Turkey: Draft Guideline On Vertical Agreements And The Related Workshop Of The Competition Authority

Introduction

A number of studies have been undertaken in order to revise the Guideline on Vertical Agreements ("Vertical Guideline")1 in line with the developments in the European Union legislation, as well as the needs in the relevant sectors. In accordance with the announcement made on 20.07.2017 on the website of the Turkish Competition Authority ("Competition Authority"), the Draft Guideline on Vertical Agreements ("Draft Guideline") was presented for public opinion. In accordance with the suggestions and opinions collected from the public, a workshop ("Workshop") was held on 12.12.2017 by the Competition Authority to discuss and evaluate these suggestions and opinions. The Workshop was a wide-ranging meeting where all parties expressed their views on the changes in the Vertical Guideline. This article addresses the Draft Guideline and the Workshop on vertical agreements.

Draft Guideline on Vertical Agreements

Regulations on Agency Agreements

The Draft Guideline proposes a new regulation to paragraph 14 of the Vertical Guideline on Agency Agreements. When designing a proposal for the new Regulation, the Competition Authority first examined whether there is a difference between the Vertical Guideline and the relevant provisions of the European Union legislation. It was then examined whether paragraph 14 of the Vertical Guideline complies with the relevant provisions of the Turkish competition law legislation.

Paragraph 14 of the Vertical Guideline under the heading of Agency Agreements states the following: "...However non-competition obligations, including those related to the period following the termination of the agreement, concern inter-brand competition, and may lead to anticompetitive 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 may fall under Article 4 of the Act."

Paragraph 14 also differs from that in the 19th paragraph of the European Commission's Guidelines on Vertical Restraints ("Commission's Guideline")2. In the paragraph referred to in the Commission's Guidelines, the non-competition obligations in the agency agreements might violate Article 101(1) of the Treaty on the Functioning of the European Union if they have foreclosure effects on the relevant market. However, as stated in the Informatory Memorandum on the Draft Guideline published by the Competition Authority ("Memorandum"), contrary to the EU legislation, in the 14th paragraph of the Vertical Guideline, the foreclosure effect in the market is considered as a criterion as to whether or not the non-compete obligations included in the agency contracts fall within the scope of Article 4 of Law No. 4054 on the Protection of Competition ("Law No. 4054").

Moreover, the Competition Authority reached the conclusion that the understanding adopted within the framework of the non-competition obligation contained in the agency agreements in paragraph 14 of the Vertical Guideline is contrary to the general understanding adopted in Law No. 4054 and in Block Exemption Communiqué on Vertical Agreements No. 2002/2 and in the Vertical Guideline, and requires to be harmonized, accordingly. Also, a new regulation should be introduced in order to eliminate the discrepancies regarding non-competition obligations in vertical agreements, and to remove inconsistencies in the application of the non-compete obligations contained in the agency contracts.

As a consequence, the Competition Authority proposes to reorganize the phrase in paragraph 14 of the Vertical Guideline, as follows: "...However non-competition obligations, including those related to the period following the termination of the agreement relates to inter-brand competition, and this provision falls under Article 4 of the Act."

At the Workshop, while some of the sector representatives arguing that the new Regulation envisaged in the Draft Guideline is in accordance with the Regulation of the European Commission ("Commission"), and that it should come into force in this manner, however, based on a different interpretation, some of them proposed that this Regulation needs to be reviewed before entry into force. Those who are of the opinion to re-evaluate the regulation have stated that it is aimed to accept that the relevant contract is within the scope of Article 4 of Law No. 4054, regardless of whether it has an effect of market closing, the manner of how to deal with the non-competition obligation in the agency contracts should be revealed in light of the decisions of the Competition Board, that any agency contract containing the non-competition obligations with the proposed regulation will cause serious concerns for enterprises and, in this respect, there will be many exemption applications to the Competition Authority, thereby increasing the workload and, due to all of these facts, the existing Regulation in the Vertical Guideline must remain.

Regulations Regarding Online Sales

There is no doubt that the widespread use of the internet in Turkey, and the increase of online sales raises the debate of introducing the new regulations into Turkish competition legislation. As is stated in the Memorandum, the Regulation in the Turkish competition legislation is limited to indicating that online sales are considered to be a passive selling method, and there are significant shortcomings as compared to the approach of the Commission.

