Tuesday, 23 August 2005 22:25
The New Block Exemption Notice for Motor Vehicles is Being Awaited Impatiently
Clauses 85, 86 and 90 of the Roman Agreement, which sets out the basic tenets of the European Community, aim to achieve economic benefit ultimately due to the fact that the same clauses alllow consumers to substitute within the European Common Market, thus increasing product and service competitiveness within associated members.
As a result of the Ankara Agreement, dated 1963 and an additional protocol, dated 1971, Turkey have committed to erect a Competition Commission in accordance with Clauses 85,86 and 90 of the Roman Agreement in order to develop European Community relations and be parallel with their applications. In accordance with the stated commitment, Turkey finalized its mission on the 13th December 1994 and started to apply Law, numbered 4054 “Consumer and Competition Protection”. In March, 27 months after the law came into play, the Competition Commission which became active on the 5th November 1997 was formed.
As a result of the Ankara Agreement, dated 1963 and an additional protocol, dated 1971, Turkey have committed to erect a Competition Commission in accordance with Clauses 85,86 and 90 of the Roman Agreement in order to develop European Community relations and be parallel with their applications. In accordance with the stated commitment, Turkey finalized its mission on the 13th December 1994 and started to apply Law, numbered 4054 “Consumer and Competition Protection”. In March, 27 months after the law came into play, the Competition Commission which became active on the 5th November 1997 was formed.
Law, numbered 4054 “Consumer and Competition Protetion” aims to prevent; any agreements which inhibit, distort or limit competitiveness between entities, dominant firms abusing the market and any agreements or components that may possibly create or give reason for domination. However, in situations where agreements result in economical and technical innovations in favour of the consumer, Clause 5 of the Law is contrary to Clause 4, Block Exemption rights are legitimised. These exemptions are as follows:
0 Exclusive distribution (1997/3)
0 Exclusive purchasing (1997/4)
0 The distribution and servicing of motor vehicles (1998/3)
0 Franchising (1998/7)
It has been established that even though the block exemption notices stated above have been prepared as a result of meticulous studies in practice, some of the horizontal agreements fall outside of the scope. The Board decided hereon to keep Notice 1998/3 Notice separate and enforce Notice 2002/2 in relation to vertical agreements as of the 9th August 2003.
Clause 2, Article 4 of Notice 2002/2 openly states that agreements subject to a greater block exemption scope will not be able to benefit from Notice 2002/2. Therefore, agreements in regards to the distribution and servicing of motor vehicles benefit from and fall into the scope of Notice 1998/3 not Notice 2002/2. In order for a distirubution and servicing motor vehicle agreement to be examined under Notice 1998/3 it is mandatory for the dealer to have sales, servicing and spare parts facilities under the same roof. Entities unable to satisfy this mandatory requirement, who are party to agreements which are uncharacteristic within the industry, thus are subject to Notice 2002/2.
There are over 50 importer companies and 15 manufacturers with different sales figures and geographical customers in the Turkish motor vehicle industry. Quality services can only be maintained if operational profitability is achieved. In order to achieve this companies; approach 3S plaza type companies in sales orientated areas, recommended by their European, Japanese or American partners, who accomodate sales, servicing and spare part operations within the structure of their company, or incorporate 2S type companies to provide service and spare parts facilities to customers based in less customer orientated areas. Problems may occur for organisations that accomodate both 3S plaza type and 2S service and spare part type companies as 3S plaza type entities fall under the scope of Notice 1998/3 whereas 2S entities fall under Notice 2002/2.
The Board have prepared a new notice with regards to the distribution and servicing of motor vehicles in order to eliminate the negativity stated above and increase post-sales services competition and have presented it accordingly for the approval of those concerned. Suppliers are able to urge their dealers to provide service facilities as a result of the current selective and exclusivity criterias within the scope of Notice 1998/3. Once the draft notice is accepted sales and service/spare parts companies established within entities will be separated and it will become mandatory for suppliers to choose either selective or exclusivity models with regards to distribution.
The draft notice will also state changes in accordance with adjustments and applications in force with the block exemption legislation 1440/2002 published in Europe as well as elaborating definitions of original and spare parts which are unclear in Notice 1998/3.
Both consumers and embassadors of the industry are impatiently awaiting the impact of the new notice which has yet to come into force.
0 Exclusive distribution (1997/3)
0 Exclusive purchasing (1997/4)
0 The distribution and servicing of motor vehicles (1998/3)
0 Franchising (1998/7)
It has been established that even though the block exemption notices stated above have been prepared as a result of meticulous studies in practice, some of the horizontal agreements fall outside of the scope. The Board decided hereon to keep Notice 1998/3 Notice separate and enforce Notice 2002/2 in relation to vertical agreements as of the 9th August 2003.
Clause 2, Article 4 of Notice 2002/2 openly states that agreements subject to a greater block exemption scope will not be able to benefit from Notice 2002/2. Therefore, agreements in regards to the distribution and servicing of motor vehicles benefit from and fall into the scope of Notice 1998/3 not Notice 2002/2. In order for a distirubution and servicing motor vehicle agreement to be examined under Notice 1998/3 it is mandatory for the dealer to have sales, servicing and spare parts facilities under the same roof. Entities unable to satisfy this mandatory requirement, who are party to agreements which are uncharacteristic within the industry, thus are subject to Notice 2002/2.
There are over 50 importer companies and 15 manufacturers with different sales figures and geographical customers in the Turkish motor vehicle industry. Quality services can only be maintained if operational profitability is achieved. In order to achieve this companies; approach 3S plaza type companies in sales orientated areas, recommended by their European, Japanese or American partners, who accomodate sales, servicing and spare part operations within the structure of their company, or incorporate 2S type companies to provide service and spare parts facilities to customers based in less customer orientated areas. Problems may occur for organisations that accomodate both 3S plaza type and 2S service and spare part type companies as 3S plaza type entities fall under the scope of Notice 1998/3 whereas 2S entities fall under Notice 2002/2.
The Board have prepared a new notice with regards to the distribution and servicing of motor vehicles in order to eliminate the negativity stated above and increase post-sales services competition and have presented it accordingly for the approval of those concerned. Suppliers are able to urge their dealers to provide service facilities as a result of the current selective and exclusivity criterias within the scope of Notice 1998/3. Once the draft notice is accepted sales and service/spare parts companies established within entities will be separated and it will become mandatory for suppliers to choose either selective or exclusivity models with regards to distribution.
The draft notice will also state changes in accordance with adjustments and applications in force with the block exemption legislation 1440/2002 published in Europe as well as elaborating definitions of original and spare parts which are unclear in Notice 1998/3.
Both consumers and embassadors of the industry are impatiently awaiting the impact of the new notice which has yet to come into force.
