As e-commerce has become the dominant channel for product distribution across virtually every sector, the question of whether and how a supplier can restrict its resellers from selling online has become one of the most practically significant issues in Turkish competition law. For foreign businesses that supply or distribute products in Turkey through dealer, distributor, or reseller networks, understanding the legal limits on online sales restrictions is not optional. It is a compliance requirement with direct financial consequences.
Turkish competition law prohibits vertical agreements that restrict passive sales, including online sales. The Turkish Competition Board (Rekabet Kurulu) has issued a series of decisions confirming that clauses in distribution agreements that prevent, limit, or make it financially disadvantageous for resellers to sell via the internet constitute anti-competitive restrictions, outside the scope of the applicable block exemption, and subject to administrative fines.
This article explains the legal framework, sets out the distinction between active and passive sales, and analyses the Board's most recent decision on this topic, the Kadioglu decision of 27 December 2024 (decision no. 24-56/1246-534), as well as two earlier landmark decisions, to draw out the practical implications for foreign businesses operating in Turkey.
The primary legal basis for the regulation of vertical agreements in Turkey is Article 4 of the Law on the Protection of Competition (Law No. 4054), which prohibits agreements, concerted practices, and decisions between undertakings that have as their object or effect the prevention, restriction, or distortion of competition in the Turkish market. Article 4 is broadly equivalent to Article 101(1) of the Treaty on the Functioning of the European Union (TFEU), and the Turkish Competition Board explicitly applies EU competition law principles, including European Commission guidelines and case law, as a reference point in its analysis.
Vertical agreements, including distribution agreements between suppliers and resellers, are not automatically prohibited under Article 4. They may qualify for a block exemption under Communique No. 2002/2 on the Block Exemption for Vertical Agreements, which is Turkey's equivalent of the EU's Vertical Block Exemption Regulation. An agreement that falls within the block exemption is deemed compatible with Turkish competition law and exempt from the prohibition in Article 4, without requiring individual assessment. However, certain provisions automatically exclude an agreement from the block exemption, regardless of the parties' market shares. These are known as hardcore restrictions.
Article 4(b) of the Communique lists the hardcore restrictions that exclude an agreement from the block exemption. These include restrictions on passive sales into territories or to customer groups allocated to other resellers. Online sales are treated as passive sales by default, and restrictions on online sales therefore fall within this category. The consequence of a hardcore restriction is significant: the entire vertical agreement loses the benefit of the block exemption, not just the offending clause. The agreement then falls to be assessed under the general prohibition of Article 4, and if it cannot satisfy the conditions for individual exemption under Article 5 of Law No. 4054, it is unlawful.
The distinction between active and passive sales is fundamental to understanding what a supplier can and cannot restrict in a distribution agreement. This distinction is set out in the EU Commission's 2010 Guidelines on Vertical Restraints, which the Turkish Competition Board explicitly applies as a reference.
Active sales are sales to customers in a territory or customer group allocated to another reseller, made through the active efforts of the selling reseller. Active selling involves the reseller proactively targeting customers outside its own territory. Examples include:
Suppliers may, under certain conditions, restrict active sales by resellers into territories or customer groups exclusively allocated to other resellers. This is generally permissible within the block exemption framework.
Passive sales are sales to customers who approach the reseller of their own initiative, without the reseller having actively targeted them. Examples include:
Online sales, by their fundamental nature, constitute passive sales. When a customer navigates to a reseller's website and makes a purchase, that is a passive transaction, because the customer approached the seller. For this reason, restricting a reseller's ability to sell via its own website is a restriction on passive sales.
| Type of Sales | Definition | Supplier May Restrict? |
|---|---|---|
| Active sales | Reseller proactively targets customers in another reseller's allocated territory | Yes, within block exemption limits |
| Passive sales (including online) | Customer initiates contact or purchase, including via the reseller's website | No. The restriction is a hardcore violation outside the block exemption |
The treatment of online sales as passive sales is firmly established in both EU and Turkish competition law. The EU Commission's Vertical Guidelines confirm that every distributor must be free to use the internet to sell its products. A supplier that restricts a reseller's use of its own website for sales is restricting passive sales, which constitutes a hardcore restriction. The Turkish Competition Board has applied this principle consistently across its decisions, treating a supplier's restriction on dealers or buyers selling through their own websites as a form of passive sales restriction.
The prohibition on restricting passive sales, including online sales, does not mean that suppliers have no ability to set standards for how their products are sold online. Paragraph 28 of the Vertical Guidelines, as incorporated into Turkish practice, makes clear that a supplier may impose certain conditions on the use of the internet as a sales channel, in the same way that it may impose conditions on the operation of physical retail outlets. Permissible conditions include:
The critical requirement is that any such conditions must be objectively justifiable, proportionate, and no more restrictive of competition than necessary to achieve a legitimate objective, such as protecting the brand's quality image or ensuring an appropriate standard of customer service. Conditions that effectively make online sales commercially unviable, or that place online selling resellers at a systematic financial disadvantage compared to those who sell only through physical outlets, will be treated as indirect restrictions on passive sales.
