Vertical Agreements and Block Exemptions in Turkish Competition Law

If you are a foreign supplier setting up distribution in Türkiye, your distribution, supply or franchise contract is a "vertical agreement" under Turkish competition law, and it is lawful only if it stays inside the safe harbour created by the Block Exemption Communiqué on Vertical Agreements (Communiqué No. 2002/2) or can be justified individually under Law No. 4054. The single biggest trap is resale price maintenance — telling your distributor what minimum price to charge — which is a hardcore restriction that strips the whole agreement of the block exemption and exposes you to investigation by the Turkish Competition Authority, even though you have no office in Türkiye. This guide explains how Turkish law assesses vertical agreements, what the block exemption protects, where the market-share ceiling sits, and the specific clauses a foreign supplier must avoid before signing a Turkish distribution contract.

What Counts as a Vertical Agreement Under Turkish Law

A vertical agreement (dikey anlaşma) is a contract between two or more businesses that each operate at a different level of the production or distribution chain — for example, a supplier and its distributor, a manufacturer and its wholesaler, or a franchisor and its franchisee. That is what makes it "vertical": the parties are not competitors selling the same thing side by side, they are links in the same chain. Agreements between competitors at the same level (two rival manufacturers, say) are "horizontal" and carry much higher cartel risk; this guide is about the vertical kind.

Vertical agreements are governed by Law No. 4054 on the Protection of Competition (Rekabetin Korunması Hakkında Kanun, Law No. 4054), enforced by the Turkish Competition Authority (Rekabet Kurumu) in Ankara and its decision-making organ, the Competition Board (Rekabet Kurulu). Two articles do the work:

• Article 4 prohibits agreements between undertakings that have the object or effect of preventing, restricting or distorting competition in a Turkish market. On its face this can catch vertical restraints such as exclusivity, territorial limits and price terms.
• Article 5 allows an individual exemption where an agreement produces benefits (improving production or distribution, or technical and economic progress) that are shared with consumers, without going further than necessary and without eliminating competition.

The everyday distribution contracts that foreign suppliers use — exclusive distribution, selective distribution, supply, agency and franchise — almost all contain restraints that could fall under Article 4. The mechanism that keeps them lawful in practice is the block exemption, explained next.

The Block Exemption: A Safe Harbour for Distribution Agreements

The Block Exemption Communiqué on Vertical Agreements (Communiqué No. 2002/2) (Dikey Anlaşmalara İlişkin Grup Muafiyeti Tebliği No. 2002/2) creates a safe harbour. Instead of clearing your distribution contract one by one, the Communiqué says that a whole "group" (block) of vertical agreements is automatically exempt from the Article 4 prohibition — provided two conditions are met:

1. The supplier's market share in the relevant market stays at or below the threshold set by the Communiqué; and
2. The agreement contains no hardcore restriction (the listed "black" clauses — chiefly resale price maintenance and absolute territorial protection, covered below).

If both conditions hold, you do not need to apply to the Authority for anything. The agreement is presumed lawful, and you and your distributor can rely on it. This is what makes the block exemption so valuable to a foreign supplier: it converts an uncertain, case-by-case competition assessment into a clear checklist you can build your contract around.

The market-share threshold (kept qualitative)

The safe harbour depends on the supplier's market share staying at or below a defined ceiling in the relevant product and geographic market. The Communiqué was amended (by a later Communiqué) to lower that ceiling and bring Türkiye into line with the EU approach, so the figure that applied in earlier years is no longer current. Because the exact percentage is the load-bearing number in any block-exemption analysis — and because defining the "relevant market" against which it is measured is itself a technical exercise — you should confirm the current threshold and how it applies to your product with Turkish competition counsel before relying on it. The practical point for planning is simple: the larger your share of the Turkish market, the more likely you sit outside the automatic safe harbour.

What happens if you fall outside it

Falling outside the block exemption — because your market share is above the ceiling, or because a clause is hardcore — does not make the agreement automatically illegal. It removes the automatic presumption of legality and shifts the burden onto you to show that the agreement still qualifies for an individual exemption under Article 5: real efficiency gains, a fair share passed to consumers, no restrictions beyond what is necessary, and no elimination of competition. That is a fact-heavy, document-heavy assessment, and it is far better to design the contract to stay inside the safe harbour from the start.

Resale Price Maintenance (RPM): The Restriction That Breaks Everything

Resale price maintenance (RPM) means a supplier fixing, or otherwise imposing, the price at which its distributor resells the goods — most dangerously, a minimum resale price or a fixed resale price. In Turkish competition law this is a hardcore restriction: one of the listed clauses that, if present, removes the entire agreement from the block exemption, not just the offending term.

