CONTENTS
Page No
INTRODUCTION
1. SCOPE OF THE BLOCK EXEMPTION 2
1.1. Definition of a "Vertical Agreement" 2
1.2. Vertical Agreements Including the Use of Intellectual Rights 4
1.3. Vertical Agreements Concluded Between Competing Undertakings 5
1.4. Its Relationship with the Other Block Exemption Communiqués 7
1.5. Agency Contracts 7
2. LIMITATIONS EXCLUDING AGREEMENTS FROM THE
BLOCK EXEMPTION 10
2.1. Resale Price Maintenance 10
2.2. Limitation by Customer and Territory 11
2.3. Selective Distribution Systems 16
2.4. Other Limitations 17
3. NON-COMPETE OBLIGATION 18
4. WITHDRAWAL OF THE EXEMPTION 22
5. ABUSE OF THE DOMINANT POSITION 25
Guidelines on the Explanation of the Block Exemption Communiqué on � Vertical Agreements No: 2002/2 �
INTRODUCTION
(1) � In article 5 of the Act on the Protection of Competition No: 4054, the Competition Board (Board) has been empowered to issue communiqués
which ensure granting block exemption to types of agreements bearing
certain conditions and which determine the conditions in question. Vertical
agreements which enable that undertakings set up the process of
production and distribution in the best manner and that consequently
interbrand competition in the market increases generally are in the lead of
the groups of agreements required to be exempted from the prohibition in
article 4 of the Act, in case they secure certain conditions. As a matter of
fact, with the Block Exemption Communiqué on Exclusive Distribution
Agreements No: 1997/3, the Block Exemption Communiqué on Exclusive
Purchasing Agreements No: 1997/4, the Block Exemption Communiqué
on Franchise Agreements No: 1998/7, and the Block Exemption
Communiqué on Distribution and Servicing Agreements of Motor Vehicles
No: 1998/3, the Board exempted in block those vertical agreements
fulfilling the conditions provided for in the said communiqués, from the
application of article 4 of the Act. Despite the fact that the said block
exemption communiqués have been provided in a quite detailed manner,
it has been established as a result of the practices in the recent period that
they covered a limited portion of vertical agreements. The Board has
issued the Block Exemption Communiqué on Vertical Agreements No:
2002/2 (Communiqué) which replaces the foregoing three block
exemptions except the Communiqué No: 1998/3, and more importantly,
which has a much broader scope. The purpose of issuing these
Guidelines is to clarify to the possible extent the points to be taken into
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account by the Board in the application of the Communiqué, and thus to
minimize the uncertainties likely to arise in the interpretation of the
Communiqué by undertakings.
(2) � Undertakings which, despite the explanations made in the Guidelines, hesitate about whether or not they may enjoy from the Communiqué No:
2002/2, or which want to request an individual exemption for those
agreements that are unable to benefit from the block exemption in
question may notify the Board in accordance with articles 10 and 12 of the
Act No: 4054.
1. SCOPE OF THE BLOCK EXEMPTION
1.1. Definition of a "Vertical Agreement"
(3) In article 2 of the Communiqué, entitled "Scope", vertical agreements are defined as "agreements concluded between two or more undertakings operating
at different levels of the production or distribution chain, with the aim of purchase,
sale or resale of particular goods or services". As is mentioned in article 7 of the
Communiqué, this Communiqué shall be applied to vertical concerted practices
besides vertical agreements by considering the same criteria. From the definition
of a "vertical agreement" given above, it is necessary to emphasize three
important points:
- Two or more undertakings should be party to the agreement. Therefore,
agreements made with end users who do not have the nature of an undertaking
are not the subject of a block exemption since they do not fall under article 4 of
the Act. However, it should not be forgotten that such commercial transactions of
undertakings, performed with end users who do not possess the nature of an
undertaking may fall under article 6 of the Act.
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- It is required that undertakings party to the agreement operate at different levels
of production or distribution. Distribution contract concluded between a producer
undertaking in the position of a supplier, and a wholesaler is a simple example of
a vertical agreement in this regard. And a supply agreement concluded between
an undertaking in the position of a raw material producer, and another
undertaking using such raw material in production is caught by the definition of a
vertical agreement provided for by the Communiqué. Also, an agreement
concluded among three undertakings, its parties being a firm in the position of a
producer, a distributor in the position of a wholesaler, and ultimately a retailer
who sells products to the consumer is also considered as a vertical agreement,
and may benefit from the block exemption on condition that it fulfils the conditions
provided for in the Communiqué. What is important here is that undertakings
party to the agreement operate at different levels of distribution. Otherwise, in
case an undertaking in the position of a wholesaler concludes the same
distribution agreement at once with more than one supplier firms which operate
at the next upper level of the distribution process, the agreement in question
does not conform to the definition of a vertical agreement, provided for in the
Communiqué. It is required that the wholesaler undertaking separately concludes
the agreement in question with each of the suppliers, rather than concluding the
same agreement at once with the competing suppliers.
