The Turkish Competition Board (“Board”) has initiated an investigation against a large number of undertakings active in the manufacturing and distribution of tyres in the automotive sector, on the grounds that Article 4 of the Law on the Protection of Competition No. 4054 (“Law No. 4054”) had been infringed.
This informational note summarises the scope of the investigation and the alleged infringements examined, the settlement processes, the decisions rendered at the conclusion of the investigation, and the key points that undertakings operating in the sector should bear in mind.
1. Scope of the Investigation and Alleged Infringements
The investigation examined the following alleged anticompetitive conducts:
- Concerted practices concerning price movements among competitors
- Exchange of competitively sensitive information
- Resale price maintenance imposed on dealers
- Territorial and customer restrictions imposed on dealers
- Discriminatory practices against dealers
- Non-compete obligations in agreements concluded with dealers
- Exchange of information restricting competition in labour markets and no-poach agreements
In respect of these alleged infringements, the investigation covered both horizontal relationships between manufacturers/suppliers and vertical relationships between manufacturers/suppliers and their dealers. The inclusion within the investigation’s scope of the allegations concerning information exchange in labour markets and no-poach agreements is noteworthy as it signals that the Board has broadened its scrutiny in this area.
2. Settlement Process and Fines Imposed
During the investigation, seven undertakings submitted settlement applications. Following the conclusion of the settlement processes, an aggregate administrative fine of TRY 497,091,986.13 was imposed on those undertakings, as set out in the table below.
3. Decisions Rendered at the Conclusion of the Investigation
As a result of the investigation, an aggregate administrative fine of TRY 3,136,843,185.19 was imposed on the undertakings that had not applied for settlement.
A noteworthy aspect of the decision is that, in respect of certain allegations, the Board resolved not to impose administrative fines on some undertakings:
- In the case of Prometeon Turkey Endüstriyel ve Ticari Lastikler AŞ, insufficient evidence was found to establish the alleged concerted practice in relation to price movements.
- No infringement was found against Brisa Bridgestone Sabancı Lastik Sanayi ve Ticaret AŞ and Hankook Lastikleri AŞ in respect of the allegations of discriminatory practices against dealers.
- Brisa Bridgestone Sabancı Lastik Sanayi ve Ticaret AŞ benefited from the block exemption under Communiqué No. 2017/3 on Group Exemptions for Vertical Agreements in the Motor Vehicles Sector in respect of the non-compete obligation it applied in the forklift tyre market.
- In the case of Cengizler Oto Lastik and Gürlas Oto Lastik, although an infringement was established, no administrative fine was imposed as the infringement was time-barred under Article 20 of the Misdemeanours Law No. 5326.
4. Structural Remedies Imposed
Pursuant to Article 9 of Law No. 4054, in addition to administrative fines, the Board also imposed structural remedies aimed at preventing the recurrence of the infringements and at restoring competition in the tyre retreading market.
a. Watermark obligation: All price lists and price-related announcements to be sent to dealers (including price increases, discounts, premiums, rebates, sales conditions, financial terms, and incentive schemes) must include, by way of a watermark, a code that individually identifies each dealer in a distinctive, visible manner spread across the page.
b. Portal/interface obligation: Announcements relating to prices and their constituent elements must not be communicated by bulk transmission methods (such as group messages or emails) but must instead be made on an individual basis through a dedicated portal/interface accessible to each dealer using their own unique username and password, through which transactions between the manufacturer/supplier and the dealer are conducted. Where no such portal currently exists, one must be established immediately.
c. Contractual measures: Existing and future agreements between manufacturers/suppliers and dealers must be amended to include deterrent provisions, comprising contractual penalties and rights of termination for cause, prohibiting and discouraging the sharing of future-oriented and/or prospectively effective information relating to prices and their constituent elements communicated to dealers with competing manufacturers/suppliers and/or their dealers.
5. Key Points for Undertakings Active in the Sector
The investigation decision is of direct relevance not only to undertakings active in the manufacturing and distribution of tyres, but also to sectors characterised by similar vertical and horizontal relationships. In light of the foregoing, undertakings operating in these markets, and in particular those active in the tyre sector, should take note of the following considerations:
a. The manner in which price announcements are communicated to dealers should be reviewed, and bulk-communication methods such as group messages and emails should be replaced with dealer-specific, individualised channels of communication.
b. The sharing of information concerning prices, costs, and premiums at industry meetings, trade associations, and sector body events should be reviewed from a competition law perspective.
c. Existing provisions in dealer agreements relating to territorial and customer restrictions, resale price maintenance, and non-compete clauses should be assessed in light of the applicable legislation.
d. Recruitment processes, remuneration policies, and human resources practices should be reviewed for competition law risks arising in the context of labour markets.
Conclusion
This investigation is significant in Turkish competition law across a number of dimensions. The aggregate administrative fines, amounting to approximately TRY 497 million under the settlement procedure and approximately TRY 3.1 billion at the conclusion of the investigation, totalling in excess of TRY 3.6 billion, demonstrate the Board’s commitment to its deterrent enforcement policy in respect of competition infringements conducted through distribution channels, particularly in the automotive and ancillary industries. The application of the settlement procedure in this context also constitutes an important precedent for undertakings formulating their strategy in the course of investigation proceedings.
Undertakings active both in the tyre sector and in sectors with comparable distribution structures are strongly advised to ensure full compliance with competition law, to identify existing areas of risk, and to implement preventive measures without delay.
This informational note is prepared for general information purposes only and does not constitute legal advice. Should you require legal advice regarding the investigation process or your compliance obligations, please do not hesitate to contact us.
