With the development of e-commerce marketplaces, price comparison engines, and multi-channel distribution networks, price competition among retail sellers has achieved a highly transparent and instantly traceable structure. In this process, many suppliers in the position of manufacturers, importers, or main distributors may resort to interfering with downstream sellers’ independent pricing decisions with the motives of protecting brand image, securing the profit margins of traditional dealers who invest in physical stores, or preventing price cutting on the internet.
Directives, pressure, and de facto sanctions frequently encountered in the market such as “Immediately increase your price on the internet to the recommended level,” “If you do not stop the campaign, I will not ship your new orders,” “We will cut off the supply of goods to the seller who disrupts the price,” or “You cannot open a listing below this floor price on the marketplace” constitute the prohibition of Resale Price Maintenance (RPM), which is considered one of the most severe vertical restraints under the Act on the Protection of Competition No. 4054.
1. What is Resale Price Maintenance (RPM) and What are the Types of Pricing?
Resale price maintenance is the direct or indirect determination or control of the fixed, minimum (floor), or maximum (ceiling) sale price or profit margin to be applied by a buyer (wholesaler, dealer, authorized seller, or marketplace store) operating as an independent commercial actor in the downstream market when selling products to third parties, by a supplier (manufacturer/distributor) located at the upstream level of the production or distribution chain.
One of the fundamental principles of competition law is the transfer of ownership and the principle of commercial autonomy. From the moment the ownership of a good passes to the buyer, the authority to determine at what price that product will be sold to the final consumer, at what rate a discount will be applied, and in which campaigns it will be included belongs entirely to the buyer undertaking. The supplier’s restriction of this discretion is deemed directly unlawful under Article 4 of Law No. 4054.
| Type of Pricing | Definition and Scope | Legal Status and Block Exemption |
| Fixed and Floor Price (Minimum RPM) | Restrictions that impose on the buyer not to fall below a certain price or to sell at a single fixed price. | Prohibited as a rule. It is considered a hardcore restriction that eliminates intra-brand competition; it cannot benefit from a block exemption. |
| Maximum (Ceiling) Price (Maximum RPM) | The upper limit that prevents the buyer from exceeding the determined price ceiling. | Conditionally permitted. Provided that it does not de facto turn into a fixed price, it falls within the scope of exemption as it protects the consumer. |
| Recommended Resale Price (RRP) | The supplier’s presentation of an indicative list of an advisory nature to the buyer. | Permitted. The buyer must be completely free to deviate from the price, and no pressure/sanctions must be applied to those who do not comply. |
2. Economic Justification: Double Marginalization, Free-Riding, and Cartel Risks
The issue of resale price maintenance is evaluated in competition economics through two fundamental theories:
A. Double Marginalization Fallacy and the Role of Maximum Price
In economic theory, double marginalization is the situation where, in a vertical distribution chain, both the manufacturer and the distributor in a monopoly position independently add their own profit margins, resulting in the final retail price exceeding even the monopoly level and total economic welfare decreasing.
Important Economic Distinction: The problem of double marginalization cannot be solved through minimum (floor) price maintenance; because minimum price does not drive down margins, on the contrary, it creates a floor. This problem can only be eliminated through maximum price maintenance (Maximum RPM) where the supplier sets a ceiling price for the retailer, or through vertical integration where the parties merge under a single roof.
B. Free-Riding and Supplier Defenses
Supplier undertakings mostly defend minimum RPM practices with the “Free-Riding” argument. In qualified or complex products, consumers benefiting free of charge from pre-sales promotional services provided by dealers who open physical stores, set up showrooms, and employ trained personnel, and then purchasing the product from discounted internet sellers who offer no services, may dampen the investment incentive of the initial dealer. Suppliers claim that by setting a minimum price, they prevent this free-riding and protect brand reputation.