- It is required that an agreement has been made for the purchase, sale or
resale of particular goods or services. Accordingly, the Communiqué covers both
purchase (supply) and distribution agreements. In other words, it is not important
for what purpose the buyer purchases from the supplier the goods or services
which are the subject of the agreement. The buyer might have purchased the
goods or services which are the subject of the agreement for purposes of resale,
or use in its own production. Even the buyer has purchased from the supplier
those goods which are the subject of the agreement, for purposes of leasing
them to third persons, the agreement he concluded by the supplier shall be
caught by the definition of a vertical agreement provided for in the Communiqué.
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However, the leasing contract concluded between the buyer and the third party
(for example, financial leasing contracts) may not be accepted as a vertical
agreement since there is not any purchase, sale or resale of goods or services.
1.2. Vertical Agreements Involving the Use of Intellectual Rights
(4) In case in a vertical agreement where there are regulations as to the purchase, sale or resale of goods or services, there are at the same time
provisions concerning the transfer or use of intellectual rights to or by the buyer,
the vertical agreement in question may benefit from the block exemption on
condition that certain conditions are fulfilled. In article 2 paragraph 2 of the
Communiqué, entitled "Scope", conditions have been mentioned, which are
required to be borne so that vertical agreements involving the transfer or use of
intellectual rights to or by the buyer may benefit from the block exemption. Being
able to consider the vertical agreement in question under the block exemption
may be possible with its securing of the entire elements explained below:
- Provisions related to intellectual rights should be directly related to the use, sale
or resale of the goods or services which are the subject of the agreement.
- The purchase, sale or resale of the goods or services which are the subject of
the agreement should be the main purpose of the agreement. In other words, the
transfer of intellectual rights to the buyer or having the buyer make use of them
should serve the purchase, sale or resale of the goods or services which are the
subject of the agreement, and it should not constitute the main purpose of the
agreement. This condition is generally secured in franchise contracts: Intellectual
rights transferred to the franchisee for being able to maintain the uniformity of the
franchise system are generally the auxiliary elements required for the purchase,
sale or resale of the goods or services which are the subject of the agreement.
However, as the purchase or sale of a good or service is not in question by any
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means in simple licence transfer contracts, it is not possible to apply the
Communiqué to such agreements.
- From whom to whom intellectual property rights have been granted in the
agreement is important. In case there is the transfer or use of intellectual rights to
or by the buyer, the block exemption granted by the Communiqué may be
benefitted from. Otherwise, should intellectual rights are transferred by the buyer
to the supplier, and certain limitations are imposed on the sales of the supplier,
such an agreement's benefitting from the block exemption is not in question. For
example, in sub-contracting production contracts, the undertaking which
performs the production and is in the position of a supplier (contractor) generally
supplies the know-how necessary for the production from the undertaking in the
position of a buyer. In order to consider under the Communiqué those practices
whereby chain supermarkets forming their own brand have producer
undertakings produce these products, it is necessary that the chain supermarket
does not perform the production of the product in question, and does not transfer
a relevant know-how to the producer in the position of a supplier.
- Provisions related to the transfer or use of intellectual rights should not include
limitations on competition the aim or effect of which is the same with the vertical
restraints not exempted in the Communiqué.
1.3. Vertical Agreements Concluded Between Competing Undertakings
(5) Pursuant to article 2 paragraph 3 of the Communiqué, vertical agreements concluded between competing undertakings may not benefit from
the block exemption, other than only one exceptional case. And the definition of
"competing undertakings" takes place in article 3 (c) of the Communiqué.
Accordingly, regardless of whether or not they operate in the same geographical
market, suppliers who operate or have the potential to operate in the same
product market in Turkey are considered as a competing undertaking.
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Distributor a (The subsidiary of the Suppl
Undertakings which do not already produce a competing good, but which may
make the necessary investments and enter the market within 1 year in case there
has been a relatively small and sustainable increase in the prices of the product
in question, shall be considered as an undertaking which has the potential to
operate in the product market in question. While establishing whether it is likely
for any undertaking to make such an investment and enter a new market, a
realistic approach based on the data in hand rather than a theoretical approach
shall be put forward. For instance, no matter how large its financial power is, any
undertaking may not be deemed as a potential competitor for another market
which has no relation with the product markets where it already operates.
However, if it is explicitly known that this undertaking plans to enter the new
market in question, then it shall be deemed as a potential competitor for this
market.
