Turkey: The New Block Exemption Communiqué For The Vertical Agreements In The Motor Vehicle Sector

Last Updated: 13 March 2017
Article by Togan Turan and Derya Genç

The new Block Exemption Communiqué No. 2017/3 on Vertical Agreements in the Motor Vehicles Sector ("the New Communiqué") has recently been published in the Official Gazette numbered 29989 and dated 24 February 2017. With this new communique, the previous Block Exemption Communiqué No. 2005/4 on Vertical Agreements and Concerted Practices in the Motor Vehicles Sector ("Communiqué No. 2005/4") is repealed and some fundamental changes have been introduced, especially in terms of general exemption conditions, non-compete obligations and additional service points.

General Exemption Conditions (Article 5)

One of the fundamental changes regulated under the New Communiqué concerns the thresholds taken into consideration in the determination of the applicability of the communiqué. Briefly, Communiqué No. 2005/4 provides that the agreements in the motor vehicles sector could benefit from the exemption if the provider's market share in the relevant market, where it provides motor vehicles or spare parts or maintenance and repair services, does not exceed 30%, or 40% for agreements where quantitative selective distribution is preferred for the distribution of motor vehicles. The New Communiqué sets forth a single market share threshold (i.e. 30%) for each and every agreement with respect to motor vehicles sector. In other words, regardless of the preferred distribution system, the agreements within the motor vehicles sector can now benefit from the protective cloak of the New Communiqué if the market share of the provider does not exceed 30%. However, similar to Communiqué No. 2005/4, the New Communiqué does not set a market share threshold for qualitative distribution systems.

Moreover, the requirement of a detailed and reasoned written termination notice in order to terminate the agreement between the supplier and the dealer or the authorized service; and the requirement of giving the parties' of the agreement the right to bring their disputes to an independent expert or an arbitrator is no longer necessary in order for the exemption provisions to apply under the New Communiqué.

Non-Compete Obligations and Restriction of Establishing Additional Service Spots (Article 7)

The New Communiqué draws a distinction between the market for sales of new motor vehicles and the market for after-sales of motor vehicles with respect to non-compete obligation. While Communiqué No. 2005/4 deems that based on the buyer's purchases in the preceding year, any direct or indirect obligation imposed on the buyer to purchase from the provider or another undertaking determined by the provider more than %30 of the goods or services in the relevant market as non-compete obligation, the New Communiqué sets the threshold as %30 for the sales of new motor vehicles market and 80% for the after-sales of motor vehicles market.

Moreover, the New Communiqué sets forward the conditions for exemption of the agreements which include non-compete restrictions separately for (i) distribution of motor vehicles, (ii) distribution of spare parts and (iii) provision of maintenance and repair services. Accordingly, the New Communiqué exempts the non-compete obligations which are imposed on the buyer that (i) does not exceed 5 years within the distribution of motor vehicles and (ii) within the term of the agreement concerning distribution of spare parts and/or provision of maintenance and repair services up to 5 years.

However, similar to Communiqué No. 2005/4, the New Communiqué does not cover non-compete obligations after the termination of the agreement.

While the New Communiqué allows restrictions of multi-branded distribution structure and establishment of additional service points within the scope of distribution of new motor vehicles, such restrictions would lead to the inapplicability of the New Communiqué in terms of the distribution of spare parts and maintenance and repair services. In other words, the New Communiqué adopts a more flexible approach for the distribution of new vehicles.

Withdrawal of the Exemption (Article 8)

One of the amendments made by the New Communiqué includes a new legal threshold in relation to the withdrawal of the exemption. According to the Communiqué No. 2005/4, the Competition Board could withdraw the granted block exemption in case the similar vertical restrictions cover a significant part of the relevant market. With the New Communiqué, the Competition Board is able to withdraw the granted block exemption in case the similar vertical restrictions cover 50% of the relevant market.

Calculation of Market Shares (Article 9)

Article 9, paragraph 3 of the New Communiqué regulates the rules to be followed for the application of 30% market share threshold in accordance with the amendments to Article 5 in relation to the unification of the legal thresholds regardless of the preferred distribution system. As a result, the 40% threshold has been removed from Article 9 and the existing provision has been revised in accordance with Article 5.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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