The Turkish Competition Authority ("Competition Authority" or "Authority") has announced on July 20, 2017, on its official website, that its "Draft Guidelines on Vertical Agreements" ("Draft Guidelines"), which aims to revise the Block Exemption Communiqué on Vertical Agreements No. 2002/2 ("Communiqué No. 2002/2") and the Guidelines on Vertical Agreements ("Guidelines") has been made available for public notice and comment.

The Draft Guidelines includes newly introduced regulations and/or amendments with regard to: (I) agency agreements, (II) online sales, and (III) most-favored nation (i.e., customer) ("MFN") clauses in order to eliminate inconsistencies in the existing legislative framework and to meet the needs of the evolving market conditions in the modern economy.

(I) With regard to the agency agreements, the Draft Guidelines includes an amendment in terms of non-compete obligations in such agreements. In this regard, the Draft Guidelines refers to Paragraph 14 of the current Guidelines, which adopts a "rule of reason" approach with regard to non-compete obligations in the agency agreements. The Draft Guidelines states that such clauses would only be considered within the scope of Article 4 of the Law No. 4054 on the Protection of Competition ("Law No. 4054") if they were to lead to market foreclosure effects in the relevant markets. The Draft Guidelines indicates that such an approach contradicts the basic framework of the Law No. 4054.

To that end, in order to eliminate this inconsistency, the Authority contemplates amending the relevant provision under Paragraph 14[1] of the Guidelines as "this provision falls under Article 4 of the Law," instead of "this provision may fall under Article 4 of the Law." By doing so, the Draft Guidelines suggests the non-compete obligations incorporated in the agency agreements to be unequivocally considered to fall within the scope of Article 4 of the Law No. 4054, irrespective of whether such clauses in the agency agreements lead to any foreclosure effects in the relevant markets.

(II) In terms of online sales, the Draft Guidelines points out the necessity of providing specific provisions regarding online sales under the Turkish competition law regime, and aims to harmonize the current legislative framework with the approach adopted by the European Commission. To that end, the Draft Guidelines proposes to incorporate provisions regarding online sales under Paragraphs 25, 26 and 27 of the Guidelines. In this regard, it should be noted that the new provisions contemplated to be introduced by the Draft Guidelines would comply with the provisions regarding online sales in the European Commission's Guidelines on Vertical Restraints.

The new provisions in the Draft Guidelines include the following: (i) restrictions with regard to online sales that exclude the relevant agreement from block exemption (i.e., hardcore restrictions for online sales), (ii) conditions that may be stipulated for websites to be utilized as sales channels, and (iii) provisions regarding online sales in the selective distribution systems.

(III) MFN clauses have recently been scrutinized by both the European Commission and the Turkish Competition Board due to the increasingly widespread utilization of electronic channels in trade activities. Therefore, indicating that this new trend necessitates specific regulations, the Draft Guidelines introduces provisions with regard to MFN clauses. In general, the Draft Regulation evaluates MFN clauses under the "rule of reason" approach. In this regard, it proposes to: (i) include a provision in Paragraph 19 of the Guidelines regarding resale price maintenance, and (ii) incorporate a new sub-section regulating the assessment of MFN clauses under the Turkish competition law regime in Section 9.5.2 of the Guidelines. The Draft Guidelines indicate that MFN clauses do not give rise to the same consequences in each case and, therefore, such clauses should be evaluated on a case-by-case basis by thoroughly analyzing various factors, such as: (i) the position of the parties and their competitors within the relevant market, (ii) the purpose of the MFN clause placed in the relevant agreement, (iii) the specific characteristics of the relevant market and the MFN clause in question.

In this context, it may be claimed that the new provisions regarding MFN clauses are highly significant, as they will provide vital guidance for the evaluation of MFN clauses under the Turkish competition law regime.

[1] The complete version of the amended provision reads as follows: "However, non-competition obligations, including those related to the period following the termination of the agreement, concern inter-brand competition and may lead to anti-competitive effects if they create a foreclosure effect in the relevant market where the contracted goods and services are being sold; as a result, this provision falls under Article 4 of the Law."

This article was first published in Legal Insights Quarterly by ELIG, Attorneys-at-Law in December 2017. A link to the full Legal Insight Quarterly may be found here.

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