(6) In the exception introduced to the provision that vertical agreements concluded between competing undertakings may not benefit from the block
exemption, undertakings may be competitors of each other only at the level of
distribution. In other words, those vertical agreements where the supplier is both
the producer and distributor of the goods which are the subject of the agreement,
and the buyer is not the producer but the distributor of the goods competing with
such goods may benefit from the block exemption. Thus, undertakings in the
position of a producer may distribute their products through independent buyers
on the one hand, and they themselves may distribute on the other hand. The said
exceptional case is illustrated below by a figure:
Supplier A Supplier B
Vertical Agreement in question
Distributor C (The distributor of the Supplier A and ier A)
B)
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(7) As is also seen from the figure, the Supplier A and the Supplier B are two competing undertakings operating in the same product market. The Supplier A
distributes his products both via its own subsidiary (the Distributor a) and through
a vertical agreement it concluded by the independent Distributor C. Due to the
fact that the Distributor C distributes at the same time the products of the
Supplier B, and the Supplier A operates at the level of distribution via the
Distributor a, the Supplier A and the Distributor C are competitors of each other
at the level of distribution. As these two undertakings are not competitors of each
other at the level of production, the vertical agreement concluded between them
is an agreement under the Communiqué. However, in case the Distributor C is
the subsidiary of the Supplier B, the Supplier B would be distributing the products
of its competitor Supplier A, and the agreement in question may not benefit from
the block exemption granted by the Communiqué.
1.4. Its Relationship with the Other Block Exemption Communiqués
(8) In article 2 paragraph 4 of the Communiqué, it is mentioned that this Communiqué shall not be applied to vertical agreements caught by another block
exemption communiqué. Thus, in the event of the existence of Communiqués
based on a particular subject or sector, these communiqués which involve more
detailed and special regulations shall be applied, rather than the Communiqué
No: 2002/2 which is a general regulation. For instance, it is not possible to
assess a vertical agreement in relation to the distribution of motor vehicles under
the Communiqué No: 2002/2. Such an agreement may only be assessed under
the Block Exemption Communiqué on Distribution and Servicing Agreements of
Motor Vehicles No: 1998/3.
1.5. Agency Contracts
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(9) Instead of using independent undertakings in the purchase or sale of goods or services, undertakings may sometimes prefer the agency system. In
article 116 of the Turkish Commercial Code (TCC), an agent is defined as "a
person whose profession is, without a dependent title such as a trade
representative, trade deputy, sales officer or employee, to act as an agent in
contracts concerning a commercial enterprise or to conclude them on behalf of
that enterprise, within a definite place or region and on a continuous basis, based
on a contract." For example, the relationship between an undertaking engaged in
the sale of flight tickets and an airline company is generally an agency
relationship.
(10) Since limitations imposed on an agent in relation to contracts mediated or concluded by him on account of his client do not generally fall under article 4 of
the Act, they are also not the subject of an exemption regime in principle. That
the agreement concluded is called an agency agreement does not mean that
such agreement is automatically not caught by article 4 of the Act. Here, the
factor which determines whether the relationship between undertakings falls
under article 4 of the Act is whether a commercial or financial risk is borne by an
agent related to activities for which he has been appointed by his client. If an
agent has not borne any commercial or financial risk for the contract which he
has concluded or where he has mediated on behalf of his client, the relationship
between the agent and his client is outside the scope of article 4 of the Act. In
such a case, the purchase or sale activity of the agent is considered as a part of
the client's activities. In return for bearing the commercial and financial risks due
to the agency services associated with it, the client undertaking shall obtain the
right of being able to determine the economic activities of the agent in this area.
Otherwise, the agent bears all such risks himself, and therefore, it is required that
he freely determines his marketing strategy for being able to ensure the return of
investments made by him. In such a case, the contract in question may fall under
article 4 of the Act, and may be subjected to an assessment under the
Communiqué.
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(11) Every undertaking committing a commercial activity is at risk, though to a limited extent. For example, an agent's gain depends on his own performance.
Similarly, an agent who invests in a workplace and personnel whereby he carries
out his activity is also at risk. However, an agent's bearing such risks as to
carrying out agency activities does not mean that the relationship between
undertakings is under article 4 of the Act.
(12) Risk which is the decisive factor in whether to apply article 4 of the Act shall be assessed by taking into account respective characteristics of each
incident. To put it in another way, in determining with whom the risk resides, one
will not suffice with assessing the legal relationship between undertakings, but
will at the same time take notice of the economic state of the market. When one
or more of the below-listed exemplary cases are in question, the relationship
between parties shall be dealt with under article 4 of the Act:
- The agent's contribution to the costs associated with the purchase or sale of
goods or services, including transport costs.
- Obliging the agent to directly or indirectly contribute to the sales-building
activities.
- The agent's bearing the risks such as financing the contract goods kept in
stock, or the cost of lost goods, and the inability of the agent to return unsold
goods to the client.
- Placing the agent under the obligation to provide after-sales service, repair or
guarantee service.
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- Making the agent obliged to make investments which may be necessary for
being able to operate in the market in question, and which may solely be used in
this market.
- The agent's being responsible against third persons due to losses caused by
the product sold.
- The agent's bearing a responsibility other than his inability to receive his
commission, due to the failure of customers to fulfil the conditions of the contract.
