.04.2011, considering that “the complicated nature of the market makes it rather difficult to evaluate the market and make future projections”, it should be stated that these definitions cannot be definite market definitions, and that extensive evaluations based on each product and its specifications should be conducted.

The concepts other than the relevant market will be analyzed separately, specific to each permit process and within the scope of the Communiqué no.2010/4.

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