Abstract
This article examines the legal structure and termination of exclusive distribution relationships affecting the Turkish market. It considers contractual classification, territorial protection, resale pricing, non-compete obligations, competition compliance, goodwill indemnity, customer information, intellectual property and dispute resolution. The discussion places the judicial authorities cited in the manuscript alongside the applicable statutory framework. It argues that exclusivity should be expressed through precise obligations and supported by operational compliance. For foreign suppliers and distributors, the most important preparation often concerns the future end of the relationship, including notice, stock, customer transition, evidence and potential compensation exposure.
Keywords exclusive distribution, Turkish law, competition compliance, goodwill indemnity, termination, foreign suppliers
Introduction
An exclusive distribution relationship often begins with a simple commercial objective. A foreign manufacturer wants one reliable partner to develop the Turkish market. The distributor wants territorial protection in return for investing in sales staff, warehousing, marketing, customer development and brand recognition.
The arrangement can work extremely well for many years. The legal difficulties usually arise later, when one of the assumptions that supported the relationship changes.
The supplier may want to establish its own Turkish subsidiary. It may decide to appoint a second distributor, move to direct online sales, restructure the territory or terminate the relationship altogether. The distributor may fail to meet sales expectations, object to pricing policies or claim that the supplier has undermined the exclusivity originally promised.
At that point, the legal analysis is not limited to what the termination clause says. For a long-running exclusive distributorship in Türkiye, counsel may need to consider the exact scope of exclusivity, competition law, customer ownership, trademark use, non-compete provisions, unsold inventory, notice, accrued claims and, importantly, whether the distributor may be entitled to a goodwill indemnity, denkleştirme istemi, after termination.
That is why I regard an exclusive distribution agreement as a relationship agreement rather than simply a sales contract. The document should regulate not only how the relationship begins, but how it performs, changes and eventually ends.
How Is an Exclusive Distribution Agreement Classified Under Turkish Law?
The Turkish Code of Obligations does not regulate the exclusive distribution agreement as a separately named contractual type. It is therefore generally treated as an atypical or unnamed contract whose legal content is determined principally by the parties' agreement, together with the applicable provisions and principles of the Turkish Code of Obligations, Turkish Commercial Code and other mandatory legislation.
In a typical structure, the distributor:
purchases the supplier's products, takes title to those products, resells them in its own name and for its own account, bears its own inventory and resale risk, and develops the relevant market using its own commercial organisation.
This distinguishes a distributor from a commercial agent. An agent generally facilitates or concludes transactions on behalf of the principal within the statutory agency framework. A distributor, by contrast, ordinarily buys and resells products as an independent trader.
That difference matters for taxation, commercial risk, customer relationships and liability.
But the distinction does not mean that agency law is irrelevant to exclusive distribution. Article 122(5) of the Turkish Commercial Code expressly extends the goodwill indemnity rules, where not contrary to equity, to exclusive distributorships and similar continuing contractual relationships that confer monopoly rights.1
Exclusivity Must Be Defined With Precision
The word "exclusive" is not sufficient by itself.
A properly drafted agreement should identify what the exclusivity actually protects. Is the distributor exclusive for all of Türkiye? Only Istanbul? Only a particular customer segment? Only one product line? Does exclusivity prevent the supplier from appointing another distributor? Does it also prevent the supplier from selling directly? What happens to sales made through the supplier's international website? What about multinational customers buying through group procurement arrangements?
These distinctions matter increasingly in modern distribution systems. A contract written twenty years ago might have assumed that exclusivity concerned only the appointment of another physical distributor.
Today, e-commerce, cross-border websites, marketplace sales and direct key-account sales can create disputes even where no second distributor has formally been appointed.
The agreement should therefore define active sales, passive sales, direct sales, online sales, key accounts, reserved customers and permitted exceptions where relevant.
Competition law must then be considered separately.
Turkish Competition Law Applies to Distribution Arrangements Affecting the Turkish Market
A foreign governing law clause does not make Turkish competition law irrelevant. Article 2 of Law No. 4054 on the Protection of Competition applies to restrictive agreements and practices involving undertakings operating in Turkish markets or affecting those markets.2
Accordingly, a distribution agreement between a foreign supplier and Turkish distributor can fall within Turkish competition rules even where the contract selects another country's substantive law.
The main vertical agreement framework is Communiqué No. 2002/2 on Block Exemption for Vertical Agreements, as subsequently amended. Following Communiqué No. 2021/4, the relevant market share threshold for the block exemption is generally 30 percent. For ordinary vertical agreements, the supplier's share of the relevant market in which it supplies the relevant goods or services must not exceed that threshold. In single-brand supply arrangements, the purchaser-side market share may also become relevant under the Communiqué.3
Being below the threshold does not mean that every contractual restriction is automatically acceptable. Certain restrictions can remove the benefit of the block exemption.