(13) In order not to apply article 4 of the Act to the relationship between the client and the agency, it is required that the agency does not assume the above-
listed risks or costs. Risks and costs listed herein are exemplary, and it is
possible to add the new ones to this list.
(14) However, even if the client bears commercial and financial risks listed above and the like, the agency agreement may fall under article 4 of the Act if it
assists in a competition-limiting cooperation. This case may particularly arise
when several clients use the same agency, and transfer important information to
each other via the agency.
2. � LIMITATIONS EXCLUDING AGREEMENTS FROM THE BLOCK EXEMPTION
(15) Vertical agreements involving any of the limitations in article 4 of the Communiqué may not benefit from the block exemption, and therefore they fall
under the prohibition in article 4 of the Act.
2.1. Resale Price Maintenance
(16) Article 4 (a) of the Communiqué is related to preventing the freedom of the buyer undertaking to determine its own selling price. Accordingly, it is definitely
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forbidden to determine the fixed or minimum selling price of the buyer. However,
on condition that it does not transform into a fixed or minimum selling price, it is
possible for the supplier to determine the maximum selling price of the buyer, or
to recommend the selling price to the buyer. In order for the selling prices, of
maximum or recommended nature, declared to the buyer not to transform into a
minimum or fixed price, it is required to clearly mention on the price lists issued
or on the product that the said prices have the nature of being maximum or
recommended.
(17) Besides directly determining the selling price of the buyer by placing an explicit provision in vertical agreements concluded by them, supplier
undertakings may also realize the same infringement by indirect means through
various practices. Determining the profit margin of the buyer, determining the
maximum level of the discount rate that may be applied by the buyer over the
level of a price announced to be the recommended price, applying extra
discounts to the buyer insofar as he conforms to the recommended prices, or
threatening the buyer with delaying, suspending deliveries or terminating the
agreement in case he does not conform to these prices, or applying such criminal
sanctions de facto may be given as the example of an indirect determination of
the resale price. Such practices of indirectly determining the resale price also fall
under article 4 (a) of the Communiqué.
(18) Direct or indirect methods aimed at the determination of the resale price would be more effective where prices applied by buyers can be monitored and
controlled by the supplier. For example, an obligation which may be imposed on
all buyers, about reporting those buyers who sell at prices different from the
standard price lists shall considerably facilitate the control, by the supplier, of
prices applied in the market.
2.2. Limitation by Territory and Customer
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(19) � Article 4 (b) of the Communiqué concerns the restrictions imposed on buyers about territories and customers where and to whom they shall sell
the contract goods or services. Accordingly, in cases other than the four
exceptions listed in the article, it is not possible to impose a territorial or
customer restriction on the buyer. At this point, it is useful to explain how
the partitioning of territories and customers may emerge in practice. If a
provision is placed in the contract about not selling to particular groups of
customers or customers in a particular territory, it would not be difficult to
establish the infringement. However, partitioning by territory or customer
may also be realized by indirect means. Despite the fact that there is not
any prohibition in the contract, supplier undertakings may take deterrent
measures with a view to preventing the fulfillment of requests from a
particular territory or group of customers. For instance, practices like
decreasing or denying the rewards or discounts granted to buyers who sell
to customers other than those determined by the supplier, diminishing the
quantity of the good supplied, or ceasing the provision of good entirely are
the most frequently encountered practices in the practice of partitioning by
territory or customer. Should there is a practice of assigning serial
numbers, or labelling in the market, that shows which buyer has launched
the existing products in the market, actions aimed at partitioning by
territory or customer may be much more effective. A prohibition imposed
on all buyers about not to sell to particular customers shall not be
considered as a limitation excluding from the scope of the block exemption
the distribution agreement which is the subject of the examination, in the
existence of an objective reason about the product. As an example,
undertakings in the position of a supplier of certain dangerous substances
may prevent buyers from selling such goods to particular customers,
based on the reasons such as safety or health.
(20) The types of partitioning by territory or customer listed under four headings in article 4 (b) of the Communiqué are not considered as a limitation
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that excludes agreements from the block exemption. The first of these exceptions
particularly allows that supplier undertakings which want to set up a distribution
network provide themselves or undertakings in the position of a buyer with
exclusive territories of sale or exclusive groups of customers. For example, a
producer undertaking in the position of a supplier may distribute its products to
every single city of Turkey through distributors appointed by it, and it may grant
regional protection to distributors. Similarly, a drug manufacturer, for instance,
may ensure distribution to pharmacies and hospitals by different distributor
undertakings, creating exclusive groups of customers. It is also possible for
supplier undertakings to divide customers among buyers both regionally and as
the customer type concurrently. The appointment, by an undertaking which is a
drug manufacturer, of different distributors to hospitals and pharmacies in every
city may be given as an example of the simultaneous practice of partitioning by
territory and customer.
