Introduction

The TCA has been initiating one investigation after another into sectors that closely affect the lives of consumers in recent times.

Large and small household appliances sector is one of these sectors and there are many recent investigations (ongoing and completed) initiated against the undertakings operating in the sector[1]. The relevant decisions mostly concern the restriction on online sales and resale price maintenance allegations.

An allegation similar to the allegations examined in said decisions was also examined in the case involving BSH Ev Aletleri San. ve Tic. A.Ş. (“BSH”), which is the subject of this article. In this context, the TCA initiated an investigation against six undertakings[2] operating in the electronics and household appliances markets with its decision dated 09 September 2021 and numbered 21-42/617-M to determine whether they had violated Act No. 4054 on the Protection of Competition (“Competition Law”) via preventing their authorized resellers from making online sales and/or resale price maintenance.[3]

During the investigation process, BSH[4] applied for a commitment mechanism regarding the prohibition of online marketplace sales as well as certain provisions (including exclusive purchasing agreement and restriction of active sales to end users) in agreements signed with its authorized resellers regarding physical store sales. The TCA has recently published its reasoned decision in which the proposed commitments by BSH were evaluated.[5]

Online Sales Ban, Exclusive Purchasing Agreement and Restriction of Active Sales to End Users

During the commitment process, various provisions in the agreements BSH signed with its authorized resellers within the scope of its selective distribution system, which constitute a restriction of competition according to the TCA, and the ban on sales from online marketplaces imposed on its authorized resellers were examined.

First, as for its assessment of BSH's physical sales channel, the TCA found that:

The TCA evaluated these foregoing issues as contrary to competition law.

The TCA also determined that BSH, as part of its selective distribution system, and prohibited its authorized resellers from selling BSH products on online marketplaces. In this context, the TCA stated that the sales of products in the electronics category, particularly white goods, have increased significantly through the online channel and that online platforms are an indispensable distribution channel for authorized resellers compared to both the suppliers' websites and the websites to be established by the authorized resellers themselves. In this respect, the TCA concluded that actions to prohibit sales through online platforms would amount to the closure of the online sales channel to resellers and would constitute a passive sales prohibition.

The Proposed Commitments Was Found Sufficient to Remove These Concerns: Not as Originally Proposed but with Some Revisions

To address the competitive concerns raised by the TCA, BSH submitted commitments regarding (i) contractual provisions with authorized resellers for sales in physical stores and (ii) sales on online marketplaces.

BSH submitted five commitments regarding the provisions of the agreements signed with the authorized resellers for the sales to be made in the physical stores.[6] The relevant commitments were intended to remove/amend the provisions considered by the TCA to be contrary to competition law. The TCA decided that these commitments regarding the contractual provisions signed with authorized resellers for sales to be made in the physical stores were acceptable.

Regarding sales on online marketplaces, BSH committed to allowing authorized resellers who fulfil certain conditions to sell BSH branded products on online platforms. In this framework, the first commitment package submitted by BSH included a set of conditions to be fulfilled by both the platforms and the authorized resellers. The conditions included in the first commitment package are set out below:

The TCA concluded that many of the conditions set by BSH were objectively concrete, reasonable, and acceptable in terms of the quality of the distribution, brand image and/or potential efficiency enhancement, but their implementation had procedural drawbacks. First of all, it stated that various conditions that impose obligations on third-party platforms were not accepted and concluded that it would be more appropriate to include the relevant conditions only in the agreement to be concluded between BSH and the authorized reseller. Some of the proposed commitments, which are shown in red in the table above, also were deemed inappropriate as they were not objectively concrete, reasonable, and acceptable in terms of supporting the nature and quality of distribution, protecting the brand image and/or enhancing potential efficiency. Thereupon, BSH submitted a revised commitment text and amended the conditions imposed on authorized resellers' sales from online marketplaces. The revised conditions are set out below:

The TCA examined the conditions under which authorized resellers shall undertake to be allowed to sell Bosch, Siemens, and Profilo branded products on online marketplaces and concluded that the justification for these conditions is objectively concrete, reasonable, and acceptable with respect to the factors that enhance the nature and quality of distribution, brand image, and/or potential efficiency. In addition, it was assessed that the criteria included in these conditions serve the same purpose as the criteria for physical sales channels, provide comparable results, and justify the differences arising from the nature of the two distribution channels. Furthermore, the TCA evaluated that the purpose of the standards and conditions specified for online platforms is not to prevent online sales and price competition.

