Hazelnut ban for Nutella producer

With this decision, Ferrero is prohibited from purchasing, shelling, and exporting hazelnuts in Turkey. The company will only be able to carry out imports from Turkey.

The company, which is the producer of Nutella, Ferrero Rocher, and Kinder chocolates, sources 80 percent of its hazelnut imports from Turkey.

A decision of great interest to the hazelnut sector has emerged from a lawsuit filed at the Ankara 15th Administrative Court by ORTAR, an organization of the Ordu Metropolitan Municipality, and a local hazelnut firm based in Ordu.

The Ankara 15th Administrative Court found the commitment given by Ferrero to the Competition Authority in March 2024, stating that it would not purchase hazelnuts below the price announced by the Turkish government, to be insufficient.

The court stated the following in its decision:

"Considering the global commercial volume, market share, and vertically integrated structure of the defendant company, which has been determined to be in a dominant position in the hazelnut market with power close to a monopsony, it is observed that the commitments presented, which focus solely on price and quantity, do not provide a concrete and reliable guarantee that they eliminate the potential for the enterprise to abuse its dominant position or that they permanently end its exclusionary and exploitative actions in the market."

DECISION FOUND NOT TO BE IN ACCORDANCE WITH THE LAW

In its decision, the court stated that it was unclear to what extent the commitments given to the Competition Authority fulfilled the function of deterrence and disciplining the market, and that the Competition Authority had failed to adequately evaluate this situation, noting: "The defendant company's dominant position in the market and its potential to directly or indirectly manipulate this power carry the risk of causing economic ruin by making it impossible for small and medium-sized enterprises, which are fundamental elements of the competitive structure in the market, to continue their commercial activities if the given commitments do not effectively prevent this situation. Therefore, there is no compliance with the law in the subject board (Competition Authority) decision, which terminates the investigation with commitments that are difficult to audit and whose effectiveness is not guaranteed by concrete data, instead of permanently establishing a competitive structure in the market."

In line with these decisions, the court annulled the commitments the Italian firm had given to the Competition Authority.

Ali Mertan, the lawyer for ORTAR, an organization of the Ordu Metropolitan Municipality, and the local hazelnut firm that filed the lawsuit, stated in his explanation that the court had annulled the Competition Authority's commitment agreement with this decision:

"In this case, the Competition Authority will terminate the current commitment process as of today, and in line with this decision, the firm will be forced to cease its commercial activities in Turkey; that is, it will have to liquidate its purchasing, shelling, and export operations of shelled and unshelled hazelnuts in the domestic market. In other words, it will only be able to perform import operations. Exports will be carried out by Turkish firms. It will end practices such as 'valuable agriculture'."

Ferrero, which has been operating in Turkey for 35 years, has more than a thousand employees across 6 facilities. In 2014, the Italian company also acquired Oltan Group, the market leader in hazelnut purchasing, processing, and sales.

The company, which is the producer of Nutella, Ferrero Rocher, and Kinder chocolates, sources 80 percent of its hazelnut imports from Turkey. As the largest buyer in the market, Ferrero is in a position to determine prices and, according to the agreement it made with the Competition Authority, had promised not to purchase shelled hazelnuts below the intervention reference price in Turkey and to support market efficiency.