(21) Protection granted by means of giving undertakings an exclusive territory or group of customers is not an absolute protection. While selling to the territory
or group of customers allocated to them, buyer undertakings may only be
protected from active competition from the other buyers within the system. In
other words, the supplier undertaking may restrict active sales to the exclusive
territory or group of customers allocated to itself or to a buyer. And the restriction
on passive sales to be made to this territory or group of customers shall be
considered as an infringement excluding the agreement from the block
exemption. At this point, the distinction between active sales and passive sales
gains importance.
(22) Those sales made to individual customers in the exclusive territory or exclusive group of customers of another buyer by direct marketing methods such
as mails or visits are considered as "active sales". Furthermore, setting up a
sales outlet or distribution warehouse in the territory of another buyer is also
included in active sales. Advertisements or promotions directly targeting the
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customers in a territory or group of customers allocated to another buyer may
also be listed among the other methods of active sales.
(23) On the other hand, meeting the requests which are from the customers in the territory or group of customers of another buyer and which do not result from
the active efforts of the buyer means "passive sales", even if the buyer delivers
the good at the customer's address. General advertisements or promotions made
through the media shall be considered as a method of passive sales. Sales made
through the Internet are also generally passive sales. However, sending e-mails
to the customers in the exclusive territory or group of customers of another buyer
shall be considered as a method of active sales as long as such a request is not
solicited by the customers in question. The same approach shall also be applied
in considering sales by posting catalogs.
(24) In order to consider as exclusive the territory or group of customers into which or to whom buyers sell, it is required that only one buyer or the supplier
himself sells actively to that territory or group of customers. To put it in another
way, if the number of undertakings selling actively to a particular territory or
group of customers is two or more than two, that territory or group of customers
is no longer exclusive. Any buyer must be able to sell actively to the customers in
such a "free" territory or group of customers. To give an example, if an
undertaking in the position of a supplier obliges himself to give his products only
to two undertakings within the borders of the city of Ankara and does not share
out customers between these two buyers in territory or customer type, it is
required that active or passive sales to be made by the dealers in the other
territories into the territory of Ankara not be prevented in order for such an
agreement to be able to benefit from the block exemption.
(25) In the first exclusion specified in article 4 (b) of the Communiqué, there is the wording that "provided that it does not include the sales to be made by the
customers of the buyer,….". What is meant hereby is as follows: The supplier
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undertaking may only prevent active sales performed by the buyer. Should any
obligation is imposed on the buyer aimed at the limitation of active sales to be
performed by the customers of the buyer, it shall not be possible to benefit from
the block exemption. In other words, customers who are not party to the vertical
agreement between the supplier and the buyer and who obtain goods or services
from the buyer may sell the goods or services in question to whom they wish
without the distinction of active and passive sales. For example, let us presume
that in accordance with a distribution agreement concluded between the
producer undertaking in the position of a supplier and the dealer in the position of
a buyer, the dealer sells products to grocers. In such a case, it is required that
grocers which are not party to the agreement have the freedom to sell the
products purchased by them from the dealer actively or passively in the territory
they wish.
(26) Pursuant to the second exception mentioned in article 4 (b) of the Communiqué, sale by the buyer operating at the wholesale level to end users
may be restricted. The imposition of such a restriction is deemed necessary so
that the efficiency of the distribution network can be maintained, and goods and
services can be offered to the consumer under equal conditions at remote points.
(27) The third exception is related to the substance of the "selective distribution system". In article 3 of the Communiqué, the selective distribution system is
defined as "a distribution system whereby the provider (supplier) undertakes to
sell directly or indirectly, the goods or services which are the subject of the
agreement, only to distributors selected by him, based on designated criteria,
and whereby such distributors undertake not to sell the goods or services in
question to unauthorized distributors." Particularly in the marketing of branded
products such as jewelry and perfume where pre-sales promotional services are
important, the physical features of points of sale where these products are sold,
and the knowledge and ability of the sales personnel gain crucial importance.
Those undertakings in the position of a supplier, which do not want that such
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products that have a particular brand image be sold in inappropriate places and
by people without the sufficient knowledge and ability generally deem proper the
selective distribution system as the distribution network. In order for these
products to be able to reach end users in the most efficient way, there is the
obligation that the product be only sold by the members of the selective
distribution system.
(28) The last exception specified in article 4 (b) of the Communiqué relates to the purchase and sale of parts supplied for purposes of combining. Restriction,
by the supplier, on buyers purchasing such parts, in relation to selling them to the
competitors of the supplier in the position of a producer is not considered as a
limitation excluding the agreement from the block exemption. For instance, while
a TV manufacturer sells to a buyer the parts of the television manufactured by it,
the buyer may be prevented from selling the said parts to the other television
manufacturers (competing undertakings). But, in case the buyer is prevented
from selling these products to the other undertakings which are not a television
manufacturer, it shall not be possible to benefit from the block exemption.
(29) Any distinction of active and passive sales has not been made other than the first one among the four exceptional regulations mentioned in article 4 (b) of
the Communiqué. In other words, any active or passive sales to be made by the
buyer in cases where the last three exceptional provisions have a scope of
implementation may be restricted by the supplier.
2.3. Selective Distribution Systems
(30) As is mentioned in article 4 (c) of the Communiqué, an active or passive sales prohibition may not be imposed on the members of the selective
distribution system in terms of sales to be made to end users. Even though the
undertaking in the position of a supplier would create exclusive territories by
means of stating that it shall give goods to a limited number of buyers in a certain
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territory, active or passive sales to be made by buyers to end users outside the
territory may not be prevented. In other words, buyers who are the members of
the selective distribution system may sell actively or passively to the end user
within the territory they wish. However, it may be prevented by the supplier that a
buyer who is the member of the system changes the place of the point of sale
where he continues his activities, or opens a new point of sale. Because, as is
also mentioned above, the physical features of the point of sale is the most
important element affecting the success of the distribution system. Another
regulation that opens the selective distribution system to competition, though
partially, has been made in article 4 (d) of the Communiqué. Accordingly,
undertakings which choose the selective distribution system as the distribution
system may not impose the exclusive purchasing obligation on buyers who are
the members of the system. That is to say that there is no obligation for the
system members to purchase products from the supplier; the members of the
system may not be prevented from being able to purchase products from the
other member undertakings.
2.4. Other Limitations
(31) Another regulation related to supply agreements where there are products formed by combining parts takes place in article 4 (e) of the Communiqué. In the
supply agreement concluded between the supplier who sells such parts and the
buyer who combines and uses such parts in production, the supplier may not be
prevented from selling these parts as spare parts to end users or to repairers not
authorized by the buyer with the maintenance or repair of goods. As is seen, the
limitation in question is imposed on the supplier by the buyer, as different from
the one above. An example of this case may be the relationship between the
supplier who manufactures bicycle chains and the buyer who uses these chains
in the manufacture of bicycles. The bicycle manufacturer in the position of a
buyer may not prohibit the chain manufacturer in the position of a supplier from
selling chains to end users or to unauthorized, in other words, independent
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repairers. However, the bicycle manufacturer who is in the position of a buyer
may impose on his own repairers authorized by him the obligation to purchase
chains merely from him.
3. NON-COMPETE OBLIGATION
(32) Included in article 5 of the Communiqué are the regulations related to the non-compete obligation which may be imposed on buyers in vertical agreements.
In case of imposing on the buyer a non-compete obligation that exceeds the
limits allowed in this article, the provisions of the contract, containing such
obligation may not benefit from the block exemption, if such provisions are
severable from the other parts of the contract; the remaining articles of the
contract may benefit from the block exemption. Should those provisions of the
contract, which contain the non-compete obligation are not severable from the
remaining parts of the contract, the entire contract may not benefit from the block
exemption.
(33) In article 3 of the Communiqué, the non-compete obligation has been defined as a direct or indirect obligation preventing the purchaser (buyer) from
producing, purchasing, selling or reselling goods or services which compete with
the goods or services which are the subject of the agreement. Within its meaning
in the Communiqué, the non-compete obligation is an obligation that provides for
that the buyer does not produce himself and does not supply from another
source other than the supplier the goods or services which are the subject of the
agreement. However, a distinction has not been made in the Communiqué as to
the case where the buyer is obliged to purchase from the supplier the entire
goods or services required or resold by him, and the case where he is obliged to
purchase a large portion (at least 80 %) of them. In other words, the supplier's
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providing the buyer with the opportunity to make a small portion of his purchases
up to 20 % from competing undertakings shall not constitute a barrier to deeming
the relevant provision a non-compete obligation. In calculation of these rates, the
buyer's purchases belonging to the previous calendar year shall be taken as the
basis. If the quantity of the buyer's purchases belonging to the previous calendar
year is indefinite, the annual total requirement of the buyer may be estimated,
making use of this quantity.
(34) The duration of the non-compete obligation imposed on the buyer has great importance. It is not possible for a non-compete obligation whose duration
is more than five years to benefit from the block exemption, apart from the
exceptions mentioned in paragraph 38. If the duration of the non-compete
obligation imposed on the buyer is indefinite, again the block exemption cannot
be applied. Non-compete obligations tacitly renewable after exceeding the five-
year period also do not fall under the block exemption. However, in cases where
the duration does not exceed five years or the extension after five years is
possible by the explicit will of both parties, and where there is no situation
hindering the buyer from terminating the non-compete condition at the end of the
five-year period, the non-compete obligation shall benefit from the block
exemption. It is helpful to explain the regulations about the non-compete
obligation with an example: A one-year distribution agreement which imposes on
the buyer a non-compete obligation as long as the agreement is valid and which
is deemed to have been renewed each year unless any of the parties objects a
specific period earlier, shall be deemed to be for an indefinite period. However, if
it is compulsory for the parties to notify each other of their will explicitly for the
renewal of this agreement each year, the agreement shall not be deemed to be
for an indefinite period. That is to say, unless the parties notify each other
explicitly, within a specific period of time, of their desire to continue this
agreement, the non-compete obligation based on a regulation which takes that
the agreement has not been extended shall not be deemed for an indefinite
period.
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(35) Pursuant to the Temporary article 1 of the Communiqué, the duration of this obligation in the agreements which are valid on the date of entry into force of
this Communiqué and which include, from this date, a non-compete obligation
such that the limits mentioned in the Communiqué are exceeded, is required to
be reduced to the limits mentioned in the Communiqué or below, within one year
from the date of entry into force of the Communiqué. At the end of this one-year
period, if the non-compete obligation has not been reduced to the limits
mentioned in the Communiqué or below, either this provision of the agreement,
or if this provision is not severable from the other parts of the agreement, the
entire agreement shall be invalid. Should the remaining duration of the non-
compete obligation in the agreement is 5 years or shorter on the date of entry
into force of the Communiqué, the agreement shall be valid for the remaining
duration; therefore, the undertaking does not need to make any amendments.
(36) If it is established that the non-compete obligation is imposed on the buyer for a duration beyond the limits provided for in the Communiqué, and that the
article of the contract, which includes such obligation is severable from the other
parts of the contract, the Board may consider that the duration of the non-
compete obligation has been reduced to the maximum limit provided for in the
Communiqué. Then, if the non-compete obligation imposed on the undertaking in
the position of a buyer has not expired the limit provided for in the Communiqué
yet, the buyer shall remain under the non-compete obligation for this remaining
period, in other words, until the uppermost limit in the Communiqué expires. If he
has been under the non-compete obligation for a period exceeding this
uppermost limit, the non-compete obligation shall be invalid, and the undertaking
in the position of a buyer shall be completely independent.
(37) Another important point with regard to the non-compete obligation is the requirement for the absence of any de facto situation that prevents, at the end of
the five-year period, the buyer from being relieved of the non-compete obligation.
For instance, if the supplier has provided a loan to the buyer, the repayment of
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this loan should not be arranged such that it hinders the buyer from being
relieved of the non-compete obligation at the end of the five-year period. The
buyer should have the opportunity to repay the outstanding debts, if any, after the
expiry of the period as to the five-year non-compete condition. Similarly, in cases
where the supplier has provided certain equipment to the buyer, the buyer should
have the possibility to take over such equipment at its market value at the end of
the five-year non-compete period.
(38) There are two exceptions to the regulation that a maximum of five-year non-compete obligation may be imposed on the buyer:
- The first exception relates to the case where a part of the investment total
necessary for enabling the buyer to realize his activity based on the agreement is
covered by the supplier. Accordingly, in case a part of this investment total is
covered by the supplier, provided that it is not less than 35 %, the non-compete
obligation imposed on the buyer may be extended to ten years at most. However,
in this case, the part of the non-compete obligation exceeding five years should
only be limited to the activity to be conducted at the facility where this investment
has been made. Despite the fact that cost items forming the investment total
necessary for enabling the buyer to realize his activity based on the agreement
may vary depending on the market of operation, the cost of land, building,
warehouse and infrastructure cost, tools and equipment cost, authorization and
licence expenses, the cost of minimum stock to be kept compulsorily, and the
operating capital are among the most important investment items.
- - And in the case of the second exception, the facility to be used by the buyer
in conducting his activities based on the agreement belongs to the supplier
entirely. From the opinion that it is a reasonable limitation that the supplier
would not allow the sale of competing goods in a facility belonging to him
without his consent, the non-compete obligation to be imposed on the buyer
has not been subjected to a limitation of duration in any manner. Accordingly,
the non-compete obligation may be imposed on the buyer as long as he uses
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the facility in question. However, in case where a facility which already
belongs to the buyer is leased to the supplier, and where the supplier again
makes the buyer who is its original owner use this facility, it is not possible to
benefit from this exception. In other words, if the supplier holds the ownership
of the facility under a real or personal right (such as lease, lending, and
usufruct) secured from the third persons not connected with the buyer, only
then a non-compete obligation of more than five years may be imposed on
the buyer.
(39) In principle, it is not possible to impose a non-compete obligation on the buyer for the period following the expiry of the agreement. However, in case
certain conditions are fulfilled, a non-compete obligation may be imposed on the
buyer, provided that it does not exceed one year from the expiry of the
agreement. To that end, it is required that the prohibition concerns the goods or
services in competition with the goods or services which are the subject of the
agreement, is limited to the facility or land where the buyer operates during the
agreement, and is compulsory for protecting the know-how transferred by the
supplier to the buyer. The use and disclosure of know-how not made available in
the public domain may be prohibited indefinitely.
