Exclusive Distribution in Turkey

Exclusivity arrangements are vertical agreements which include the obligation to collaborate solely among party/parties to the arrangement. Under an exclusive distribution agreement, a supplier may grant an exclusive purchase, sale, or resale right of a specific product or service to a distributor, and exclusivity may be granted to the distributor for a specific geographic territory and/or to a specific customer group. Exclusivity can be ensured by including a provision in the agreement executed between the supplier and the buyer or it can be realized de facto through the adoption of certain incentives such as rebates or promotions or through the implementation of sanctioning mechanisms.

Exclusive distribution agreements fall within the scope of Article 4 of Law No. 4054 on the Protection of Competition (Law No. 4054). However, these agreements may also benefit from the exemptions set forth in Block Exemption Communiqué No. 2002/2 on Vertical Agreements (Communiqué No. 2002/2) if the conditions laid out therein are fulfilled. According to Article 2 of Communiqué No. 2002/2, if the market share of the buyer party to an exclusive distribution agreement is above 30% in the relevant product market in which it provides the products or services that are subject to the vertical agreement, the agreement cannot benefit from the block exemption. However, the agreement may benefit from an individual exemption if it cumulatively fulfils the conditions set forth under Article 5 of Law No. 4054. Moreover, pursuant to Article 4 of Communiqué No. 2002/2, restrictions requiring the buyer not to sell the products or services in certain geographic territories or to certain customers may be considered as a violation by object of Article 4 of Law No. 4054. There are, however, a number of exceptions to this rule. Indeed, Article 4(b)(1) of Communiqué No. 2002/2 allows the supplier to prevent the buyer from active sales of contracted products or services to an exclusive territory or customers allocated to a supplier or another buyer, provided that this restriction does not cover any resale by the buyer’s customer. Communiqué No. 2002/2 grants block exemption to the practices listed above. Provisions extending beyond what is permissible under an appropriately defined exclusive distribution system, such as restriction of passive sales, which consist of restriction of resale of a product or a service by the buyer’s customer, cannot benefit from the block exemption and may exclude the vertical agreement from the application of Communiqué No. 2002/2.

For more information on exclusive distribution in Turkish competition law, please feel free to reach out to ELIG Gurkaynak at +90 212 327 1724 or through gonenc.gurkaynak@elig.com.