BSH also committed to fulfilling a number of obligations to provide information to the TCA to monitor BSH's compliance with the commitments regarding its physical and online sales channels. The first commitment offered by BSH in this context is that it will inform the TCA on the matters set out below for the 12-month period following the notification of the reasoned decision:

According to the TCA, this information will allow for the monitoring of the issues such as whether the competition problem subject to the commitments has been effectively eliminated, the circumstances that led to the termination of authorized resellers' platform sales, and whether these grounds led to the ineffectiveness of the commitments.

In addition, BSH committed that (i) within 90 days following the notification of the reasoned decision and in any case not later than 31 December 2022, it will announce to its authorized resellers, through the systems it uses to communicate with its authorized resellers, the TCA's decision and that authorized resellers wishing to sell on the platform must enter into an agreement with BSH and (ii) that it will inform the TCA of the announcement within two weeks of the announcement.

The TCA has concluded that it is intended to respond to possible questions from authorized resellers by making the relevant announcement and, at the same time, to clarify and permanently implement issues such as the establishment of the necessary infrastructure to fulfil the conditions subject to the commitment and the signing of the relevant agreements before 2023 and has found this period reasonable. It was also stated that the notification of the announcement to the TCA would make it clear that the authorized resellers were aware of the content and justifications of the TCA's decision.

Conclusion

In line with all these assessments, the TCA concluded that the proposed final commitments are proportionate to the competition problems identified, are suitable to eliminate these problems, can be fulfilled in a timely manner, and be effectively implemented. Accordingly, the TCA decided that they are capable of addressing the relevant competition concerns and are acceptable. The TCA stated the investigation may be concluded for BSH with respect to the provisions in the agreements signed with authorized resellers selling through physical sales channels and the practice of prohibiting authorized resellers from selling on online marketplaces.

The decision is of significance especially as it shows the stance of the TCA towards the various conditions that may be enforced by suppliers on their resellers regarding the sales conducted through online platforms. As online sales continue to grow in importance and popularity, it is essential for the TCA to establish clear guidelines and standards for online sales. Therefore, the outcome of this decision has important implications for the e-commerce sector and its stakeholders, especially online platforms, suppliers, and resellers.

Footnotes

[1] These decisions include the followings;

[2] These undertakings are Arçelik Pazarlama A.Ş., Gürses Kurumsal Tedarik ve Elektronik Tic. Paz. A.Ş., LG Electronics Tic. A.Ş., Samsung Electronics İstanbul Paz. ve Tic. Ltd. Şti. and SVS Dayanıklı Tük. Mall. Paz. ve Tic. Ltd. Şti. as well as BSH.

[3] Under Turkish competition law, resale price maintenance practices are considered naked and hard-core infringements and no commitment application can be made regarding these practices. Therefore, BSH did not submit a commitment in this respect and the decision did not include an assessment regarding resale price maintenance.

[4] BSH currently operates in Turkey under the Bosch and Siemens brands, as well as the local brand Profilo and the private brand Gaggenau. The product portfolio of these brands consists of large household appliances/white goods and small household appliances.

In Turkey, BSH distributes Bosch, Siemens, and Profilo branded products mainly through a selective distribution system established for each brand separately throughout Turkey.

[5] The TCA’s decision dated 08 September 2022 and numbered 22-41/579-239.

[6] The content of these commitments is not included in the decision since they are related to the provisions of the agreements between undertakings and are considered trade secrets.