Turkey: Draft Guideline On Vertical Agreements

Last Updated: 29 September 2017
Article by Özlem Kurt and Ezgi Köse

Turkish Competition Authority ("the Authority") has reviewed the Guideline on Vertical Agreements (" the Existing Guideline") considering the developments in the legislation of European Union as well as the requirements in related sector and announced the "Draft Guideline on Vertical Agreements" ("the Draft Guideline") where some explanations in the Guideline has been changed and some new explanations have been added, with the aim at obtaining public consultation.

The Draft Guideline includes mainly some amendments in and additions to ''Agency Agreements'', ''Internet Sales'' as well as ''Most Favored Customer Clause''.

Agency Agreements

The Existing Guideline indicates that non-competition clauses in the agency agreement could have effect to restrict the competition in the market and fall under the scope of Article 4 of Law on the Protection of Competition No. 4054 ("the Law") , if they could foreclose the market. As understood, this explanation in the Existing Guideline included a possibility itself. However, in the Draft Guideline, it is aimed to remove the difference between the agency agreement and other vertical agreements and with this approach it has been stated that both the agency agreements and other vertical agreements should be subject to the same assessment processes in terms of the non-competition clauses in the agreements. In this regard, if the agency agreements including non-competition clauses effective both during the effectivity of the agreements and after the termination and/or expiry of the agreement, these could have effect to foreclose the market and fall under the evaluation within the scope of Article 4 of the Law. 

Online Sales

As is known, it is possible to designate exclusive sales locations or regions for buyers in a provider-buyer relationship in a distribution network. Fulfilling demands of customers from the region or customer group of another (exclusive) buyer and which are not a result of active efforts by the buyer constitutes passive sales and restriction of passive sales to exclusive regions or customer groups is prohibited and considered an infringement which excludes the agreement from the block exemption.

As the Internet becomes a widespread sales channel day by day, the Authority has accepted internet sales as a new distribution channel and aimed to provide a balance of interests in terms of competition rules and accordingly new sections related to internet sales have been deemed necessary by the Authority to add to the Existing Guideline.

In this regard, it has been deemed appropriate to add the phrase "the restriction of a vendor's buyers to sell on the Internet is a kind of passive selling restriction" following the section where the passive sales are described. It is explained in the Draft Guideline that each supplier/ dealer / distributor have the right to make sales outside its region by selling through the internet and the prohibition of passive sales is not benefitted from the exemption. In particular the agreements including the following restrictions (for exclusive distributors) would not take the advantage of the block exemption;

  • Restriction of access to customers located in another distributor's region to its website or  reroute of such  customers to the website of the manufacturer or other (exclusive) distributor,
  • Termination of the transaction by the distributor, once it has been realized from the address in the customer's credit  card that the address of the customer is not located in distributor's region,
  • Restriction on the ratio of online sales to total sales
  • Agreement on to pay higher price for the products that the distributor will resell online than the products to be offered to sell at the physical points of sale (offline).

However, the supplier may foresee some conditions on the use of internet as the sales channel by the distributor. In this sense, the supplier has the right to require some quality standards, sales of certain products and providing certain services, having physical point of sale (being a brick and mortar shop) etc. Despite the right to determine such conditions for online sales, such conditions may not have the effect to prevent directly or indirectly online sales.

In addition to this, in accordance with the section regulating "Selective Distribution Systems" of the Existing Guideline, no prohibition to active or passive sales to be made to end users may be imposed on system members. With the Draft Guideline, this section has been expanded to indicate that online sales are also covered by passive sales. Besides, pursuant to the Draft Guideline opening a website for online sales will not be considered as opening a new physical point of sale.

Most Favored Customer Clause

In the Existing Guideline there is no explanation on the 'Most Favored Customer' clause. Due to the increase of e-commerce and the frequency of being the subject to the investigations of the Authority the Authority deemed necessary to give a special place to the Most Favored Customer ("MFC") clause in the Draft Guideline.

Supplier provides price guarantee for a product to favored customer in MFC clauses. The Authority's approach both in the guideline and in its decisions is not to prohibit MFC clauses per-se. With this approach, the Authority has stated that MFC clauses may result in different consequences in different markets and in some markets it could harm consumers by restricting the competition and in other markets, it may cause efficiency gains in the market by increasing the competition.

Besides, the Authority has made a distinction between narrow MFC and wide MFC clauses by taking into account the recent decisions adopted by the competition authorities in European Union and gives its definition a place in the Draft Guideline.

In narrow MFC clause, the undertaking providing price guarantee to the favored customer, is not allowed to offer the same product/services on better or cheaper prices only on its own online sales channel.

Unlike narrow MFC clause, in wide most favored customer clause, the undertaking providing price guarantee to the favored customer is not allowed to offer the same product/services on better or cheaper prices to the competitors of favored customer as well as the same on its own online and offline sales channel.Competition authorities in Europe generally do not prohibit the narrow MFC clauses, but prohibit the  wide MFC clauses.

The Authority has conducted three investigations in different markets focusing on MFC clauses, namely

  • Decision on  "Sony Europe/Arçelik" dated 08.12.2010 and numbered 10-76/1572-605
  • Decision on "Yemek Sepeti" dated 09.06.2016 dated and numbered 16-20/347-156
  • Decision on Booking.com" dated 05.01.2017 dated and  numbered 17-01/12-4

The Authority stated in its Information Letter it has announced with the Draft Guideline that the MFC clause prevents the undertakings to offer better prices to buyers other than the favored customer and therefore the prices are to be fixed in a certain level. As is known buyers have the right to determine its own prices and determination of fix or minimum sales prices of the buyers are forbidden under Turkish Competition Law. The Authority underlines in its Information Letter that the practice of MFC clauses have the similar effect as the determination of the resale prices in the market.

In Section 9.5.2.9 added to the Draft Guideline, the different practices and potential consequences of the MFC clauses have been explained by examples and it has been stated that (i) the position of the party benefitting from MFC clause as well as its competitors (ii) the purpose of the subject MFC clause and (iii) the characteristics of the market and the MFC clause itself have to be analyzed in detail. The Authority has given the following examples:

In case the parties benefitting from the MFC clause have strong positions in the market in comparison to its competitors, the likelihood for this clause to harm the competition is high.

Unlike above example, in case the parties to the agreement including the MFC clause do not have market power, it is unlikely for the MFC clause to create a concern on its effects in the competition. 

Conclusion

It is seen that the amendments and additions in the Draft Guideline explained above has been done in order to comply with the approach adopted in Europe by Competition Authorities, which is the role model of the Authority. The Draft Guideline is open to public consultation until September 11, 2017.

www.cukuryilmaz.av.tr

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Özlem Kurt
Similar Articles
Relevancy Powered by MondaqAI
ELIG Gürkaynak Attorneys-at-Law
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
ELIG Gürkaynak Attorneys-at-Law
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions