Turkish Competition Authority's (TCA) recent investigation against TADIM, the leading Turkish snack producer is finalized upon commitments with key takeaways on the antitrust practice of exclusionary abuses in FMCG.
The exclusionary practices of TADIM that raised competition law concerns are as follows:
- Removing competitors through various props such as installation of stands, free products, discount applications, and prepayments,
- Entering the retailers where TADIM is not available in a way to sell only TADIM,
- When this cannot be achieved, trying to reduce the visibility of the products of competing brands by placing stands at the points, not leaving enough space for the stands of competing products, and exhibiting all product groups of TADIM together in their stands, and,
- To ensure that TADIM, as a single brand, maintains its loyal customer quality by continuing its support at the points where it is present.
TCA determined that these practices excluded competitors from many retailers and TADIM has become a monopoly. In response to these concerns TADIM proposed a detailed commitment package as follows:
- TADIM and its distributors shall not establish a contractual and actual exclusivity practices upon small retailers such as grocery stores, tobacco shops, kiosks, fuel station stores,
- TADIM and its distributors will not provide benefits from the
retailers in any period (e.g. one year), under any name whatsoever
such as additional discount, additional premium, higher or more
premium, free goods, free stand or product, service fee, promotion
in return for;
- Purchasing all of purchase from TADIM;
- Not buying, selling, stop buying, or stop selling competitor packaged sunflower seeds or other packaged nut products,
- Purchasing more than 60% of the packaged sunflower seeds or other packaged nuts from TADIM in the previous period.
- TADIM and its distributors shall not pay any premium (e.g. upfront premium, wholesale prepaid premium, annual upfront premium, etc.) in return for selling TADIM products exclusively.
- TADIM and its distributors shall not apply a discount (retroactive discount) to cover purchases made in previous periods as well as the current period if the retail point of sale achieves a discount target that can be determined as the total purchase or total sales amount, in a way that will cause exclusivity for TADIM.
- TADIM and its distributors shall not offer special premiums, free goods, or other benefits in return for exclusivity even if a retailer requests it.
- TADIM and its distributors shall not apply discounts, premiums, or free goods in a way to prevent retailers from independently determining the purchase quantities of packaged sunflower seeds, each packaged nut product, and dried fruit and bar products. Whether or not or in what quantity any of the products in question are supplied shall not depend on whether or not or in what quantity any other product is also purchased.
- TADIM shall ensure that each of its distributors sells to retailers with a fixed discount rate to be determined on a district basis independently of TADIM. This commitment does not mean that the sales rates of TADIM distributors will be determined by TADIM and the discount rates will be determined by the distributors on their initiative. This commitment shall not prevent TADIM from taking necessary commercial initiatives to compete with the competitor's price, discount, promotion, and similar commercial practices in retailers selling its products together with competitor brand packaged dried nuts or sunflower seeds products.
- The relevant employees of TADIM and its distributors will be trained on competition law and the matters contained in this undertaking.
- TADIM,
-
- From the end of the 5th (fifth) year following the publication of the reasoned decision closing the investigation;
- In case TADIM market shares fall below 40% for two consecutive years, even before the expiration of the five years referred to in (a);
According to TCA, the commitment package will prevent the creation of exclusivity in traditional sales channels, thus making it possible for competing products to be available at the final sales points. In addition, it was assessed that this situation would enable consumers to have a wider choice of products and that the information activities to be carried out by TADIM at the endpoints of sale would raise awareness of the implementation of the commitments. The Board has stated that this commitment package is designed to address competition concerns and can be implemented in a short period. Finally, the Board emphasized that competition concerns arising from the product portfolio would also be eliminated. Accordingly, the Authority reached to the conclusion that the commitments submitted by TADIM were proportionate to the competition problems, suitable to eliminate these problems, fulfillable in a short time, and effectively enforceable, therefore made the commitments binding and terminated the investigation.
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