Turkey: Frito Lay Receives An All-Clear For Allegations Concerning Exclusivity, RPM Practices And Rebate Systems: The Board Decides Not To Initiate A Full-Fledged Investigation

The Turkish Competition Board's ("Board") reasoned decision1 on the preliminary investigation launched against Frito Lay Gida San. Tic. A.Ş. ("Frito Lay") is "hot off the presses." The Authority investigated a complaint received from a former sales chief of Frito Lay, alleging that the company had violated the Law No. 4054 on the Protection of Competition ("Law No. 4054") by excluding its competitors and by engaging in exclusivity practices.

Frito Lay is a Turkish subsidiary of PepsiCo, Inc. ("PepsiCo"). It is active in die "packaged chips" market through its Lay's, Ruffles, Doritos, Cheetos, A la Turca, and Cerezza brands, and in the "sugary products" market through its Rocco brand.

In line with its previous decisions concerning the same sector, the Board defined the relevant product market in this case as the "packaged chips" market. The Board then outlined the general characteristics of the packaged chips market and described it as a "tight oligopoly" market, in which the sales are mostly made by Frito Lay (through its Lay's, Ruffles, Doritos, Cheetos, A la Turca and Çerezza brands) and Doğuş Yiyecek ve İçecek Üretim Sanayi Ticaret A.Ş. (through its Patos, Cipso, Chips Master and Çerezos brands).

The Board's Substantial Assessment

The main allegation in this case concerned de facto exclusivity practices on the part of Frito Lay through its provision of certain discounts and incentives.

Having examined the available evidence, the Board ultimately determined that the complainant had failed to provide sufficient evidence in support of the allegations. The documents collected during the on-site inspections at Frito Lay's premises were also found to fall short of supporting or substantiating the exclusivity allegations. However, the Board decided that it would be useful to further analyse the various incentive schemes that Frito Lay had implemented for its sales points and distributors (including discounts) in order to determine whether these practices had led to de facto exclusivity.

Furthermore, the Board declared that, since one of the documents collected during the onsite inspection implied that Frito Lay had intervened in its distributors' resale prices, and given that the Board had previously examined resale price maintenance ("RPM") allegations against Frito Lay in 2007, a separate examination should be conducted as to whether Frito Lay had engaged in anticompetitive RPM practices. Accordingly, the Board conducted its ensuing assessment under two separate categories, namely: (i) abuse of dominance through de facto exclusivity behavior and rebate systems, and (ii) RPM practices through handheld terminals. As for the evaluation of dominant position, the Board did not provide a precise assessment as to whether Frito Lay enjoyed a dominant position in the relevant market, and opted to proceed directly with the examination of the practices mentioned above.

Assessment on de facto exclusivity and rebate systems

On the complainant's allegations that Frito Lay had implemented exclusive arrangements with its distributors, the Board found that the agreements concluded between Frito Lay and its distributors did not contain any exclusivity clauses. The Board also noted that the documents collected during the on-site inspections of Frito Lay's facilities did not imply or suggest that Frito Lay had engaged in exclusivity or exclusionary practices in the relevant product market.

That being said, the Board found that Frito Lay had established certain sales objectives for its sales points and had granted various incentives (such as discounts, free products, display prices and stands) to its sales points in order to incentivize them to reach and attain these sales objectives. In this regard, the Board decided that it was necessary to carry out a more detailed analysis as to whether Frito Lay's strategy had had an effect of de facto exclusivity and market foreclosure in the relevant market.

In its detailed analysis, the Board first mentioned that Frito Lay's strategy had enabled the salespersons of Frito Lay's distributors to receive higher premiums if they reached the relevant sales objectives, and thus, noted that the system increased the employees' motivation to increase their sales and achieve the sales objectives. In this regard, the Board first compared Frito Lay's growth objectives to the general growth level in the relevant market, in order to assess whether Frito Lay's investigated practices had an effect in the market. Accordingly, the Board concluded that Frito Lay's growth objectives were not significantly different from the general growth level in the market. Furthermore, the Board also conducted a separate analysis regarding the İzmir market (Turkey's third largest city), where Frito Lay had established higher growth targets compared to other regions. According to this analysis, the Board determined that: (i) Frito Lay's growth objectives had only been applied for the relatively short period of 5 months, (ii) Frito Lay had not implemented such an elevated growth objective prior to 2018, and (iii) there had been successful new entries into the market. Based on all of these considerations, the Board ultimately concluded that there were no grounds or factors that would lead the Board to initiate a full-fledged investigation against Frito Lay in connection with its rebate systems.

Assessment on RPM practices

As for the allegations that Frito Lay had engaged in RPM practices through handheld terminals, the Board stated that one of the documents collected during the on-site inspection indicated that the distributors' resale prices had been set by Frito Lay's headquarters, and that the distributors were not in a position to change or adjust the prices that were defined in (i.e., pre-loaded onto) the handheld terminals.

In this regard, the Board first referred to its previous Frito Lay decision2, where it had examined the RPM allegations against Frito Lay and decided to send an opinion letter to Frito Lay requiring it abstain from the investigated practices (on the basis of Article 9 of the Law No. 4054), rather than initiating a full-fledged investigation against the company. That decision had been based on the limited use of handheld terminals and the distributors' tendency to set different prices, even though the Board had concluded that the handheld terminal system used by Frito Lay had the potential to prevent distributors from setting their own resale prices. The Board also referred to another of its decisions3, in which it had once again evaluated Frito Lay's handheld terminal system and concluded that there were no grounds to initiate a full-fledged investigation against the undertaking, since the system under scrutiny gave distributors the ability to change the prices that had been defined (i.e., pre-loaded) in the handheld terminal system.

Pursuant to its assessment of Frito Lay's distributorship agreements in light of the legislative framework applying to such agreements, the Board determined that Frito Lay's agreements were in compliance with the Block Exemption Communiqué No. 2002/2 on Vertical Agreements ("Communiqué No. 2002/2"). The Board also conducted a separate analysis as to whether Frito Lay had intervened in its distributors' resale prices in practice through the meetings that it had held with the distributors. As a result of its examination, the Board concluded that there were no documents or information supporting the allegation that Frito Lay had determined the resale prices of its distributors, and thus decided not to initiate a full-fledged investigation against the company regarding the RPM allegations concerning handheld terminals.

In light of the foregoing considerations, the Board ultimately decided not to initiate a full- fledged investigation against Frito Lay, pursuant to Article 41 of the Law No. 4054.


1   The Board's decision dated June 12,2018, and numbered 18-19/329-163.

2 The Board's decision dated January 11,2007, and numbered 07-01/12-7.

3 The Board's decision dated July 18,2013, and numbered 13-46/588-258.

This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in March 2019. A link to the full Legal Insight Quarterly may be found here.

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.

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”

Practice Guides
by Mondaq AdviceCentre
Relevancy Powered by MondaqAI
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (please 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.


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.


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