The Turkish Competition Authority ("TCA") has recently published its decision, in which it examined BSH (Bosch Siemens Hausgeräte) Ev Aletleri Sanayi ve Ticaret A.S.'s ("BSH") commitments1 ("Decision"). The Decision has the potential to serve as a guideline for the suppliers that operate a selective distribution system ("SDN") and would like to impose qualitative criteria for the e-marketplace sales of their authorized resellers ("ARs") in Turkey. In the same vein, e-marketplaces that desire to accommodate BSH's ARs (or the ARs of any supplier operating an SDN and uses the Decision as guidance) would have to make sure that they can allow the ARs to abide by these criteria.

Background of the Decision

In 2021, the TCA had launched an investigation against BSH, a major home appliance firm, on the premises that, inter alia, the unconditional e-marketplace sales bans imposed by BSH on its ARs constitute a passive sales restriction. To remedy the concerns of the TCA, BSH offered certain commitments to the TCA consisting of 26 provisions in total.

The TCA first evaluated if the proposed commitments are equivalent to a total ban of sales in the e-marketplaces. Afterwards, it checked whether they aim to preserve the nature and quality of the distribution network, protect the brand image, increase potential efficiency. Finally, the TCA compared the criteria imposed for physical sales and e-marketplace sales to determine if they reflect the differences inherent in both distribution channels. While the TCA rejected the first commitment package, the second package was accepted fully after BSH's revisions.

TCA's Evaluation on Complete Ban of Sales on E-Marketplaces

The TCA started its assessment by explaining the reach of e-commerce especially in relation to the home appliances sector in Turkey. The TCA stipulated the following facts to show the prominence of e-marketplace sales in Turkey:

  • Internet sales make up an average of 54.5% of total sales,
  • For 57.7% of sellers, internet sales contribute more to their turnover than physical store sales,
  • For 40.5% of sellers, internet sales make up 80% or more of their turnover,
  • Internet channel is the primary sales channel for a significant portion of sellers,
  • E-marketplaces account for an average of 68.5% of sellers' internet channel sales, indicating that e-marketplaces are the main internet channel for sellers,
  • 76.6% of all online sales were realized on online marketplaces in 2021
  • The turnover of a significant number of sellers is heavily reliant on e-marketplace sales.

In terms of the home appliances markets, the importance of e-commerce is even more striking as it is the sector with the highest share in Turkey's e-commerce volume with approx. EUR 2.48 billion2.

Considering those, the TCA concluded that suppliers' closing the e-marketplace channel to their resellers would be equivalent of an outright ban on internet sales and thus constitute a passive sales restriction (which is hardcore violation in Turkey that may not benefit from group exemption and is unlikely to benefit from individual exemption).

Hence, the TCA reaffirmed its stance in the BSH Exemption Decision3. However, it should be noted that both TCA's BSH Exemption Decision and BSH Commitment Decision subjects the sales of home appliances, which cannot be considered as luxury products4. It remains to be vague whether the TCA will adopt a more liberal approach in terms of luxury products. It is likely that the TCA will evaluate the market conditions, the growth tendency of the sales in the internet channel, the share of e-marketplaces within the internet channel, the e-marketplaces' share in resellers' turnover and consumer habits in relation to the specific luxury product.

Thus, it is clarified once again that ARs of BSH may not be precluded from selling on online marketplaces in Turkey. Yet, the TCA also realized that suppliers operating an SDN may require their ARs to only use certain e-marketplaces that satisfy certain qualitative criteria so long as these criteria comply with the principle of equivalency5.

Acceptable Qualitative Criteria Regarding the E-Marketplace Sales of ARs

In the BSH Commitment Decision, the TCA held that BSH may require its ARs to conduct sales only on e-marketplaces that satisfy the following criteria:

  • Online store of the ARs on e-marketplaces shall include AR badges, indicating that the relevant sellers are part of BSH's SDN,
  • Online store of the ARs on e-marketplaces shall not direct the customers to the competitors of BSH,
  • The ranking criteria of e-marketplaces should be applied all ARs on an indiscriminate and equal manner,
  • The contractual and commercial conditions of e-marketplaces should be applied to all ARs objectively and ARs should be made aware of any changes on e-marketplaces immediately,
  • E-marketplaces should be able to provide technical solutions that would preclude the ARs from selling more than four products to the same buyer at once,
  • The ARs shall provide the product materials and information shared or approved by BSH to e-marketplaces and the AR should be able to ensure that no other product materials and information is used or displayed on its online store on e-marketplaces or the respective product page on e-marketplaces,
  • The ARs may only conduct sales on e-marketplaces that allow it to set its resale prices unilaterally, and
  • Online stores for the ARs on e-marketplaces should have means allowing customers to directly ask questions to the ARs.
  • The ARs shall share any statistical information they can obtain from the e-marketplaces with BSH or to allow the e-marketplace to share this information with BSH,
  • The ARs shall only sell on their online store on e-marketplaces, the products that they are allowed to sell on their physical stores,
  • The online store of the ARs on e-marketplaces shall comply with the corporate standards of BSH regarding its brand,
  • The ARs that desire to sell on e-marketplaces shall sign separate agreements with BSH,
  • The ARs shall allow BSH to oversee their sales processes and service quality on e-marketplaces in accordance with the relevant guidelines and agreements,
  • The ARs shall refrain from using any name other than their trade names and they shall use the same store name on all online venues,
  • The ARs that would sell on e-marketplaces must have physical stores,
  • The ARs shall not sell products that are out of stock or display prices for such products,
  • The ARs shall refrain from selling damaged, defective or second-hand products,
  • Campaigns announced by BSH should also be applied in the ARs online store on e-marketplaces to the extent possible,
  • The ARs shall be solely responsible for the provision and the delivery of the products to the consumers,
  • The consumers should be granted the opportunity to track their cargo to the extent that systems allow,
  • The ARs should respond to questions asked by the consumers over e-marketplaces within two days,
  • The ARs should bear the costs of consumer complaints resolved through the involvement of BSH,
  • The ARs shall be evaluated in accordance with objective criteria such as seller scores and complaint management,
  • Per the relevant legislation, cancellation may only be made if consumers use their right of withdrawal and the ARs may not cancel orders due to lack of stocks, and
  • Stock and term restrictions regarding special prices shall be displayed in the ARs online store on e-marketplaces explicitly.

