Turkey: Cards Are Being Redistributed In The Turkish Beer Market

Introduction

Beer is one of the first beverages that humankind produced, such that beer is mentioned even in the epic of Gilgamesh, believed to be circa 2800 and 2500 BC. While the process of becoming human from the primitive human, "Enkidu" who lives with animals and eat herbs is described, it is expressed that Enkidu eats bread and drinks beer. The first large scale brewery in Turkey was Bomonti Brewery that opened in Feriköy, İstanbul in 1890. In 1909, Nektar Brewery was also founded in Istanbul, Büyükdere, as a competitor of Bomonti. The ensuing competition commenced in the beer market, causing both companies loss. Thereupon this loss, Bomonti and Nektar decide to merge, a seemingly wise move. In 1912, they commenced operating under the trademark, "Bomonti-Nektar". The said company operated as the most important beer producer, for many years; however, with the foundation of the modern Republic of Turkey, it was nationalized in 1934, under the name, "Tekel".

From the perspective of competition law, the beer market is as colorful as its short history, as summarized, above. In the said market, the sectorial regulations have serious influences on the market structure. Nevertheless, the Competition Board decisions are also some of the most important dynamics in the market. The competition between the two big players of the market, Efes Pazarlama ve Dağıtım Ticaret A.Ş. ("Efes") and Tuborg Pazarlama A.Ş. ("Tuborg"), have created the most detailed and colorful applications regarding Turkish competition law history.

The reflections of the change in the beer market is seen in competition law practices through the Competition Board decision dated 09.11.2017 and numbered 17-36/583-256. With this decision, Tuborg, who has benefited from the exemption regime, has started to be subject to the same conditions as Efes, as Tuborg's market share has increased. The individual exemption granted for the exclusive agreements of Tuborg in the closed beer market has been revoked by this decision. Therefore, the possibility of the removal of the exemptions applied in the beer market have arisen in respect of both of the big players.

The Features of the Beer Market Regarding Competition Law

Upon examination of the Competition Board decisions, the market structure and the influence of the regulations of the Tobacco and Alcohol Market Regulatory Authority (TAMRA) are truly effective through the decisions numbered 17-36/583-256. Making the products in the cold beer market available to consumers is important according to the Competition Authority1. In this regard, it is important for the producers to have refrigerated coolers present in the points of sale. When producers have more types of products that they can offer cold at the point of sales, they have greater advantage in direct proportion. Therefore, producers have the opportunity thereby to promote their products to consumers. Considering the fact that there is a prohibition on advertising in the said market, having refrigerated coolers in the points of sale is of paramount importance. The Competition Board expresses that especially with the regulations made in 2013, the prohibitions regarding advertisements and sponsorship entered into force and, therefore, the said market passed into the dark market conditions. According to the Board, it is considerably difficult for new undertakings to enter into the market because of the dark market conditions and prohibitions on advertising. Indeed, it is impossible for new players who enter the market to compete with the current producers that are still in the market, and which are known by consumers, without their making any promotions or advertisements.

Furthermore, the Board determined that importation does not constitute sufficiently competitive pressure in the related market. The market shares of the undertakings that operate through importation are low due to the changes in foreign exchange rates, the amount of the special consumption taxes, as well as consumer habits. Moreover, the Board states that Efes and Tuborg, the two biggest producers in the market, have a seriously unutilized capacity.

The Competition Board divides the beer market into two groups regarding points of sale. The closed points of sale ("CPS") are the points of sale that sell the products to the consumers as closed, such as grocery stores, super markets, or kiosques. Open points of sale ("OPS") are places, such as hotels, restaurants, or bars where the products are sold to consumers for immediate use, generally with food, music and accommodation services. Various permits are required for the sale of beer in both of these points of sale.

Previous Competition Board Decisions

The Decision of the Competition Board dated 22.04.2005 and numbered 05-27/317-80 ("Decision on Revocation of Exemption") is related to the exclusivity agreements of Efes and Tuborg that they concluded with CPS and OPS. According to the said Decision, the group exemption provided to both producers' vertical agreements that include exclusivity, and which are concluded with the said points of sale, is revoked. In this Decision, it is determined that Efes is in the dominant position, that it is difficult to enter into the market as a producer, importation is not at an important level, and there is no sufficient competition in the market. Furthermore, the surplus capacity of Efes and Tuborg, the limitations on advertising in the sector, and the fact that the points of sale are not financially strong, are also taken into account. Hence, in light of these determinations, the group exemptions that had been granted to both Efes and Tuborg's agreements, including exclusivity, with the points of sale, was revoked.

After almost 3 years from the Decision on Revocation of Exemption, Tuborg applied for exemption again, as it had lost its market shares to Efes. Certain exceptions to the Decision on Revocation of Exemption are stipulated through the Decision of The Competition Board dated 10.04.2008 and numbered 08-28/321-105 ("Cabinet Rule Decision"). However, the most important rule brought by this decision is for CPS with net sales areas of 100 m2 and under; in this regard, if no other alcoholic beverage cooler is available to the consumer, directly, except for the Efes or Tuborg cooler, then the competing products will be allowed to cover up to 20% of the total cooler volume at the point of sale. Thus, Tuborg obtained the opportunity to place its products in Efes coolers at many points of sale.

Nevertheless, in spite of the Cooler Rule Decision, a decrease in the market shares of Tuborg continued. The Competition Board determined, in its Decision dated 18.03.2010 and numbered 10-24/331-119 ("Tuborg Exemption Decision"), that the market shares of Tuborg decreased, the market shares of Efes continued to increase, and the small players in the market pulled out of the market, altogether. For this reason, individual exemption is granted to agreements that include exclusivity, and that will be concluded by Tuborg and its distributors with CPS and the OPS.