The Turkish Competition Board's decision of 27 December 2024 in the Kadioglu case (decision no. 24-56/1246-534) is the most recent and most instructive decision on online sales restrictions. The case involved Kadioglu Kirtasiye Pazarlama Ticaret A.S., a stationery and office supplies distributor, and its reseller network.
The Board examined the reseller agreement between Kadioglu and its dealers, which included a clause giving Kadioglu the right to temporarily suspend or completely terminate the operation of its web environment at any time, without bearing any responsibility toward its web members or third parties for doing so. In practice, this gave Kadioglu the right to suspend or shut down the online sales system used by its resellers, including the XML system, at any time and without liability. The XML system was a product information and order management system that facilitated online sales by resellers and was widely used by the dealer network.
The Board found that the combination of the contractual clause and the actual use of the XML system constituted a restriction on online sales, on two main grounds.
First, indirect financial disadvantage to online selling resellers. The Board found that Kadioglu did not provide the same level of discounts and support to resellers who sold online as it did to those who did not. In the Board's assessment, although Kadioglu did not completely restrict internet sales, its failure to extend the same support and discounts to online selling resellers placed them at a disadvantage compared to those who did not sell online, weakened their motivation to use the online channel, and therefore amounted to an indirect restriction of online sales.
Second, the XML system as an instrument of restriction. The Board found that the ability to shut down the XML system, which was the primary technical tool enabling resellers to conduct online sales, was itself a form of online sales restriction. In the Board's view, for a distributor that had opened the XML system to its dealers to then close it to those who sold online, exposing them to difficulties and costs they would not face with physical sales, was in itself a type of internet sales restriction.
The Board confirmed that the online sales restrictions found constituted passive sales restrictions within the meaning of Article 4(b) of Communique No. 2002/2, and therefore fell outside the block exemption. The Board then assessed whether the restrictions could qualify for individual exemption under Article 5 of Law No. 4054, which requires that the agreement:
The Board found that the restrictions failed the individual exemption test, particularly on the indispensability criterion. Referencing the EU Commission's approach, the Board noted that where a supplier has concerns about brand image or free riding, there are less restrictive alternatives available, such as imposing quality standards on online sales channels, rather than restricting or dis-incentivizing online sales altogether. As a result, the Board found a violation of Article 4 and imposed an administrative fine on Kadioglu.
The Kadioglu decision follows a line of Board decisions confirming the same principles. Two earlier decisions are particularly instructive for foreign businesses.
Yatas Yatak ve Yorgan Sanayi Ticaret A.S. included a clause in its reseller agreements prohibiting dealers, without the company's written permission, from displaying, marketing, or selling the relevant goods at any location other than the store, including in virtual environments and over the internet, even temporarily, and from changing or relocating the store without permission. The Board found that this explicit internet sales prohibition failed both the block exemption and individual exemption tests. However, given the undertaking's limited market power and the correspondingly limited competitive impact of the restriction, the Board chose to issue a compliance recommendation rather than a fine, requiring Yatas to remove the infringing provision.
Yatsan Sunger ve Yatak Sanayi Ticaret Ltd. Sti. included a clause in its reseller agreements for Tempur branded products stating that internet sales of those products would under no circumstances be permitted. The Board found that this constituted both a block exemption excluding hardcore restriction and a restriction on competition under Article 4. Importantly, the Board noted that the prohibition on online sales restricted consumers' freedom of choice and could not be considered legally legitimate. A fine was imposed.
Selective distribution is a distribution model in which a supplier selects its resellers based on defined qualitative or quantitative criteria, and restricts resale to non-selected distributors. It is commonly used for luxury goods, branded products, and technically complex merchandise. Under Article 4(c) of Communique No. 2002/2, restrictions on both active and passive sales by members of a selective distribution system to end users are treated as hardcore restrictions. This means that even within a selective distribution system, a supplier cannot prevent its authorized resellers from making passive sales to end users, including sales made through the resellers' own websites.
The principle is straightforward: the existence of a selective distribution system does not give the supplier the right to restrict online sales by authorized resellers. Authorized resellers in a selective distribution system may sell to any end user in any territory, including through the internet, unless the restriction satisfies the narrow conditions that would apply outside selective distribution.