A Supplier Should Not Control the Distributor's Resale Price
This is one of the clearest competition law risks in distribution agreements. The Competition Authority's official Guidelines on Vertical Agreements state that preventing the buyer from independently determining its resale price falls outside the permitted block exemption framework.
A supplier may, subject to the applicable conditions, recommend a resale price or establish a maximum resale price. It may not convert that recommendation into a fixed or minimum resale price through direct or indirect pressure.4
Indirect pressure can be just as problematic as an express clause. The Authority identifies examples such as:
linking discounts to compliance with recommended prices, restricting the distributor's permitted discount level, delaying supply when the distributor discounts, threatening termination, or otherwise penalising deviation from the supplier's preferred resale price.5
This continues to be an active enforcement area in 2026. For example, in April 2026 the Competition Board concluded part of its investigation concerning Kyocera through settlement in relation to allegations involving resale price maintenance.6
The practical rule for foreign suppliers is simple:
recommended pricing must remain genuinely recommended. A commercial team should not undermine carefully drafted competition language by pressuring distributors through emails, WhatsApp messages, discount controls or supply threats.
Territorial Exclusivity Does Not Mean Every Sale Into the Territory Can Be Prohibited
This is another area where commercial expectations and competition law often diverge.
A supplier may want to promise a distributor "complete exclusivity" for Türkiye.
Competition rules do not necessarily permit that promise to be implemented literally.
The Competition Authority distinguishes between active sales and passive sales. Under the vertical framework, certain restrictions on active sales into an exclusively allocated territory or customer group may be permissible within the specified exceptions.
A general prohibition on passive sales is much more problematic. The Competition Authority has expressly stated that, even in an exclusive territory structure, restrictions on passive sales can remove the benefit of the group exemption.7
This distinction becomes particularly important online. A customer located in another distributor's territory who independently visits a website and places an unsolicited order may present a passive-sales issue.
By contrast, targeted advertising, direct solicitation or customer-specific marketing in another exclusive territory can constitute active selling.
The contract should therefore not simply say:
"Distributor shall not sell outside its territory."
That sentence may be commercially understandable but legally overbroad.
Non-Compete and Single-Brand Obligations Need Their Own Review
Suppliers often want the distributor to focus exclusively on their products.
Competition law imposes limits. Under the current vertical agreement framework, a non-compete obligation extending beyond five years ordinarily falls outside the block exemption, subject to the recognised exceptions.
An indefinite non-compete obligation is also outside the ordinary safe harbour, as is an obligation that can automatically renew beyond five years without a genuine possibility for the distributor to terminate the restriction at the end of that period.8
The Competition Authority also treats an obligation requiring the buyer to purchase more than 80 percent of its requirements from the supplier, directly or indirectly, as a form of non-compete obligation for this purpose.9
This means the legal analysis should not focus only on a clause expressly headed "Non-Compete." Minimum purchasing structures, rebate schemes and sourcing restrictions can have the same substantive effect.
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Footnotes
1. Turkish Commercial Code No. 6102, art. 122, including para. 5. Official Gazette No. 27846, 14 February 2011. Official Gazette statutory text.
2. Law No. 4054 on the Protection of Competition, particularly arts. 1, 2, 4 and 5. Competition Authority, official statutory text.
3. Communiqué No. 2002/2 on Block Exemption for Vertical Agreements, as amended by Communiqué No. 2021/4, Official Gazette No. 31650, 5 November 2021. Competition Authority, official notice of the amendment.
4. Competition Authority, Guidelines on Vertical Agreements, concerning resale price maintenance, territorial restrictions, active and passive sales. See also the Authority's published territorial-restriction decision.
5. Competition Authority, Guidelines on Vertical Agreements, concerning resale price maintenance, territorial restrictions, active and passive sales. See also the Authority's published territorial-restriction decision.
6. Competition Authority, published enforcement notices concerning İntema, Kyocera, automotive tyre distribution and technology dealer networks, 2025 and 2026.
7. Competition Authority, Guidelines on Vertical Agreements, concerning resale price maintenance, territorial restrictions, active and passive sales. See also the Authority's published territorial-restriction decision.
8. Competition Authority, published interpretation of non-compete obligations under Communiqué No. 2002/2, including the five-year rule and 80 percent sourcing criterion.
9. Competition Authority, published interpretation of non-compete obligations under Communiqué No. 2002/2, including the five-year rule and 80 percent sourcing criterion.
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.