C. Strict Approach of Competition Authorities and “By Object Infringement”
The Competition Board does not accept defenses such as free-riding as an automatic ground for exemption. This is because minimum RPM completely halts price competition at the retail level, leading consumers to pay higher prices, enables manufacturer or distributor cartels to be easily monitored through retail prices, and excludes efficient e-commerce businesses that wish to sell cheaply with low profit margins from the market. For this reason, in Turkish competition law practice, minimum RPM is evaluated as an overt infringement restricting competition directly by object, without requiring proof of concrete market effects.
3. Distinction Between Recommended Price and Prohibited RPM and Minimum Advertised Price (MAP) Restrictions
The transmission of recommended resale price lists to dealers by manufacturers does not constitute an infringement on its own. The infringement arises when sanctions, threats, discount deductions, or bonus conditions are appended behind this recommendation, thereby de facto transforming the list into a mandatory floor price:
| Lawful Recommended Price (RRP) | Prohibited Price Intervention (RPM) |
| The dealer is completely free to go below the recommended price. | Warnings, notices, or threats of supply cut-offs are applied to the dealer who cuts the price. |
| Price lists explicitly include the statement “It is of an advisory/recommended nature.” | The note “Compliance is mandatory / Cannot be sold below” is appended to price lists. |
| Compliance with the price is not tied to a specific reward or penalty. | Turnover bonuses or additional discounts are conditioned upon compliance with the recommended price. |
Minimum Advertised Price (MAP) and Marketplace Prohibitions
Minimum Advertised Price (MAP) policies, whereby suppliers state that dealers may sell at whatever price they wish in their physical stores but cannot post advertisements below a certain floor price on e-commerce marketplaces, are deemed in Turkish competition law practice as a direct indirect interference with the buyer’s pricing freedom and are, as a rule, considered an infringement by object within the scope of RPM.
Furthermore, suppliers completely or de facto preventing their authorized sellers from selling over the internet or via marketplaces constitutes a passive sales restriction that severely damages intra-brand competition and excludes the agreement from the scope of block exemption.
4. Indirect Price Intervention Methods and Hub-and-Spoke Cartels
In Competition Board audits, de facto and indirect intervention mechanisms developed are directly penalized even if there is no explicit price provision in the contract:
- Halting Supply of Goods (Supply Cut-off): Non-shipment of new orders, delaying shipments, or closing current accounts of the seller who runs campaigns or cuts prices on marketplaces.
- Cancellation of Discounts and Bonuses: Revocation of periodic discounts, turnover bonuses, or maturities earned by the dealer who fails to comply with price instructions, or tying bonus entitlements to the condition of compliance with the recommended price.
- Algorithmic and Software-Based Price Monitoring: Instant scanning of sellers’ internet prices with marketplace crawling bots, and exerting pressure on dealers who lower prices via WhatsApp or phone saying “Immediately pull the price up.”
| Hub-and-Spoke Element | Method of Operation and Manifestation in the Market | Legal Nature |
| Central Undertaking (Hub) | The supplier/manufacturer collects forward-looking price, stock, and campaign information from retailers. | It is in the position of coordinator and information carrier of the horizontal cartel. |
| Spoke Undertakings (Spokes) | Competing retailers simultaneously raise their prices based on competitor price information received from the supplier. | They are considered parties to a horizontal price agreement under the guise of a vertical relationship. |
| Market Outcome | Retailers equalize prices upwards through the supplier without sitting at the table directly. | It is directly considered a hardcore horizontal cartel under Article 4 of Law No. 4054. |
5. Precedent Decisions of the Competition Board and Council of State
In the settled case law of the Competition Board and judicial bodies, interventions targeting dealers’ pricing independence have been set forth with clear criteria:
- Competition Board Decision dated 23.06.2011 and numbered 11-39/838-262 (Anadolu Elektronik): The Board characterized interference with dealers’ selling prices as a hardcore restriction directly eliminating intra-brand competition and increasing consumer prices; ruled that Article 4 of the Law was violated without conducting a concrete market effect analysis because the act restricted competition by object.
