ACTECON | View firm profile
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 agreement signed with an undertaking that sells BSH products prohibited active sales by system members to end-users;
- in the agreement signed with another undertaking that sells BSH products, an exclusive purchase obligation was imposed, preventing the purchase and sale of products among system members; and
- in the agreements signed with resellers, various provisions (i) prevent the purchase and sale of products among system members by imposing exclusive purchase obligation, (ii) prohibit sales to end-users by system members, and (iii) prohibit active and passive sales to end-users by system members by assigning an exclusive customer group to the supplier.
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:
| Conditions in the First Commitment Package for Authorized Resellers’ Sales from Online Marketplaces |
| Platform shall be free to publish advertisements that BSH confirms are appropriate for use of the brand. |
| Authorized reseller’s platform store shall comply with the corporate standards set by BSH for the relevant brand. |
| Authorized resellers shall have authorized reseller badges on their platform stores. |
| BSH brands can only be sold by authorized resellers on the platform. |
| Authorized reseller platform stores and product pages featuring BSH brands shall not have practices that direct consumers to competitor brands. |
| Criteria for ranking based on consumers’ searches on platforms shall be applied equally to each authorized reseller. |
| Authorized reseller agrees that BSH may audit the sales processes and service quality of authorized resellers on the platforms in accordance with the published guidelines and the agreement. |
| Platform shall enter into a contract with BSH in which it agrees to comply with the criteria set out in this commitment letter. |
| The Platform shall undertake to be aware that the authorized reseller can only sell the products in its stock and cannot provide price information for products that are not in its stock and to provide BSH with the necessary support and convenience in the implementation of this requirement. |
| Platform shall not continue to display prices after the saleable product has run out. |
| Products and services that are not included under the authorized reseller’s agreement with BSH will not be sold on the authorized resellers’ platform store and product pages. |
| Platform shall apply agreement terms and commercial conditions to all authorized resellers according to objective criteria. BSH and all authorized resellers shall be informed simultaneously about possible changes regarding the processes and services. |
| A standard contract shall be concluded between the platform and the authorized resellers, the suitability of which is confirmed by BSH in terms of protection of BSH brands and brand rights, interpretation and application of the criteria and consumer protection. |
| The platform shall share the comments/questions/answers related the sold product, traffic, quantity, complaint types, profile, dealer and product related and seller score information with BSH within the framework of an agreed technical solution. |
| Platform shall create technical solutions to prevent the sale of more than four units of the same product to the same buyer at a time. |
| Platforms shall provide the necessary up-to-date technical sufficiency in terms of security and quality of service. |
| Only the information shared by BSH (product features/pictures/videos, etc.) shall be used and displayed on the platforms. |
| Product prices shall be determined by the authorized reseller. |
| In distance selling agreements, it shall be clearly stated that the authorized reseller who carries out the sale is exclusively responsible for the delivery of the product subject to the sale to the buyer. |
| Consumers shall be provided with the possibility to track shipments, where systems are available. |
| Platforms shall provide the opportunity to ask questions to the authorized reseller. |
| Authorized reseller shall resolve complaints regarding the sales transaction and the product within two days. If the complaints cannot be resolved within this period, the remaining unresolved complaints for BSH to intervene shall be shared with BSH. |
| Consumer evaluation shall only be made by the product purchasers in accordance with the legislation. |
| All positive / negative comments and ratings must be published in accordance with the legislation. |
| Platform shall know and accept that the authorized reseller can only cancel the sale if the consumer exercises his/her right of withdrawal, and that the order cannot be cancelled due to unavailability of stock. |
| If there is a time or stock limit for the price to be valid, this time limit and stock amount shall be clearly indicated. |
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:
| Revised Conditions for Authorized Resellers’ Sales from Online Marketplaces |
| Authorized resellers shall have authorized reseller badges on their platform stores. |