As is set forth in the Draft Guideline, the Competition Authority envisages a broad regulation based on the Commission's Guidelines on prohibitions of online sales. As per the Draft Guidelines, limitations imposed on online sales will exclude vertical agreements in question from the scope of a block exemption. These limitations, in particular, are the restrictions imposed on buyers with regard to territory, and on customers to which the contractual goods and services will be sold, the restrictions on the proportion of sales made via the internet, and limitations on determining higher prices to be paid by buyers for the products to be sold on the internet, than for products to be offered at physical sale points.

Furthermore, the Draft Guideline regulates that the provider may set forth certain conditions with respect to the use of the internet as a sales channel. These conditions are exemplified as follows: The quality conditions of the website in which the products are offered for sale, the requirement of providing certain services to online consumers, and the obligation to have a physical point of sale. Also, in accordance with the Draft Guideline, provided that online sales will not be prevented, directly or indirectly, the provider may request from the buyer to sell on "sales platforms" that meet certain standards and conditions.

Finally, for the purpose of harmonizing Article 31 of the Vertical Guideline with the selective distribution system in terms of online sales, it is envisaged to make additions to the said paragraph referred to in the Draft Guideline.

The regulations proposed in the Draft Guideline on online sales have been discussed, in detail, by various sector representatives at the Workshop. Although a consensus has been reached on the development of e-commerce and the growth of e-commerce volume, differing opinions have been put forward on introducing some limitations to online platforms, provided that they do not hinder competition. Within the context of the limitations imposed on online sales, the Coty Decision (C-230/16) of the European Court of Justice dated 06.12.2017 has been referred to. This decision is a precedent that affirms that luxury brands can block online sales in order to avoid damaging the images of their products. While some sector representatives have argued that the Draft Guideline must be drafted in accordance with the last provision of paragraph 54 of the Commission's Guidelines and the Coty Decision, on the other hand, some have argued that no restrictions should be imposed on online platforms.

Regulations Regarding the Most Favored Nation / Customer Condition

As is stated in the Memorandum of the Competition Authority, it is not easy to decide whether or not a competition law violation has occurred with regard to the most favored nation / customer ("MFN"). Moreover, pursuant to the Competition Authority, the fact that there is no explanatory provision on the conditions of MFN in the Turkish competition law legislation causes uncertainties, in practice. For this reason, the Competition Authority has considered that it would be appropriate to include the regulations on the MFN conditions in the Draft Guideline. In accordance with the new regulation proposed in the Draft Guideline, in the competition law examinations with regard to the MFN condition, it is necessary to examine, in detail, the competitive position of the beneficiary and competitors in the relevant market, the purpose for which the contract is placed, the characteristics of the market, and the condition.

In the Workshop, the concerns regarding introducing regulations regarding the application of the MFN have been expressed due to the fact that there has been no established case-law on the MFN practice. It has been proposed by some sector representatives to introduce a market share threshold in the competition law examinations for the MFN condition, pointing out that it is unclear how to conduct market power examinations on the market position of the beneficiary and competitors. Additionally, with the proposed amendment to Article 19 of the Vertical Guideline, it states that the MFN condition might be another example of enhancing the effectiveness of maintaining the resale price. However, as such additional proposal of regulation is mentioned together with the resale price regulation, under the same paragraph, it has been criticized that the MFN condition might be recognized as the resale price maintenance.

Conclusion

In order to meet the needs arising from the competition law applications, and to comply with the EU legislation, it has been concluded that the "Agency Contracts," "Internet Sales," and "Most Favored Nation / Customer Conditions" should be reviewed and introduced into the Vertical Guideline. In the Workshop of the Competition Authority, the Draft Guideline was evaluated with the participation of various sector representatives. Changes to be introduced into the Guidelines are expected to take effect soon.

Footnotes

1 Please see. http://rekabet.gov.tr/Dosya/guidelines/13-pdf (Last Access date: 20.12.2017).

2 Please see. http://ec.europa.eu/competition/antitrust/legislation/guidelines_vertical_en.pdf (Last Access date: 20.12.2017).

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
Similar Articles
Relevancy Powered by MondaqAI
 
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
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