Turkey: Restriction Of Sales Through Online Marketplaces Under Turkish Competition Law: What Does The Decision In BSH Tell Us?

In its recent decision in BSH, the Turkish Competition Board ("TCB") decided that the restriction of sales through third-party online marketplaces does not fall under Block Exemption Communiqué on Vertical Agreements numbered 2002/2 ("Vertical Communiqué") and does not also meet the individual exemption criteria. The decision thus provides further clarification on the TCB's approach to the ban of online sales through marketplaces, which has been subject to criticism that it is not compatible with the current EU approach to the matter.

1. Introduction

The treatment of restrictions of online sales on third-party marketplaces has been a topical issue in Turkish competition law, as in EU competition law. Following the Court of Justice's judgement in Coty, the Commission, in its Competition Policy Brief dated of 18 April 2018¹, has provided that the ban of sales on marketplaces in a selective distribution system does not constitute a hardcore restriction and is block-exempted under Vertical Block Exemption Regulation ("VBER"). The draft for Vertical Guidelines published by the EU Commission also confirms that restrictions of sales on online marketplaces in a vertical agreement will benefit from block exemption, where the market share threshold of 30% is not exceeded. In Turkey, however, the TCB's Guidelines on Vertical Agreements ("Vertical Guidelines") provides that suppliers cannot impose a general ban on sales through online marketplaces. The TCB's decision in BSH, dated of 16 December 2021², indicates that the TCB maintains its position in the Vertical Guidelines regarding marketplace bans, contrary to the permissive approach adopted in the EU in this respect.

2. Bans on sales through online marketplaces under the Vertical Communique and the Vertical Guidelines

The Vertical Communique substantially mirrors the current version of the VBER. In this regard, Article 4(b)-1 and 3 of the Communique stipulates that the restrictions of (i) active sales to an exclusive region or exclusive group of customers assigned to the supplier or to a purchaser and (ii) active or passive sales by the members of a selective distribution system³ to unauthorized distributors fall under the block exemption. Article 4(c) thereof, however, lists the restriction of active or passive sales by the members of a selective distribution system to end users as a hardcore restriction.

Paragraph 25 of the Vertical Guidelines clearly provides that the restriction by a supplier of its distributors' ability to make sales on their own websites is considered as a type of passive sales restriction. Therefore, there is no question that a total ban of online sales will fall outside the block exemption and is highly unlikely to meet the individual exemption criteria. The Vertical Guidelines does not however provide such a clear guidance on whether prohibiting the members of a selective distribution system from making sales on market places may be exempted by the Vertical Communique. Paragraph 28 of the Vertical Guidelines states that:

It may be inferred from this paragraph that a supplier cannot impose an absolute ban of sales on third-party online marketplaces. It is not however certain whether a supplier may establish certain objective criteria which, in practice, may lead to a ban of online sales on all or most of marketplaces.

3. Decision in BSH

The TCB's decision in BSH relates to a negative clearance and individual exemption application made by BSH Ev Aletleri ve Sanayi Ticaret AŞ., a manufacturer of household appliances, for its vertical agreements with authorised resellers, including an absolute ban on sales through online marketplaces. The TCB found that such an absolute ban could not be block-exempted mainly on the ground that many marketplaces offered suppliers to have their own special page design in order to protect their brand image by implementing the standards of their selective distribution system on the marketplace. The TCB also concluded that the absolute marketplace could not satisfy the individual exemption conditions because:

• the marketplace ban would not serve the prevention of free riding or the protection of brand image, therefore would not produce efficiency gains;
• the marketplace ban would not be to the benefit of consumers, considering the wide use of internet for shopping purposes;
• the ban on sale through marketplaces could decrease both inter-brand and intra-brand competition;
• such an absolute ban could not be considered proportionate to preventing free riding and protecting brand image as many marketplaces offered sellers to have a special page design to implement the standard of a selective distribution system.

The decision in BSH clearly prohibits absolute ban on sales through marketplaces. It is not sufficiently clear whether a supplier may restrict sales only on marketplaces which do not offer suppliers to have their own special page design. Considering that the using of such a special page design is not very popular among suppliers in Turkey, the ability to impose such a limited restriction would be far from satisfying the expectations of suppliers. In any event, the decision confirms that the TCB does not follow the Commission's permissive approach towards the ban of sales on marketplaces. However, the reactions from the market indicate that although the decision has disappointed many suppliers in Turkey, it did not end their fight over marketplace bans.

Footnotes

1. See https://ec.europa.eu/competition/publications/cpb/2018/kdak18001enn.pdf.

2. BSH, 16.12.2021, 21-61/859-423. The reasoned decision was published on 8 February 2022.

3. In Article 3 of the Vertical Communiqué, a Selective distribution system is defined under as "a distribution system whereby the provider undertakes to sell directly or indirectly, the goods or services which are the subject of the agreement, only to distributors selected by it, based on designated criteria, and whereby such distributors undertake not to sell the goods or services in question to unauthorized distributors".

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