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24 September 2020
On 4 June 2020 the Competition Board published its reasoned decision of 6 February 2020 (20-08/83-50) following a preliminary investigation based on allegations that Yataş Yatak ve Yorgan Sanayi Ticaret AŞ and Doğtaş Kelebek Mobilya Sanayi ve Ticaret AŞ had violated Article 4 of Law 4054 on the Protection of Competition by:
As a result of the preliminary investigation, the Competition Board found no evidence demonstrating the alleged behaviours. However, the preliminary investigation revealed that Doğtaş and Yataş had been restricting their dealers' online sales, which was not part of the allegations in the beginning.
In relation to the product market, the Competition Board stated that Turkish furniture market players are diverse in size. The board also classified undertakings operating in the furniture sector into three groups:
The Competition Board stated that with its Istikbal, Bellona and Mondi brands, Erciyes Anadolu Holding was the leading market player. The board defined the relevant product market based on the product groups taking into account, among other things, the supply-side substitution between them. Accordingly, the board defined the following markets:
In its assessment, the Competition Board first examined various agreements which Yataş and Doğtaş had executed with their dealers. The board concluded that the price lists sent by Yataş and Doğtaş to their dealers were recommended retail prices and that there was no provision in the agreements and documents seized during the on-site inspections to indicate that Yataş and Doğtaş had determined the resale prices of their dealers, fix discount rates or limit payment methods.
In relation to two emails collected as evidence from Yataş, the board stated that these documents implied that Yataş monitored and interfered with the resale prices of its dealers. The relevant document shows that:
The Competition Board assessed that the relevant document related only to an isolated, non-recurring situation specific to the Izmir region, noting that there was no other evidence indicating that resale price maintenance had occurred in the same region or other regions. The board also analysed the dealers' resale prices to see whether Yataş had engaged in resale price maintenance.
In this regard, the board examined Yataş's recommended prices and the dealers' actual sales prices realised in the market. The assessment highlighted that the dealers had been free to set their prices differently from the recommended prices and that they had been able to set prices even below the lowest prices in Yataş's recommended prices in certain situations. It was further noted that the dealers had determined their pricing policies internally and sold their products as they wished. Accordingly, the board rejected the allegations, noting that there was no evidence indicating that Yataş and Doğtaş had engaged in resale price maintenance, fixing discount rates or limiting payment methods.
With regard to Doğtaş, the Competition Board noted that no evidence had been found to signal that Doğtaş was involved in price maintenance, fixing discount rates or limiting payment methods, in the scope of both on-site inspections of Doğtaş's and the concerned dealer's premises. Nevertheless, the board examined the dealer's actual sale prices and Doğtaş's recommended prices and concluded that the dealer's prices differentiated from the recommended price and that various discounts and payment methods had also been offered to customers.
The Competition Board evaluated whether Yataş and Doğtaş had restricted online sales as the board found that some of the provisions in the agreements found were restrictive in terms of online sales.
The board first referred to the EU Vertical Block Exemption Regulation (330/2010), accompanied by its Guidelines on Vertical Restraints in terms of online sales. It stated that the following restrictions exclude the relevant agreement from block exemption:
The Competition Board indicated that if the restriction on sales has no objective justification, it would be regarded as anti-competitive behaviour. Subsequently, referring to the Block Exemption Communique on Vertical Agreements (Communique 2002/2), the board noted that a provision restricting the online sales of authorised distributors would cause a vertical agreement to fall outside the communique's scope and within the scope of Article 4 of Law 4054 because online sales are primarily categorised as passive sales and their restriction would be deemed a restriction of passive sales.
The board referred to its BSH decision,(1) in which it confirmed that although the wording of an agreement may not always result in a passive sales restriction an agreement's implementation in practice may lead to a de facto restriction of passive sales.
The board also referred to its Jotun decision,(2) in which it indicated that although Jotun established a selective distribution system, since it restricts the online sale of authorised distributors, it should alter and renew its dealer agreement to exclude the prohibition of passive sales via the Internet.
The Competition Board assessed the provisions of Yataş's and Doğtaş's agreements by noting that provisions which could lead to the restriction of online sales and their effect in practice should be evaluated to determine whether said agreements benefit from Communique 2002/2's safe harbour. As a result of its assessment, the board found that both Yataş's and Doğtaş's aforementioned agreements did not benefit from the protective cloak of the block exemption since they both restricted online sales, which are regarded as passive sales. Thus, the agreements fell within the scope of Article 4 of Law 4054. After determining that the agreements did not enjoy the block exemption, the board conducted an individual exemption analysis within the scope of Article 5 of Law 4054. As such, the board decided that restricting passive sales are viewed as a hardcore restriction, which does away with the expected economic or technical improvement and thus such agreements will not be granted individual exemption.
As a result, considering both Yataş's and Doğtaş's market position, the board decided that there was no need to initiate a fully fledged investigation and ordered that Yataş and Doğtaş avoid practices that restrict passive sales and alter and renew their dealership agreements accordingly, otherwise written opinions should be delivered to Yataş and Doğtaş in accordance with Article 9(3) of Law 4054.
The Competition Board emphasised its established position that restricting passive sales, unless justified with objective reasons depending on the nature of the concerned product, is regarded as a hardcore restriction, which does not benefit from the block exemption and, as the case may be, from individual exemption.
The decision also demonstrates the Competition Board's tendency to follow EU practice closely and implement such practice in Turkey as necessary.
For further information on this topic please contact Gönenç Gürkaynak at ELIG Gürkaynak Attorneys-at-Law by telephone (+90 212 327 17 24) or email (email@example.com). The ELIG Gürkaynak Attorneys-at-Law website can be accessed at www.elig.com.
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