As known, active and passive sales by distribution system members to ultimate buyer cannot be prohibited. Sales made via the internet and similar means are generally accepted as passive sales. Therefore, prohibitions on sales through online channels and practices that will result in an absolute prohibition are considered as passive sales prohibitions.
Accordingly, the provider will not be able to prevent the reseller’s sales over the internet, impose pricing practices for this purpose, impose ratio limitations or engage in behaviors that may prevent online sales. However, the provider may impose quality standards and conditions for the websites and marketplaces where its products are offered for sale, and may require certain services to be offered to consumers shopping through these channels. The standards and conditions that may be imposed in this context shall be objectively concrete, reasonable and acceptable in terms of the attributes and quality of distribution, brand image and/or potential effectiveness. At this point, the conditions to be imposed on internet sales need not be the same as the conditions for physical sales, but there should be criteria that are appropriate to the different nature of both distribution channels, serve the same purpose and provide comparable results. In any case, the purpose of such standards and conditions should not prevent price competition and discourage sales to be made through the internet channel.
The Competition Authority clarified these issues further with its recent decisions published in April 2023 which evaluated whether or not the relevant suppliers violated Article 4 of the Law on the Protection of Competition No. 4054 (Law No. 4054) by setting resale prices and restricting internet sales.
Some of the restrictions/requirements foreseen by the suppliers for their selective distribution system and approved by the Competition Authority are as follows:
Regarding trademarks
– Authorized dealers must have authorized dealer badges in their platform stores.
– The authorized dealers shall use the trade name in the supplier’s system when selling and shall not sell under different store names.
– The platform store of the authorized dealer must comply with suppliers’ corporate standards for the relevant brand.
– The authorized dealer’s logo, visuals, content texts, etc. shall be of the same quality and content as the supplier’s websites.
Regarding platform store/market place
– Authorized dealers’ platform stores should not have practices that direct consumers to competing brands.
– Authorized dealers will be able to sell on platforms where the criteria used for the ranking created based on consumer search are applied equally to each authorized dealer.
– The authorized dealer will be able to sell on platforms where the terms of the contract and commercial conditions are applied to all authorized dealers of the supplier according to objective criteria; The authorized dealer will be able to sell on platforms where the authorized reseller is immediately informed about possible changes regarding the processes and services on the platform.
– The authorized dealer shall be able to sell on platforms that allow and enable it to set product prices exclusively.
– The authorized dealer shall provide the consumer with the opportunity to ask questions in the platform store.
– If there is a period of time or a stock limit regarding the validity of the price, this period and stock amount must be clearly stated in the relevant section of the authorized dealer’s platform store.
– The types of campaigns announced by the supplier should also be applied in the platform store to the extent possible
Regarding products/authorized dealers
– The authorized dealers will be able to sell on platforms that provide technical solutions to prevent the sale of multiple units of the same product to the same buyer at one time.
– The authorized dealer may sell only the brands and products that it sells in its physical store in the platform store.
– The authorized dealer will only sell products bearing the brand of the supplier that are provided by the supplier.
– Authorized dealers who will sell products on the platforms must first have a physical store.
– The authorized dealer will sell products only to end users. It will not make corporate sales.
– The authorized dealer will provide delivery service for the products that it sells from the marketplace and require assembly.
Regarding information exchange
– The authorized dealer will share with the supplier, or allow the platform to share with the supplier, any statistical information it has access to about sales made on the platform.
– the supplier will be able to audit the sales processes and service quality of the authorized dealers on the platforms.
– The authorized dealer will instantly transfer to the supplier information such as number of sales, sales-delivery date, store points, customer data to the extent permitted by the legislation, regarding the sales of products bearing the brand of the supplier through the market place
In this context, the Competition Authority has accepted that additional restrictions/requirements may be imposed on the distributors in selective distribution system regarding their sales on online marketplaces.
