In recently published Yatas Dogtas decision1, the Board assessed the allegations that Yatas Yatak ve Yorgan Sanayi Ticaret A.S. ("Yatas") and Dogtas Kelebek Mobilya Sanayi ve Ticaret A.S. ("Dogtas") have violated Law No. 4054 by determining dealers' resale prices, fixing discount rates and limiting payment methods of their dealers.
In relation to the market, the Board stated that there are many players with small, medium and large scales in the Turkish furniture market. The Board also classified the undertakings operating in the furniture sector into following three groups: (i) no-name small scale firms having less concept stores and limited product types, (ii) underground economy (the Board stated that these two groups consist of 65-70% of the market) and (iii) branded undertakings operating country-wide. The Board stated that with its Istikbal, Bellona and Mondi brands, Erciyes Anadolu Holding is the leading player in the market. The Board defined the relevant product market based on the product groups. Accordingly, the Board defined the following markets: (i) bed, (ii) sofa bed, (iii) home textile, (iv) modular furniture and (v) sitting room sets.
In its assessment, first of all, the Board examined various agreements Yatas and Dogtas executed with their dealers. As a result of this the Board concluded that the price lists sent by Yatas and Dogtas to their dealers are recommended retail prices and that there is no provision in the agreements and the documents seized during the on-site inspection indicating that Yatas and Dogtas determine resale prices of their dealers, fix discount rates or limit payment methods. In relation to two documents collected from Yatas, the Board noted that these documents imply that Yatas monitors and interferes with the resale prices of its dealers. The relevant document shows that (i) Yatas was informed about one of its dealers apply lower prices than Yatas's own stores, (ii) one of the Yatas managers responded that he/she will discipline the relevant dealer offering low prices and terminate the agreement with this dealer, if deemed necessary. The Board assessed that the relevant document only relates to an isolated situation specific to Izmir region, noting that there were no other evidence indicating that resale price maintenance within the same region or other regions. The Board also analyzed the resale prices of dealer to see whether Yatas engaged in resale price maintenance. On that front, the Board noted that dealers are free to set their prices different from recommended prices and that they have been able to set prices even below the lowest prices in Yatas's recommended prices in certain situations. Accordingly, the Board decided to reject the allegations noting that there is no evidence indicating resale price maintenance, fixing discount rates or limiting payment methods by Yatas and Dogtas.
The Board also evaluated whether Yatas and Dogtas restricted online sales as some of the provisions in their agreements found to be restrictive by the Board in terms of online sales.
The Board first referred to the European Commission's Vertical Agreements Block Exemption Regulation (the "Regulation No. 330/2010"), accompanied by the EU Guidelines ("the Guidelines") in terms of online sales. It stated that the following restrictions exclude the relevant agreement from block exemption: i) agreeing that the (exclusive) distributor shall prevent customers located in another (exclusive) territory to view its website or shall redirect the customers to the manufacturer's or other (exclusive) distributors' websites, (ii) cancelling a customer's order if it is noticed from the customer's credit card information that the customer is not located in the exclusive territory, iii) restriction on the proportion of total sales conducted over the internet and iv) agreeing that the distributor shall pay a higher price for products planned to be resold by the distributor online than for products planned to be resold off-line.
The Board indicated that if the restriction on sales does not have an objective justification it would be regarded as competition restrictive behavior by object. Subsequently, referring to the Block Exemption Communiqué on Vertical Agreements ("Communiqué No. 2002/2") the Board noted that a provision restricting online sales of authorized distributors would cause the vertical agreement to fall out of the scope of the Communiqué No. 2002/2 and within this scope, as online sales are primarily categorized as passive sales, restriction of such sales would be deemed as the restriction of passive sales. The Board referred to its BSH decision2 where it confirmed that although the wording of an agreement may not always result in a passive sales restriction, the implementation of the agreement in practice may lead to a de facto restriction of passive sales. The Board also referred to its Jotun decision3 where it indicated that although Jotun established a selective distribution system, since it restricts online sales of authorized distributors, it should alter and renew its dealer agreement to exclude the prohibition of passive sales via internet.
The Board, after assessing the provisions of Yatas's and Dogtas's agreements noting that provisions which may lead to restriction of online sales and its effect in practice should be evaluated so as to determine whether distributorship agreements of Yatas and Dogtas benefit the safe harbor of the Communiqué No. 2002/2, found that both Yatas's and Dogtas's aforementioned agreements do not benefit from the protective clock of block exemption since they both restrict online sales, namely the passive sales. Thus the agreements fell within the scope of Article 4 of the Law No. 4054. That said, the Board conducted individual exemption analysis and decided that Yatas's and Dogtas's online sales restriction do not satisfy Article 5(a) of Law No.4054, thus such agreements will not be granted individual exemption.
As a result, considering both Yatas's and Dogtas's market position, the Board decided that there not to initiate a full-fledged investigation and ordered that Yatas and Dogtas to avoid practices that restrict passive sales, and to alter and renew their dealership agreements accordingly otherwise written opinions should be delivered to Yatas and Dogtas in accordance with Article 9(3) of Law No. 4054.
This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in September 2020. A link to the full Legal Insight Quarterly may be found here
Footnotes
1 The Board's decision dated February 6, 2020 and numbered 20-08/83-50.
2 The Board's decision dated August 22, 2017 and numbered 17-27/454-195.
3 The Board's decision dated February 15, 2018 and numbered 18-05/74-40.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