This is the single most common and most costly mistake foreign suppliers make. Suppliers naturally want to protect their brand positioning and stop discounting that cheapens the product. But in Türkiye the Competition Board enforces against RPM strictly, and it looks past the contract wording to how the relationship actually works in practice. The risk arises not only from an express "you must sell at X" clause, but from any mechanism that pressures a distributor to hold a price:

• Monitoring distributor or online prices and chasing those who discount;
• Threatening to cut supply, delay deliveries or end the relationship over price;
• Withholding rebates, bonuses or marketing support unless a price is maintained;
• "Recommended" prices that are policed as if they were mandatory.

Because RPM is judged on conduct, not just clauses, a clean contract is not enough on its own. How your sales team communicates with distributors — emails, messaging, price lists, incentive structures — is exactly what the Authority examines, and it can establish an infringement even where the written agreement looks compliant.

Exclusivity and Territorial Restrictions: Where the Line Sits

Not every restriction is forbidden. Vertical agreements routinely contain exclusivity and territorial terms, and many of them are permitted inside the block exemption. The line runs between restraints that channel distribution efficiently and restraints that wall off the market entirely.

What is generally permitted

• Exclusive distribution — appointing one distributor for a defined territory or customer group, and agreeing not to appoint others there.
• Exclusive purchasing / single branding — requiring the distributor to buy the contract goods only from you (non-compete obligations are allowed within limits on their scope and duration).
• Selective distribution — supplying only distributors who meet defined quality criteria, common for technical, luxury or brand-sensitive products.
• Restricting your exclusive distributor's active sales (proactive marketing, outbound targeting) into a territory you have reserved for yourself or allocated exclusively to another distributor.

What crosses into hardcore territory

The danger is absolute territorial protection. While you can restrict a distributor's active selling into another's territory, you generally cannot ban its passive sales — unsolicited orders that customers place on their own initiative, including from other regions or across borders. A clause that stops a Turkish distributor from fulfilling an order simply because the customer is located elsewhere, or that partitions the market so completely that goods cannot flow between territories, can be treated as a hardcore restriction — with the same fatal effect as RPM: the whole agreement loses the block exemption.

Franchise Agreements as Vertical Agreements

Franchise agreements sit squarely within the vertical-agreement framework. A franchise bundles a licence of a brand, know-how and a business format with ongoing supply and support, and the Block Exemption Communiqué can cover it in the same way it covers distribution — subject to the same market-share ceiling and the same hardcore prohibitions.

Franchising does, however, justify restraints that would look aggressive in a plain distribution contract. To protect the integrity of the network and the know-how transferred to franchisees, Turkish competition practice (following the EU model) generally tolerates obligations such as:

• Quality standards and uniform presentation across the network;
• Sourcing key inputs from the franchisor or approved suppliers, where this is needed to protect identity and reputation;
• Confidentiality and non-compete obligations tied to the protection of transferred know-how, within reasonable limits.

The hard limits are unchanged: a franchisor still cannot fix the minimum resale price the franchisee charges (recommended or maximum prices only, genuinely non-binding), and still cannot impose absolute territorial protection that blocks passive sales. Franchisors expanding into Türkiye should have the franchise package reviewed against both competition law and the surrounding commercial-law and intellectual-property requirements before rolling it out.

What a Foreign Supplier Setting Up Turkish Distribution Must Avoid

If you are appointing a Turkish distributor, franchisee or agent from abroad, the competition-law work belongs at the drafting stage, not after a complaint lands. The recurring mistakes are predictable, and almost all of them flow from reusing a contract written for another country. Before you sign, pressure-test the agreement against this list:

1. No minimum or fixed resale prices — in the contract or in how your sales team actually manages distributors. Keep any "recommended" price genuinely optional and unenforced.
2. No bans on passive sales — do not block your distributor from fulfilling unsolicited orders, including online and cross-border. Restrict active marketing only, and only where the territory is genuinely reserved.
3. Check your market share against the current block-exemption ceiling for the relevant Turkish market; if you may be above it, plan the Article 5 individual-exemption justification in advance.
4. Keep non-compete and exclusivity terms within scope and duration limits rather than open-ended.
5. Watch the conduct, not just the clauses — price-monitoring tools, rebate conditions and threats to cut supply can create an RPM finding even with a clean contract.
6. Localise the contract — a distribution agreement lifted from an EU or US template often carries territorial and pricing terms that do not map onto the current Turkish Communiqué.

How Lexin Legal helps

Lexin Legal reviews and drafts distribution, supply, agency and franchise agreements for foreign suppliers entering the Turkish market — testing each agreement against the current block-exemption ceiling and hardcore-restriction list, structuring exclusivity and territorial terms that hold up, and advising on RPM and online-sales risk before a contract is signed. Where an agreement may fall outside the safe harbour, we assess the Article 5 individual-exemption route, and we represent clients in proceedings before the Competition Board. For a contract review or a competition-law assessment of your Turkish distribution plan, see our Commercial Contract practice or contact our Istanbul office.

Frequently asked questions