The Turkish Competition Authority Updates the Guidelines on Vertical Agreements

The Turkish Competition Authority finalised its ongoing work with respect to up-to-date provisions in the Guidelines on Vertical Agreements. The work was intended to put a new face on provisions relating to agency agreements, online sales and most-favoured customer clause in the first place. However, in the light of the opinions submitted for the purposes of the updates in question, consensus was reached on the fact that no update in respect of agency agreements would be necessary. Thus, the new update package does not cover agency agreements.

The first update in the Guidelines concerns the provisions on online sales. The progress of online platforms as a new distribution channel enables consumers to access a broader set of information, benchmark prices, and reach sellers, while it allows producers to offer goods to larger areas less costly, with the swift increase in the use of online sales throughout Turkey, leading to the need to regulate this field. That being so, attempts were made to set up a balance between protection of interests on behalf of consumers and resellers, and protection of producers’ trade interests, and reconsider the competition rules in terms of online sales. Formerly, Turkish Competition Law regulations covered online sales only regarding the fact that they were taken to be passive sales. The new regulations intend to fill the gap in this subject. Also, the former provision on the selective distribution system was reformed from the point of online sales in paragraph 31.

The new provisions on online sales cover, in particular, restrictions given below:

  • The ability of the (exclusive) distributor to restrict access to its own electronic shop window for customers in the territory allocated to another (exclusive) distributor, or the ability of the former to direct these customers to the electronic shop window run by the producer or another (exclusive) distributor,
  • The ability of the (exclusive) distributor to terminate the transaction in case of being aware, from the address information of the customer that he is not located in the (exclusive) territory allocated to the distributor,
  • Restriction on the rate of online sales over total sales,
  • Determination of higher prices for the products offered online by the distributor compared to those offered in physical locations.

In the first two situations, sales by exclusive dealers or distributors to the outside territory that is not allocated to them can be restricted in terms of ban on active sales. Nevertheless, sales to customers from outside territory, which amount to passive sales, cannot be restricted.

Alongside the foregoing explanations, restrictions on the rate of the sales over total sales will hereafter be regarded as indirect restrictions on online sales, as well as increasing the price difference between physical locations and online platforms, which was provided for as the last example among the restrictions counted above.

The second update, on the other hand, refers to most-favoured customer clause (MFC), which has recently been dealt with constantly by competition enforcers and authorities worldwide. The use of online trade had become widespread, whereupon competition authorities took initiatives to set up new regulations on MFC, considering its ever-mounting significance. The Turkish Competition Authority too embarked on regulating this field, and included a provision in paragraph 19 in the Guidelines in the update package. In this regard, the Guidelines prescribes that MFCs, which may reinforce resale price maintenance, should not be considered as per se practices that may lead to determination of resale prices.