In the meantime, there are a great number of Competition Board decisions regarding complaint and exemption applications, including various 2 decisions in relation to the franchise system called "Ekomini" that was carried into effect by Efes. Therefore, this situation indicates that the "quarrel" regarding competition law between the two big players in the beer market, continues to increase. Within this framework, in the Decision dated 03.07.2017 and numbered 17-20/320-142, the Board, on the one hand, rejected the request to grant exemption to the agreements to be concluded between Efes and the CPS, while, on the other hand, upon the request of the same undertaking, it examined the request for revocation of the individual exemption that Tuborg has in the closed beer market.

Decision on Revocation of the CPS Exemption

The Competition Board Decision dated 09.11.2017 and numbered 17-36/583-256 ("Decision on Revocation of the CPS Exemption)was given upon a request made during the exemption application regarding the exclusive agreements that Efes intends to conclude with the CPS; whereas, the exemption request of Efes was rejected, Efes also requested revocation of the individual Exemption of Tuborg that was granted through the Tuborg Exemption Decision. As a result of this examination, the individual exemption that Tuborg benefited from was revoked through the Decision on Revocation of the CPS Exemption.

The Competition Board's said Decision is a first in terms of revoking the previously granted individual exemption to Tuborg. Indeed, contrary to Efes, Tuborg is allowed to conclude exclusivity agreements in the beer sector. Hence, the Decision on Revocation of the CPS exemption is, in a sense, a return from the Tuborg Exemption Decision made in 2010. In this regard, the Competition Board takes into account the changing conditions in the beer market, and the changed position of Tuborg. This attitude of the Competition Board draws attention as a congruent approach to the dynamic structure of competition law.

When the competition law contest between Efes and Tuborg, which is described in detail, above, is observed, one may see that there are two half-times, much like a football match. The first half-time is the period that lasts until 2010, and in which, from the beginning (with the 2005 Decision on Revocation of Exemption), no competition law protection is provided for both players, but then competition law interventions took place for the protection of Tuborg. Various exemption requests by Efes were rejected in the Tuborg Exemption Decision in 2010, but competition law protection is provided through individual exemptions due to the decline in the market shares of Tuborg.

The second half-time is the period that begins with the Decision on the Revocation of the CPS Exemption, and in which the understanding that Tuborg no longer benefits from competition law protection begins to be dominant. The most characteristic feature of the second-half terms is that the competition between the two players in the market starts to increase. In the near future, commencement of discussions regarding the dominant position of Efes, or the concept of joint dominant position, is on the cards, as well. Furthermore, it is also probable for all of the exemptions to be revoked in the beer market.

Within the framework of the Decision on Revocation of the CPS Exemption, the Competition Board determines that the market share of Tuborg has regularly increased in the last seven years. The Board indicates that the market shares lost by Efes have been obtained by Tuborg, and this has emerged without the exclusivity clauses in the Tuborg CPS agreement. As a matter of fact, pursuant to the sectorial regulations, the agreements with CPS, including exclusivity, are not allowed, in spite of the Competition Board decision. Moreover, the Competition Board considers the fact that Tuborg obtains market shares despite the constriction in the closed beer market, as an indication of obtaining market power by the said undertaking. The Competition Board thoroughly evaluates the increase of Tuborg's availability rate in the closed beer market starting from 2005, the relative decrease in HHI rates in the said market, and Tuborg's investments with regard to the CPS.

In the light of these determinations, the Competition Board states that the current market structure is very different from the market structure when the Tuborg Exemption Decision is made, and that Tuborg is in a competitive position with Efes in respect of market share, sales amount, availability rates and financial power. In this scope, the Competition Board revoked the individual exemption granted to Tuborg's agreements containing exclusivity in the closed beer market.

Conclusion: New Game, New Cards

Beer, which is one of the most ancient beverages that humanity knows, started to be produced by the both Bomonti and Nektar in Turkey. In the progress of time, both companies, instead of being engaged in intense competition, chose to merge their powers through a wise move. This transaction, which can be considered as one of the most undesirable mergers in terms of competition law, caused the removal of the competitive structure in the said market, at the beginning phase.

The Competition Board regularly intervenes in the said market as a result of complaints and exemption applications. Considering the numerous decisions of the Competition Board, which include extensive market analyzes, detailed determinations for open and closed sales points in the market, one may observe that there is a serious struggle between the parties in terms of competition law, as well as two phases that are not unlike a football match. In the first phase, primarily all of the exemptions in the market are revoked, but this situation negatively influences Tuborg's position in the market. Thereupon, the Board grants Tuborg the right to conclude exclusive agreements. The other player in the market, Efes, has requested exemptions several times; however, the Board has not granted exemptions to the latter.

Nevertheless, the Competition Board signals in a totally different phase through its Decision on Revocation of the CPS Exemption. The increasing market power of Tuborg, which has been "protected" until this time, has caused the loss of this position of the undertaking and its exemption for the CPS. The most important part of this Decision is the determination that places Tuborg is in a competitive position with Efes with regard to market share, sales amounts, availability and financial power. Therefore, in the "second half-time," placing Efes in the dominant position may no longer be possible. In a similar way, this change may create more than one dominant position, i.e. a joint dominant position. In any case, this market will continue to encompass the possibility to create really interesting and enjoyable competition law applications for a long time to come.

Footnotes

1 Decision of the Competition Authority dated 09.11.2017 and numbered 17-36/583-256.

2 The Decision of the Competition Board dated 23.05.2012 and numbered 12-27/795-223 and the Decision of the Competition Board dated 09.10.2013 and numbered 13-57/802-341

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
 
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
 
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