Per the Decision, the conditions listed above are deemed as acceptable qualitative criteria that could be adopted by suppliers with an SDN. In other words, the TCA provided suppliers operating SDNs a white-list of requirements that can be imposed on ARs in relation to their sales on e-marketplaces. Suppliers operating an SDN do not have to impose all the criteria in the white-list, and they can pick and choose specific criteria suiting their needs from that list.

Excessive Restrictions Regarding the E-Marketplace Sales of ARs

In the Decision, the TCA held that certain criteria BSH desires to impose on its ARs in relation to their sales on e-marketplaces do not meet the conditions laid down in the paragraphs 28 and 29 of the TCA's Guidelines on Vertical Agreements. This means that these conditions were deemed to contradict with the principle of equivalency and unduly restricted ARs ability to conduct online sales.

The blacklist includes the following criteria:

  • Marketplaces shall only be allowed to display advertisements, the appropriateness of which are approved by BSH within the scope of its brand usage,
  • E-marketplaces shall ensure that BSHs products will only be sold by the ARs,
  • E-marketplaces shall enter into an agreement with BSH,
  • E-marketplaces shall enter into agreements with BSH's ARs relating to the protection of BSHs brands and trademarks, interpretation of the relevant criteria and protection of consumers, the content of which shall be approved by BSH,
  • E-marketplaces shall share information on product sales, traffic, sales volume, types of complaints, comments/questions/answers regarding the ARs and products and ARs scores with BSH via a technical solution to be agreed upon (it should be noted that the TCA did allow the imposition of a criterion on the ARs requiring them to share any statistical information they can obtain from the e-marketplaces with BSH or to allow the e-marketplace to share these information with BSH, yet, the white-listed version of the criterion does not impose any requirement on the e-marketplaces to share specific kind of information with the ARs or to establish the technical means for such sharing), and
  • E-marketplaces shall satisfy required up-to-date technical adequacy regarding security and quality of service.

Per the Decision, suppliers (either directly or through their ARs) should refrain from requesting e-marketplaces to comply with any of the blacklisted criteria mentioned above to be eligible mediums for the ARs without obtaining an individual exemption from the TCA or conducting a detailed self-assessment themselves.

Conclusion

The Decision sets an important precedent for both suppliers operating a SDN and e-marketplaces accommodating ARs. By providing guidance on imposing qualitative criteria for e-marketplace sales and clarifying the limitations of unconditional bans on e-marketplace sales, the Decision will shape the future of e-commerce in Turkey. Overall, the Decision highlights the need for businesses to carefully consider their online sales strategies.

Footnotes

1 TCA's decision dated 08.09.2022 and numbered 22-41/579-239.

2 TL 52.9 billion is equal to approx. EUR 2.48 billion as of the date of May 2, 2023.

3 Turkish Competition Board's decision dated 16.12.2021 and numbered 21-61/859-423.

4 For further information on the Board's BSH Exemption Decision see. Bora Ikiler, Emin Köksal, Aysu Tanoglu, Selçukhan Ünekbas, "A Milestone Decision: TCA Says 'No' To Sales Bans On E-Marketplaces", Mondaq, March 7, 2022, https://www.mondaq.com/turkey/antitrust-eu-competition-/1168774/a-milestone-decision-tca-says-no-to-sales-bans-on-e-marketplaces (last accessed on April 23, 2023).

5 Paragraph 29 of the TCA's Guidelines on Vertical Agreements defines "principle of equivalency" as follows: "Due to the differences between the terms of physical sales and online sales, the criteria introduced for these two distribution channels do not necessarily have to be exactly the same; although these criteria must serve the same goal, must ensure comparable results and must be of a nature that confirms the differences stemming from the nature of the two distribution channels ("principle of equivalency"). In other words, the conditions envisaged should not, directly or indirectly, result in the prevention of internet sales. Accordingly, in case the conditions placed by the supplier violate the principle of equivalency and discourage the use of internet, the conditions in question may be considered to be severe restrictions."

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