(40) Another practice of the non-compete obligation not allowed is preventing the system members from selling the products of a particular competitor in the
selective distribution systems. This provision does not mean that the selective
distribution and the non-compete obligation may not be applied jointly. The
undertaking which is in the position of a supplier of the selective distribution
system may oblige that the selected buyers sell only his products and not sell
any of the competing products. However, it may not allow the sale of the
products of some competitors, while hindering the rest from using this system. In
other words, the non-compete obligation should either be imposed for all or none
of the competing products in the selective distribution system.
4. WITHDRAWAL OF THE EXEMPTION
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(41) All vertical agreements fulfilling the conditions sought in the Communiqué
No: 2002/2 are exempted from the prohibition in article 4 of the Act.
Because, while issuing the Communiqué in question, the Board has
presumed that those agreements caught by the Communiqué fulfil the
conditions for exemption, listed in article 5 of the Communiqué. However,
even if they fulfil the conditions provided for by the Communiqué, there
may also be some exceptional cases where certain vertical agreements
cannot secure, in terms of their effects, the conditions for exemption in
article 5 of the Communiqué. Especially in cases where undertakings
party to the vertical agreement hold a considerable market share, and
where barriers to market entry reach a substantial extent, it may become
difficult for certain types of vertical agreements to secure conditions
required for exemption. An important power has been entrusted to the
Board for employing in such exceptional cases: In the first paragraph of
article 6 of the Communiqué, it has been ruled that the Board may
withdraw the exemption granted by the Communiqué to the agreement in
case it is established that an agreement granted an exemption by the
Communiqué has effects incompatible with the conditions provided in
article 5 of the Act. Therefore, even if any vertical agreement has been
provided in compliance with the Communiqué, the protection of exemption
ensured by the Communiqué may be withdrawn by the Board, if it has
moved away from the conditions enabling the obtaining of an exemption,
in terms of its effect on the market at the stage of implementation. In such
a case, the Board shall ask for the written and/or oral comments of parties
prior to taking its final decision. Furthermore, the process of withdrawing
the exemption shall not be effective retroactively. Therefore, since the
transaction of withdrawing the exemption shall not be retroactive, the
agreement shall have benefitted from the exemption within the period until
the decision has been taken.
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(42) It is inevitable that the practice of withdrawal of the exemption arises particularly in those markets where undertakings which have considerable levels
of market share are parties to agreements. However, market shares of
undertakings party to the agreement are not the decisive element alone in
determining whether or not to withdraw the exemption. It may also be the case
that exemption is withdrawn from a vertical agreement concluded by any
undertaking in an oligopolistic market where undertakings whose market shares
moving close to each other operate. In an assessment to be made at this point,
some other elements, besides market shares, such as barriers to market entry,
the characteristics of the relevant product, and the degree of dependence of
consumers on this product shall be taken into account.
(43) The practice of withdrawal of the exemption may not only be performed by individual Board decisions directed at an undertaking which is party to an
agreement, but may also take place through issuing a Communiqué, which shall
be binding upon all undertakings in the market. In the second paragraph of article
6 of the Communiqué, it has been stated that in case parallel networks formed by
vertical restraints of similar nature cover a substantial part of the relevant market,
the Board may, by a communiqué to be issued by it, exclude from the exemption
agreements containing certain restraints in the relevant market. Should vertical
agreements concluded by undertakings operating in the market create similar
effects on the market, restraints included in such agreements shall be deemed as
"similar vertical restraints", even though they have been provided differently in
wording.
(44) The Board, while deciding whether the practice of withdrawal of the exemption shall be realized by an individual Board decision directed at
undertakings which are party to an agreement, or by a Communiqué to be issued
for all undertakings in the market, shall take notice of certain elements.
Particulary elements such as the number of undertakings operating in the
market, whether the market power is held only by some of these undertakings,
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and the structure of the relevant market shall serve as a factor in determining
how to withdraw the exemption.
(45) The Board may not only fully withdraw the exemption from vertical agreements in a particular market, but also may tie the continuation of the
exemption to the fulfillment of certain conditions. For example, the duration of the
five-year non-compete obligation allowed to be imposed on buyers with the
Communiqué No: 2002/2 may be decreased to three years for certain markets,
with a Communiqué to be issued. Likewise, the right to determine the maximum
selling price of the buyer, granted to suppliers with the Communiqué No: 2002/2
may be lifted for some markets.
5. ABUSE OF THE DOMINANT POSITION
(46) In article 8 of the Communiqué, it is expressed that an exemption granted pursuant to the provisions of this Communiqué shall not prevent the application
of article 6 of the Act. In article 6 of the Act, the undertakings in dominant position
are prohibited from abusing their position. On the other hand, exemption merely
grants a protection against the prohibition in article 4 of the Act, but not the
prohibition in article 6 of the Act. What is meant hereby is not that undertakings in
dominant position may by no means conclude a vertical agreement nor may they
benefit from the block exemption. Whether restraints in a vertical agreement
within the scope of the block exemption are the abuse of dominant position shall
be decided by taking account of the quality of the relevant market and the vertical
agreement.
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