Turkey: The Turkish Competition Authority Makes Important Changes in the Guidelines on Vertical Agreements

We previously mentioned that certain changes were foreseen in relation to the Guidelines on Vertical Agreements and that Draft Guidelines on Vertical Agreements (Draft Guidelines) was prepared in relation to the changes foreseen. The Turkish Competition Authority (TCA) held various meetings and collected opinions of various stakeholders in a span of two years in relation to the Draft Guidelines.  Finally, changes to the Guidelines on Vertical Agreements were determined with publication of the New Guidelines on Vertical Agreements (New Guidelines) on 30.03.2018. So, what is new in the New Guidelines and how does it differ from the previous one?

What's new in the New Guidelines?

The New Guidelines provide further guidance on consideration of internet sales as passive sales and sets forth certain hard-core restrictions (similar to the ones in the EU) relevant to online passive sale restrictions. The Guidelines highlight importance of refraining from unjust restriction or restriction by object of online sales via online platforms as well as distributors and underline that any restriction foreseen must be objective and reasonable.

This is particularly important, as the New Guidelines diverge from the heated debate in the EU stemming from the following provision "For instance, where the distributor's website is hosted by a third-party platform, the supplier may require that customers do not visit the distributor's website through a site carrying the name or logo of the third-party platform". We would like to remind that the provision underpins the CJEU's Coty Decision^[1], which favors the suppliers to restrict sales on third-party platforms on the purpose of protecting the luxury image of their products. The New Guidelines uphold that online passive sale restrictions concerning third party platforms imposed in accordance with certain agreed standards and conditions shall not restrict internet sales or price competition of the distributor by object.

Moving on, the New Guidelines restructure the provisions available for selective distribution based on the explanations adopted for online passive sale restrictions.

Finally, the New Guidelines provide guidance on assessment of most favored customer (MFC) practices within scope of vertical agreements and also notes how such practices may amount to resale price maintenance.

How does the New Guidelines differ from the Draft Guidelines?

When the New Guidelines are compared with the Draft Guidelines, the following is observed:

• Detailed explanation in relation to consideration of internet sales as passive sales, underlining importance of non-restriction of online sales via online platforms as well as distributors is adopted
• More details on interpretation of MFC practices as vertical agreements are provided (i.e. guidance on market share analysis in relation to online platforms is provided)
• Proposal to tailor application of non-compete clause provisions to agency agreements is not adopted
• Online sales related amendments are reconciled with the selective distribution system provisions