Turkey: The Board published its reasoned decision on Roche Müstahzarları Sanayi A.Ş.’s request for granting negative clearance or individual exemption for the application on decreasing the number of storage facilities (below ten)

Last Updated: 5 December 2016

The Board published its reasoned decision on Roche Müstahzarları Sanayi A.Ş.’s request for granting negative clearance or individual exemption for the application on decreasing the number of storage facilities (below ten) that work within the distribution of medicines for human use to drugstores and private hospitals (18.08.2016, 16-28/476-213)

The Turkish Competition Board published its reasoned decision on the application filed by Roche Müstahzarları Sanayi A.Ş. (“Roche”), requesting the Board to determine that the application on decreasing the number of storage facilities (below ten) that work within the distribution of medicines for human use to drugstores and private hospitals, does not violate Articles 4 or 6 of the Law No. 4054 on the Protection of Competition (“Law No. 4054”) and consequently grant negative clearance or individual exemption. Roche, that is the Turkish subsidiary of F. Hoffmann-La Roche Ltd. based in Basel, Switzerland, is active in the sectors for medicine for human use and diagnostic equipment.

In its reasoned decision, the Board found that the pharmaceutical warehouses that Roche will be working with are not yet determined. The Board also stated that the opposing party of the draft agreement submitted by Roche in scope of the application is not designated yet and mutual will of agreement has not been presented. In this respect, the Board indicated that an agreement which may be subject to an evaluation under Articles 4 and 5 of the Law No. 4054 is not present for the case at hand.

The Board found that Roche’s application is concerned with a negative clearance application for the purpose of indicating that its unilateral practice does not constitute a violation in terms of Article 6 of Law No. 4054. The Board made a reference to the Article 8 of Law No. 4054, which states that, “Upon the application by the undertaking or associations of undertakings concerned, the Board may, on the basis of information in hand, grant a negative clearance certificate indicating that an agreement, decision, practice or merger and acquisition do not violate the to articles 4, 6 and 7 of the Law No. 4054.” and stated that the wording of the article indicates that negative clearance evaluations are not limited to the written agreements and also incorporates the determination of whether there is an infringement in terms of Article 6 of Law No. 4054. In this respect, the Board stated that the non-existence of a signed and definitive agreement in scope of the case file does not pose an obstacle for conducting a negative clearance evaluation.

With regards to the evaluation of whether Roche is in a dominant position within the relevant market, the Board stated that Roche’s market shares are significantly high even if the relevant product market is defined in the broadest manner as ATC-3 classes. The Board also stated that Roche’s market share levels increase even further in case the relevant product market is defined in a narrower manner. In this respect, the Board indicated that it would be possible to determine that Roche is in a dominant position, however due to the reasons explained below, it is not required to definitively determine whether Roche is in a dominant position in scope of the possible market definitions.

The Board further evaluated that Roche, who may be deemed dominant within the relevant market, may potentially refuse to enter into agreements with some pharmaceutical warehouses in the future, in conjunction with its contemplated applications on decreasing the number of warehouses it will be working with. In this respect, the Board stated that the relevant application may potentially constitute an infringement under Article 6 of Law No. 4054. The Board found that the purpose of the application is ensuring legal certainty prior to signing the final agreements, in consideration with the foregoing scenario.   

The Board stated that the fundamental information that is required for the purpose of the evaluating Roche’s applications on working with a limited number of pharmaceutical warehouses and refusing to enter into agreements with certain pharmaceutical warehouses has not been submitted in scope of the case file. In this respect, the Board evaluated that at this stage, it is not possible to question whether exclusionary effects will arise within the free pharmaceutical market with respect to the pharmaceutical warehouses that will be unable to supply Roche’s products. The Board further stated that even though an application that is in violation of the Law No. 4054 has not been found in scope of the draft contract submitted by Roche, the relevant draft contract does not incorporate the fundamental elements of the application. Therefore, the determination of whether the draft contract is in violation of the Law No. 4054 will cannot be evaluated in scope of the application.

The Board finally stated that in its former decisions where other suppliers’ similar applications have been formerly evaluated and where the Board has reached definitive judgments, the opposing parties’ of the applications were concretely determined in all cases. However, with respect to the application at hand, the Board indicated that Roche did not submit information in order to make the relevant determination.

Ultimately, the Board determined that under the foregoing consequences, it is not possible conduct a negative clearance/individual exemption evaluation with respect Roche’s application in question.

This document is not intended to create an attorney-client relationship. You should not act or rely on any information in this document without first seeking legal advice. This material is intended for general information purposes only and does not constitute legal advice. If you have any specific questions on any legal matter, you should consult a professional legal services provider.

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