| Authorized reseller platform stores should not have practices that direct consumers to competitor brands. |
| Authorized resellers shall be able to sell on platforms where the criteria used for the ranking created based on the searches made by consumers on the platform are applied equally to each authorized reseller. |
| Authorized reseller shall be able to sell on platforms where agreement terms and commercial conditions are applied to all BSH authorized resellers according to objective criteria; where the authorized reseller is immediately informed about possible changes regarding the processes and services on the platform. |
| Authorized reseller will share with BSH, or allow the platform to share with BSH, any statistical information it has access to concerning sales made on the platform. |
| The authorized seller shall be able to sell on platforms that provide technical solutions to prevent the sale of more than four units of the same product to the same buyer at a time. |
| Authorized reseller shall only provide the platform with product materials and information (product specifications/images/videos, etc.) that BSH has shared or approved, and shall ensure that no product materials or information other than those provided by BSH are used or displayed on the platform store or product page. |
| Authorized resellers shall be able to sell on platforms that allow and enable them to set product prices exclusively. |
| Authorized resellers will provide the consumer with the opportunity to ask questions on the platform store. |
| The authorized reseller shall sell on the platform store only the brands and products that it sells in its physical store. |
| Authorized reseller’s platform store shall comply with BSH’s corporate standards for the relevant brand. |
| Authorized resellers who wish to sell on the platforms shall sign a separate agreement with BSH. |
| Authorized reseller agrees that BSH may audit the sales processes and service quality of authorized resellers on the platforms in accordance with the published guidelines and the agreement. |
| Authorized resellers shall not use any pseudonym beyond their trade name on the platforms, and the authorized reseller’s store name shall be the same across all online channels. |
| Authorized resellers who will sell products on platforms shall first have a physical store. |
| Out-of-stock products shall not be offered for sale and the price of such products shall not be displayed on the platforms, and the authorized seller shall not continue to share price information after the number of available products reported to the platform has run out. |
| Damaged, defective, or second-hand products shall not be sold. |
| The types of campaigns announced by BSH also shall be applied in the platform store to the extent possible. |
| Authorized reseller shall be solely responsible for the supply and delivery of the product subject to the sale to the buyer and shall clearly inform the end user on this matter. |
| Consumers shall be provided with the possibility to track shipments, where systems are available. |
| Questions asked to the authorized reseller on the platform shall be answered within 2 (two) days. |
| Costs arising from consumer complaints in which BSH intervenes and resolves shall be borne by the authorized reseller. |
| Authorized reseller is evaluated based on objective criteria such as service rating (reseller rating) and complaint management. |
| In accordance with the legislation, cancellation shall be possible only if the consumer exercises their right of withdrawal. Authorized reseller cannot cancel the order on the grounds of the unavailability of stock. |
| If there is a time or stock limit for a price to be valid, this time limit and the stock amount shall be indicated clearly in the relevant section of the authorized reseller’s platform store. |
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:
- The list of resellers who have entered into an agreement with BSH to sell on the platforms
- Names of platforms on which sales are made by authorized resellers
- The number of sales of each product group made from the platforms declared by the reseller and their ratio to total sales
- Titles, contact information, agreement execution and expiration dates, and the reason for the termination of the agreement of the resellers whose agreements for sales on the platform have ceased
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;
- Miele Elektrikli Aletler Dış Ticaret ve Pazarlama Ltd. Şti. (dated 10.11.2022 and numbered 22-51/753-312),
- Türk Philips Ticaret A.Ş. and its distributors (dated 05.08.2021 numbered 21-37/524-258),
- Arçelik Pazarlama A.Ş. and Vestel Ticaret A.Ş. (dated 02.01.2020 and numbered 20-01/13-5)
- Arnica Pazarlama A.Ş. (dated 30.09.2021 and numbered 21-46/671-335)
- Groupe SEB İstanbul Ev Aletleri Ticaret A.Ş. and İlk Adım Dayanıklı Tüketim Malları Elektronik Tekstil İnşaat ve İletişim Hiz. San. Tic. Ltd. Şti. (dated 04.03.2021 and numbered 21-11/154-63)
[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.