For foreign businesses that supply or distribute products in Turkey through dealer or reseller networks, the following compliance framework is essential.
| Issue | Risk | Compliant Approach |
|---|---|---|
| Clause prohibiting online sales by resellers | Hardcore restriction: loss of block exemption, Article 4 violation, administrative fine | Remove the clause entirely. Resellers must be free to sell online. |
| Clause giving supplier right to suspend the online sales platform or tools used by resellers | Treated as an indirect online sales restriction (Kadioglu approach) | Remove, or limit to narrow, objectively justified circumstances that do not discourage online sales |
| Discounts or support withheld from resellers who sell online | Treated as an indirect online sales restriction creating systematic disadvantage (Kadioglu approach) | Apply discount and support structures consistently regardless of whether the reseller sells online or offline |
| Quality requirements for the reseller's website | Permissible if objective, proportionate, and no more restrictive than necessary | Draft quality standards carefully, tied to verifiable criteria such as product presentation, service levels, and after-sales support |
| Prohibition on selling on specific third party platforms (for example, online marketplaces) | Permitted in certain circumstances where objective justification exists; a contested area in EU and Turkish practice | Obtain specific legal advice before including; ensure objective justification is documented |
| Selective distribution network with internet sales restrictions | Same rules apply as general distribution: passive online sales cannot be restricted | Authorized resellers must remain free to sell online to end users in any territory |
Where the Turkish Competition Board finds a violation of Article 4 arising from an online sales restriction in a vertical agreement, the consequences may include:
9.1. Can a supplier in Turkey prohibit its resellers from selling online?
No. A supplier cannot prohibit resellers from selling online through the resellers' own websites. Such a prohibition is a restriction on passive sales, which is a hardcore restriction under Communique No. 2002/2. It falls outside the block exemption and constitutes a violation of Article 4 of Law No. 4054, regardless of the parties' market shares.
9.2. Are online sales always classified as passive sales?
Online sales made through a reseller's own website in response to customer visits are treated as passive sales, since the customer approaches the reseller rather than the other way around. Targeted online advertising specifically directed at customers in another reseller's allocated territory may be treated as active sales, which can be more easily restricted. The distinction turns on who initiates the contact.
9.3. Can a supplier impose quality standards on how its resellers sell online?
Yes, subject to conditions. A supplier may require its resellers to maintain a website that meets certain quality and presentation standards, to provide defined levels of customer service to online buyers, and to comply with specific service conditions. These conditions must be objectively justified, proportionate, and no more restrictive of online sales than necessary. Conditions that in practice make online sales commercially unviable will be treated as indirect restrictions on passive sales.
9.4. What if the supplier does not prohibit online sales outright but makes it financially less attractive to sell online?
This is exactly what the Kadioglu decision addressed. The Board held that providing lower discounts or less support to resellers who sell online, compared to those who do not, constitutes an indirect restriction on online sales. A systematic financial disadvantage for online selling resellers is treated as equivalent to a direct prohibition.
9.5. Can a supplier prevent its resellers from selling on third party online marketplaces?
This is a contested area in both EU and Turkish competition law. Restrictions on selling through specific third party platforms may be permissible where the supplier can demonstrate objective justification, provided the reseller is still free to sell through its own website. The assessment is fact specific and depends on the nature of the restriction, the supplier's market position, and the availability of alternative online channels. Specific legal advice should be obtained before including such restrictions in distribution agreements.
9.6. My company distributes products in Turkey through a selective distribution network. Do the same rules on online sales restrictions apply?
Yes. Under Article 4(c) of Communique No. 2002/2, restrictions on both active and passive sales by members of a selective distribution system to end users are hardcore restrictions. Even within a selective distribution system, authorized resellers must be free to make passive sales to end users, including sales through their own websites, in any territory. The existence of a selective distribution network does not create additional flexibility to restrict online sales.
9.7. Our existing distribution agreements contain a clause restricting internet sales. What should we do?
You should remove the infringing clause as promptly as possible and renegotiate the relevant agreements with your resellers. If you wish to impose any conditions on the manner in which resellers sell online, those conditions should be reviewed by competition law counsel to ensure they are compliant. Waiting for the Board to identify the issue is significantly more costly than proactive compliance: fines can reach 10% of Turkish annual turnover, and all existing agreements may need to be revised in any event.
The Turkish Competition Board's approach to online sales restrictions is clear, consistent, and aligned with EU competition law. Online sales are passive sales. Restricting them, whether directly through contract clauses, indirectly through financial disincentives, or technically through the withdrawal of tools that enable online selling, is a hardcore restriction that falls outside the block exemption and constitutes a violation of Turkish competition law.
The Kadioglu decision of December 2024, together with the earlier Yatas and Yatsan decisions, establishes that the Board will scrutinize not only explicit contractual prohibitions but also indirect mechanisms that systematically discourage online sales. For foreign businesses that distribute through reseller networks in Turkey, this is a compliance area that requires active legal review.
At Bayraktar Attorneys, we advise foreign businesses on Turkish competition law compliance, including the review and drafting of distribution agreements, selective distribution systems, and e-commerce compliance frameworks. If you have questions about whether your existing distribution arrangements comply with Turkish competition law, please contact us.
