Turkish competition laws consider RPM to have the unintended effect of reducing, or even eliminating, intra-brand competition. It can also facilitate horizontal price-fixing cartels since the increased transparency of prices make price cuts at the retail level easier to detect. The reduction of intra-brand competition may also reduce intra-brand competition as it leads to less downward pressure on the price for particular goods.
Resellers are usually independent entities that engage in commercial activities on their own behalf and for their own account as independent legal and economic entities, by assuming all commercial risks, expenses and benefits related thereto. Therefore, resellers have to be left at liberty to determine the conditions under which they may resell the contract goods, unless they do not bear any financial or commercial risks concerning the operation.
Controlling resellers’ resale prices does not always amount to a violation. Turkish competition laws do not object to recommending resale prices or setting maximum resale prices, to the extent they do not turn into fixed or minimum resale prices. Setting minimum resale prices are prohibited.
Resale Price Maintenance (“RPM”) under Turkish Competition Law
Dictating or influencing resale prices may fall under Article 4 of the Competition Law, which prohibits price-fixing agreements. Indications in practice suggest that the RPM prohibition is not a per se violation. As a result, the Turkish Competition Board (the “Board”) is increasingly disinclined to find a violation without going into the analysis of whether the actions of the supplier have pro-competitive effects.
Communiqué No. 2002/2 exempts certain vertical conduct, such as setting a maximum resale price or recommending it. However, conduct that negates the freedom of the purchaser to set its own prices or impose minimum resale prices does not benefit from the exemption and is therefore prohibited. The block exemption does not apply to vertical agreements of undertakings possessing more than 40 percent share in the relevant market for contract goods or services.
The foregoing prohibitions also apply to cases where the maintenance of resale prices is accomplished through indirect methods. Conduct such as discriminatory prices towards the buyer for refusals to comply with the supplier’s demands, the awarding of discounts based on compliance, late deliveries to the relevant buyer to punish non-compliance, or the discontinuation or suspension of the relevant buyer for the same purpose constitute examples of attempts to maintain resale prices indirectly.
RPM is one of the most significant areas of enforcement activity in the Turkish competition law system. The Board considers it an essential characteristic of competitive markets that undertakings be independent in their pricing decisions. Accordingly, interferences (falling out of the limits set out in the legislation) by suppliers in pricing decisions of their customers can and do attract the Board’s scrutiny. The Competition Law aims at eliminating all mechanisms targeting to achieve resale price maintenance, through direct (such as explicit contractual obligations to observe the supplier’s price policy) or indirect (such as fixing the distribution margin, fixing the maximum level of discount the reseller can grant from a prescribed price level, making the grant of rebates, or reimbursement of promotional costs by the supplier subject to the observance of a given price level, etc.) means of dictating trade parameters to the reseller.
The Board’s established practice adopts a very sensitive approach in connection with all RPM arrangements. Despite certain decisions where the Board signalled a ‘rule of reason’ analysis by considering the market structure, competition level and effect on consumers (eg, Çilek, 20 August 2014, Decision No. 14-29/597-263; Dogati, 22 October 2014, Decision No. 14-42/764-340), the Board’s established precedent points towards a per se infringement for RPM concerning minimum or fixed prices (eg, Anadolu Elektronik, 23 June 2011, Decision No. 11-39/838-262; Akmaya, 20 May 2009, Decision No. 09-23/491-117; Kuralkan, 27 May 2008, Decision No. 08-35/462-162). In a more recent decision, the Board decided not to initiate a full investigation into Duru Bulgur Gýda San. ve Tic. AÞ (8 March 2018; Decision No. 18-07/112-59) by taking into consideration:
- inter-brand competition in the market;
- competitive pressure in the retail market from discount stores and retail chains;
- Duru’s low market share;
- low concentration level in the market;
- the fact that retailers often price its products below the recommended prices; and
- lack of evidence regarding any enforcement or monitoring mechanism to implement the recommended prices set by Duru.
Regardless of these findings, the Board also issued an opinion letter stating that Duru should indicate in its price lists that the relevant prices are 'maximum' or 'recommended sales prices' and terminate any conduct that may lead to determining resale prices and discount rates or fixing resale prices by any other means.
As seen in the Duru decision, suppliers are not prohibited from setting a maximum resale price or recommend resale prices, provided that such conditions do not, directly or indirectly, lead to any fixed or minimum selling prices and the supplier’s market share in the relevant product market in Turkey remains below 40 per cent. Indeed, in the Jotun decision (15 February 2018, Decision No. 18-05/74-40), the Board found that Jotun Boya Sanayi ve Ticaret AÞ's conduct was more a situation of setting a maximum price including a special discount for large-scale projects than a problematic resale price management.