- Competition Board Decision dated 07.11.2016 and numbered 16-37/628-279 (Aral Oyun / Vestel and Philips): Monitoring retailers selling at discounted prices below the recommended price through the system, warning them, and threatening dealers who do not abandon discounts with deprivation of installation/warranty services were deemed direct RPM violations, resulting in high administrative fines.
- Competition Board Decision dated 05.10.2001 and numbered 01-47/483-120 (Doğuş Otomotiv): Checking whether dealers complied with recommended prices through customer surveys and audits, and curbing profit margins of non-compliant dealers, was deemed an explicit competition infringement.
- Competition Board Decision dated 21.02.2007 and numbered 07-15/142-45 (Alarko): Determining resale prices in authorized service contracts and monitoring prices through an established intranet network were deemed infringements; it was stated that the relevant line of business having a small share in the company’s total turnover would not grant exemption from the penalty.
- Competition Board Decision dated 23.09.2010 and numbered 10-60/1251-469 (Yatsan): Imposing discount caps on dealers and restricting internet sales were examined; considering the dynamic structure of the market, an investigation was not opened, but an official warning opinion was sent pursuant to Article 9/3 of the Law to terminate the practices.
- Competition Board Decision dated 09.06.2016 and numbered 16-20/340-155 (3M): It was determined that distributors’ final sale prices were interfered with, and an administrative fine was imposed on the undertaking following judicial review stages.
- Council of State 13th Chamber Decision dated 06.07.2021, Docket No. 2021/969, Decision No. 2021/2654: While acknowledging that suppliers can also implement RPM through indirect methods, the Council of State emphasized that for an infringement to exist, it must be proven with clear, definitive, and concrete evidence that the supplier’s pressure or incentive is potent enough to de facto vitiate buyers’ independent price determination freedom.
- Competition Board Decision dated 28.10.2021 and numbered 21-53/747-360 (Chain Supermarkets / Hub-and-Spoke): It was established that coordinating future prices among retailers via suppliers constituted a hub-and-spoke cartel and an overt competition infringement.
6. Legal and Administrative Sanctions: Nullity, Penalty Reduction, and 3-Fold Damages Lawsuits
For suppliers carrying out price interference and sellers suffering harm therefrom, the process proceeds across three fundamental legal dimensions:
A. Contractual Invalidity and Absolute Nullity (Law No. 4054 Art. 56)
Pursuant to Article 56 of Law No. 4054, vertical agreements contrary to Article 4 of the Law and price-fixing provisions in contracts are absolutely null and void (butlan). The supplier cannot demand that the dealer comply with the price based on these invalid clauses; cannot terminate the contract for just cause on the grounds of non-compliance with the price, enforce contractual penalties, or liquidate letter of guarantees.
B. Administrative Fines and Settlement (25% Discount)
The Competition Board may impose administrative fines of up to 10% of the annual gross revenue (turnover) generated at the end of the previous financial year on undertakings determined to have fixed resale prices. Company executives who played a decisive role in the infringement are also subject to personal monetary fines. However, if undertakings accept the existence of the infringement during the investigation process and proceed with settlement, a reduction of up to 25% may be applied to the administrative fine to be imposed.
C. 3-Fold Damages Regime for Aggrieved Sellers (Law No. 4054 Art. 57-58)
Sellers whose goods are wrongfully cut off, whose orders are cancelled, or whose dealership is terminated on the grounds of not complying with price instructions may file a damages lawsuit before the Commercial Court of First Instance:
| Law No. 4054 Art. 58 Damages Element | Legal Regulation and Implementation Principles |
| Actual Loss Assessment Base (Option 1) | The difference between the price paid by the injured buyer and the price it would have paid had competition not been restricted. |
| Infringer’s Profit Assessment Base (Option 2) | The amount of profit that the supplier committing the infringement obtained or is likely to obtain from this act. |
| Judge’s Discretionary Power | Upon request, the judge may award compensation up to three times one of these assessment bases (it is not automatic). |
| Cause-of-Action Condition and Ease of Proof | Mandatory commercial pre-litigation mediation is required; a finalized Competition Board decision constitutes conclusive evidence in the lawsuit. |
7. Practical Compliance Rules for Companies to Protect Against Penalty Risks
The overwhelming majority of evidence obtained during on-site inspections by Competition Authority experts originates from e-mail and WhatsApp correspondence of field personnel and regional managers. To protect companies from corporate risks, the following steps must be taken:
- Clean Up Correspondence Language: Directive language such as “Fix the price,” “Immediately remove the discount,” “The seller disrupting the market cannot get goods” must be completely purged from intra-company correspondence and dealer communications. The statement “It is of a recommended nature and the final selling price is entirely at the dealer’s sole discretion” must be added as a boilerplate note to all price lists.
