The Board published its reasoned decision1 on the preliminary investigation launched against Yataş Yorgan ve Yatak San. ve Tic. A.Ş. ("Yataş"), a company active in the furnishings and home textile sectors, in order to determine whether Yataş had violated the Law No. 4054 either by acting in cooperation with its independent retailers or by imposing certain pricing policies on them through its "best price guarantee" campaign.
The Board evaluated Yataş's conduct in light of its recent decisions on most favored customer/most favored nation ("MFN") clauses. The Board found that MFN clauses can restrict competition by facilitating coordination (in particular, through cartels), creating entry barriers and excluding competitors. MFN clauses can also have pro- competitive effects, such as creating efficiencies, eliminating the free-rider problem, protecting trademarks, and reducing costs. In this respect, the Board noted that the conditions of Yataş's "best price guarantee" aim to ensure that its distributors will offer the lowest prices available in a specific time period. To that end, the Board held that the conduct of Yataş should be evaluated as an instance of resale price maintenance ("RPM"), rather than an MFN practice.
The Board also noted that RPM could arise when the supplier directly or indirectly obligates the reseller to a fixed, minimum or maximum price. Although RPM is considered to be a hard-core restriction within the scope of Article 4(a) of the Block Exemption Communiqué on Vertical Agreements ("Communiqué No. 2002/2"), the Board held, in line with its recent precedents, that an effects-based approach could be adopted in this case, provided that objective justifications existed for the practice in question. The Board determined that Yataş competed with a great number of small-scale and large-scale suppliers, and that its market share in the relevant markets did not exceed 40%. Therefore, the Board concluded that the agreements between Yataş and its distributors could benefit from a block exemption under the Communiqué No. 2002/2, if the relevant conditions were met.
In this respect, although the Board did not find any evidence that the best price guarantee campaign prevented resellers from offering lower prices, it decided to analyze whether (i) the campaign could still constitute an RPM-related violation in light of the market structure, and (ii) Yataş's campaign could prevent the resellers from selling the relevant products for a price below the guaranteed price after the campaign period ended.
Based on the information and documents gathered during the preliminary investigation and the interviews conducted with the resellers, the Board ultimately concluded that (i) there was no indication that Yataş had pressured resellers regarding the resale prices through its best price guarantee campaign, (ii) resellers were able to sell the products with prices and discounts that differed from the recommended prices even during the campaign period, and (in) inter-brand competition was considerably high, and there was a large number of undertakings who were active in the relevant markets—with none of them possessing a significant amount of market power. As a result, it was determined that the best price guarantee campaign was unlikely to result in an RPM violation.
Furthermore, the Board took into account that Yataş's best price guarantee campaign had two separate justifications, namely (i) to generate campaigns in order to ameliorate the "expensive product" perception of its products in its concept stores, and (ii) to prevent and counteract the negative effects arising from the expectation of lower prices (particularly in the periods following the peak wedding season), which resulted in reduced or postponed customer demand and caused fluctuations in the demand structure for its products. Consequently, the Board concluded that, even though these two justifications did not constitute an "objective justification" that could remove any infringements in terms of RPM, due to the specific market structure and the lack of evidence regarding RPM in this case, these justifications could be deemed sufficient to reveal Yataş's intentions.
Therefore, the Board decided not to initiate a full-fledged investigation against Yataş.
This is a significant and noteworthy decision by the Board, which sheds considerable light on its current approach to RPM allegations.
Footnote
1 The Board's decision numbered 17-30/748-211 and dated September 27, 2017
This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in June 2018. A link to the full Legal Insight Quarterly may be found here.
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