Two-minute Recap of Recent Developments in Turkish Competition Law – May 2023

In May 2023, the Turkish Competition Board (the “Board”) published one reasoned decision and approved 19 merger and acquisition transactions.

The highlight of Turkish competition law in May was that the Board resolved to settle its investigation into the household appliances industry via the settlement mechanism.

RPM Tied up via Settlements

On 5 May, the Turkish Competition Authority published the Board’s decision regarding the actions of Korkmaz, a manufacturer of household appliances, and its distributors, Gençler and Punto. The decision focused on allegations of practices that maintain resale prices and put a customer restriction on resellers. Regarding the aforesaid allegations, the Board concluded as follows:

As to Korkmaz:

• Based on the investigation documents, the Board found that Korkmaz set the resale prices for its resellers (including its distributors, Gençler and Punto).
• Korkmaz's practices included prohibiting bulk sales to prevent lower prices and explicitly determining resale prices through contracts.
• Korkmaz also interfered with the resale prices of its resellers by:

• determining discount rates,
• threatening resellers with sanctions, such as suspending the delivery of goods or terminating agreements, and
• sharing information about potential sanctions.
• The Board considered the allegation of customer limitation as a part of the behaviour of fixing resale prices.

As to Punto:

• The Board determined that Punto ensured resale prices were raised to a specific level by directly warning resellers who applied low prices.
• Punto also determined resale prices through certain practices, such as withholding resale certificates from non-compliant resellers or threatening them with sanctions, such as suspending the delivery of goods or terminating contracts.

As to Gençler:

• Similar to Punto, Gençler intimidated non-compliant resellers by threatening sanctions, such as contract termination or sharing information about such sanctions being applied.

In light of the above assessments, the Board imposed a total monetary fine of approximately EUR 1.25 million against Korkmaz, Gençler and Punto.

Another Decision by the Board Regarding Online Sales Restrictions

In one of its recent decisions, the Board accepted the commitments proposed by Arçelik, a multinational household appliances manufacturer that owns well-known brands such as Beko and Grundig. The investigation focused on allegations that Arçelik restricts online sales by its resellers and engages in resale price maintenance.

Following the investigation, Arçelik offered a commitment package to settle with the Board regarding the investigation. The Board found these commitments to be objectively concrete, reasonable and acceptable on the grounds that they increase the quality and nature of distribution, brand image and potential efficiency. Below is a summary of the Board's assessments and the commitments made by Arçelik:

Enhancing consumer experience and protecting brand image:

• The Board considered certain commitments acceptable, such as resellers being allowed to sell only on online marketplaces that meet the same quality and content standards as Arçelik/Beko's official websites.
• Resellers are also obligated to provide product delivery services.

Data transfer and marketing strategies:

• The commitment requiring resellers to share data, such as sales numbers, delivery dates, and store scores with Arçelik, was accepted as reasonable and beneficial for marketing strategies, thus enhancing brand image.

Quality of the distribution system and selective distribution:

• Commitments that improve the distribution system's quality, such as resellers achieving a certain score level in online marketplaces, were accepted.
• Additionally, commitments in line with the nature of the selective distribution system, such as prohibiting resellers from selling more than two of the same products, were also accepted.

Sales through brick-and-mortar stores:

• The commitment stating that sales through physical stores should account for 85% of a reseller's turnover was accepted.

The Board assessed that this ratio would not significantly restrict internet sales of Arçelik's resellers in the short term and fulfilled the aforementioned conditions.

The Board Fines Chambers of Commerce for Hindrance of On-Site Inspections

On 20 October 2022, the Board concluded its evaluations regarding the on-site inspection conducted at the Alanya District Representative Office of the Chamber of Electrical Engineers of the Union of Turkish Engineers and Architects Chambers ("District Representative Office"). The Board held an on-site inspection within the scope of its preliminary investigation into whether a particular decision of the District Representative Office violated Article 4 of the Law No. 4054 on the Protection of Competition.

In its decision, the Board imposed a monetary fine on the grounds that an employee refused to submit their phone to the Board for inspection. The Board also evaluated the status of the District Representative Office as an undertaking. It was further determined that the District Representative Office does not possess decision-making or executive bodies. Additionally, the Board found that the District Representative Office has the authority to implement the decisions of the Chamber of Electrical Engineers, but does not have the authority to take independent decisions. In light of these findings, the Board deemed the Chamber of Electrical Engineers of the Union of Turkish Engineers and Architects Chambers as the recipient of the administrative fine.

Tagged with: Gen & Temizer | Özer, Bulut Girgin, Ceren Ceyhan, Merve Zeynep Aydaş, Competition, Turkish Competition Board