- Do Not Make Price Tracking Software an Intervention Trigger: E-commerce price tracking bots should only be used for market analysis purposes; a chain of calling the dealer based on software reports to exert pressure saying “Increase your price” must not be established.
- Do Not Condition Bonuses on Price Terms: Turnover bonuses, maturities, and discount entitlements must under no circumstances be conditioned upon compliance with recommended retail prices; they must be based solely on price-independent objective criteria such as sales volume or payment performance.
- Shut Down Tip-off Lines: Mechanisms where dealers report one another saying “They are selling cheaply online” must not be operated; incoming price complaints must be answered corporately with “Our sellers are completely independent in determining their prices.”
8. Frequently Asked Questions (FAQ)
Is sending recommended retail selling prices to dealers completely prohibited?
No, sharing price lists of an advisory/recommended nature is permitted by legislation. What is prohibited is transforming this recommendation into a de facto mandatory floor price through sanctions, supply cut-offs, discount cancellations, or bonus conditions.
What happens if the clause “Dealer cannot go below recommended price” is included in the contract?
Pursuant to Law No. 4054 Art. 4 and Art. 56, this clause is legally null and void ab initio (absolute nullity). The manufacturer cannot impose contractual penalties or terminate the dealership based on this clause; on the contrary, this clause is considered direct evidence of infringement against the company during Board audits.
Does interfering only with online marketplace selling prices constitute an infringement?
Yes. Even if physical store prices are not interfered with, setting floor prices solely for online sales, prohibiting e-commerce discounts, or preventing listings below a certain price (MAP) is directly deemed a resale price maintenance infringement.
Is writing “Raise the price immediately” over WhatsApp considered official evidence?
Yes. WhatsApp correspondence, e-mails, and invoice records obtained by Competition Authority experts from company computers and phones during on-site inspections are used directly as binding evidence in investigations.
What should an e-commerce seller whose supply of goods has been wrongfully halted do?
The seller can file a formal application with the Competition Authority by documenting correspondence demonstrating price interference and order cancellations, and simultaneously file a 3-fold damages lawsuit before the Commercial Court of First Instance to claim compensation for material damages incurred or lost profits.
You may obtain professional legal consultancy to avoid forfeiture of rights in all your legal processes regarding resale price maintenance claims, compliance of dealership and distribution agreements with competition law, hub-and-spoke cartels, Competition Authority investigation processes, and 3-fold damages lawsuits.
2. For the Competition Law (RPM) Article:
Importance of an Expert Attorney in Competition Law and RPM Disputes
Resale price maintenance (RPM) and vertical restraints are technical areas carrying high risks for companies due to administrative fines of up to 10% on turnover imposed by the Competition Authority, scanning of company digital data during on-site inspections, and 3-fold damages lawsuits filed in commercial courts. For supplier undertakings, drafting distribution agreements in compliance with competition legislation, auditing field correspondence language, and strategically managing a 25% settlement discount in a potential investigation is only possible through corporate counsel from an attorney specialized in competition law.
For e-commerce sellers and dealers whose orders are cancelled or whose supply of goods is cut off for not complying with price pressure; filing e-mails, WhatsApp, and invoice records as legal evidence, structuring the Competition Authority complaint, and claiming lost profits based on economic data in a 3-fold damages lawsuit to be filed under Articles 57-58 of Law No. 4054 requires professional legal representation support.