BRISA BRIDGESTONE SABANCI LASTIK SANAYI VE TICARET The Turkish Competition Board ("Board") published its reasoned decision1 concerning the preliminary investigation initiated upon the complaints received from Samuklar Motorlu Araçlar Madencilik Ins. San. ve Tic. Ltd. Sti.'s ("Samuklar"), which had been a dealer for
In its application, Samuklar alleged that (i) Brisa engaged in discriminatory behavior against Samuklar by way of applying different discount rates, terms, support on investments, expenses, advertisement and marketing etc., (ii) dealers were only able to make certain discounts in their sales, (iii) only certain dealers determined by Brisa were allowed to make sales to fleet customers, and thus, Brisa prevented other dealers from selling to fleet customers, and (iv) certain tire coating companies sold their tire coating products solely to Brisa and Brisa offers relevant products, as the sole supplier in the market. Samuklar claimed that Brisa abused its dominant position by way of preventing Samuklar from continuing its commercial activities through discriminatory practices in favor of one of its other dealers, Alkam Lojistik Otomotiv San. ve Tic.
In its assessment on the allegations, the Board first set forth that the mere existence of a vertical agreement between Alkam and Brisa containing more favorable terms compared to Samuklar's agreement with Brisa would not be sufficient to characterize Brisa's conduct as discriminatory under Article 4 of Law No. 4054 on the Protection of Competition ("Law No. 4054"), which prohibits anti-competitive agreements between undertakings. It was stated that there should also be a meeting of minds between the undertakings (in this case, Brisa and Alkam) to discriminate against another undertaking (e.g., Samuklar). The Board concluded that there are no findings proving such meeting of minds.
The Board further added that Article 6 of Law No. 4054, which prohibits the abuse of dominant position, would only be violated in case "different conditions are put forward for the same or equivalent rights or obligations" with respect to customers with an "equal status." To determine whether Samuklar and Alkam had equal status, the Board examined the purchase amounts of Samuklar and Alkam from Brisa, along with the data on other dealers in the same region and concluded that Alkam purchased and paid significantly more than Samuklar. Therefore, the difference between the purchase volumes of dealers is considered by the Board as a factor indicating the absence of equal status between the customers in terms of competition law. In addition, the Board determined that discount rates, premiums and investment support provided by Brisa to dealers differ depending on the purchase volume and the purchase amount. It also underlined that while Alkam operates as a wholesale dealer, Samuklar had been operating as a retail dealer, which is considered by the Board as the underlying reason for Brisa's offering different conditions to Samuklar and Alkam. Accordingly, the Board stated that wholesale dealers purchase larger quantities of products and thus, need more support due to storage and logistics expenses, as well as the relatively higher risks that they face in collection of revenues compared to the retailer dealers. Consequently, the Board held that Samuklar and Alkam do not have an equal status in the eyes of Brisa and noted that even under the assumption that Samuklar and Alkam do have an equal status, there is no evidence proving that Brisa engaged in discriminatory behavior against its dealers and that the Sales Promotion System announced by Brisa annually was applied in a non-discriminatory manner.
The Board also evaluated the allegation that dealers were only allowed to make a certain level of discount, in light of the Communiqué No. 2017/3 on Block Exemption on Vertical Agreements in the Motor Vehicles Sector ("Communiqué No. 2017/3"), since the tires constitute "spare parts" for motor vehicles. The Board underlined that dealers should be free to determine their resale prices as per Article 6(a) of Communiqué No. 2017/3 and determining the maximum discount a dealer can apply to recommended prices may indirectly lead to resale price maintenance. That being said, by examining the findings obtained during the preliminary investigation, including Brisa's dealership agreements and price circulars, the Board concluded that Brisa only shares recommended resale prices and does not dictate any discount on its dealers and that there is no evidence to support the presence of direct or indirect resale price maintenance.
As for the allegation that only certain dealers are allowed to make sales to fleet customers, the Board examined Brisa's dealership agreements and the data on dealers' sales to fleet customers, and found no indication of a restriction.
On the other hand, the Board analyzed the allegation concerning Brisa being the sole supplier in coated tires (since certain tire coating companies allegedly sell only to Brisa), in terms of exclusive supply obligations. However, it stated that companies referred by Samuklar in its allegation are dealers which purchase coating products, coating machines and other materials etc. from Brisa and produce coated tires. The Board found that, contrary to the allegations, relevant dealers do not sell any coated tires to Brisa and the only commercial relationship on that front relates to Brisa's supply of coating materials and relevant services to these companies and that Brisa does not purchase or distribute coated tires. Accordingly, the Board concluded that the complainant's allegation does not reflect the reality as to Brisa's activities related to coating and cannot be evaluated within the scope of exclusive supply obligations.
The Board also reviewed whether Brisa is the single supplier for coating materials. In this regard, the Board examined Brisa's franchise agreements with its dealers. The Board held that the clause requiring dealers to purchase coating raw materials only from authorized points is reasonable for maintaining a certain level of standard in the franchise system. The Board also underlined that relevant franchise agreements do not include any restriction on customers and/or regions. Accordingly, the Board found the complainant's allegations are baseless and concluded that Brisa does not have a dominant position in coating materials.
As a result, the Board decided not to initiate a full-fledged investigation against Brisa. The Board's Brisa decision is noteworthy as it reinforces the Board's approach towards analysis of vertical relationships as well as discriminatory behaviors under competition law.
This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in
Footnote
1. The Board's Brisa decision dated
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.
Mr Gönenç Gürkaynak
ELIG Gürkaynak Attorneys-at-Law
Citlenbik Sok. No: 12
Yıldız Mahallesi 34349
Beşiktaş
E-mail: gonenc.gurkaynak@elig.com
URL: www.elig.com/
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