Price Regulation and Discounts under Competition Law

Pricing strategies are at the heart of any business, but they are also a minefield under Turkish Competition Law. Two main areas attract scrutiny: Resale Price Maintenance (RPM) for suppliers, and Rebate Systems for dominant firms.

1. Resale Price Maintenance (RPM)

RPM occurs when a supplier (e.g., a brand owner) dictates the price at which the distributor or retailer must sell the product to the final consumer.

• Fixed Prices: Illegal. “You must sell at 100 TL.”
• Minimum Prices: Illegal. “You cannot sell below 90 TL.”
• Maximum Prices: Legal. “You cannot sell above 120 TL” (protects consumers).
• Recommended Prices: Legal, provided there is no pressure or incentive to enforce them as fixed prices.

Strict Enforcement: The Turkish Competition Board treats RPM as a severe violation (by object) equal to cartels. Recent heavy fines on FMCG companies and supermarkets highlight this zero-tolerance policy. Computer algorithms monitoring retailer prices can be evidence of RPM enforcement.

2. Rebate Systems (Discounts)

Offering discounts is generally pro-competitive. However, for a Dominant Firm (Article 6), certain rebate structures can be abusive:

• Fidelity Rebates: Giving a discount only if the customer buys all or most of their needs from the dominant supplier. This locks in the customer and excludes competitors (“Exclusionary Conduct”).
• Target Rebates: Individualized retroactive targets that make it economically irrational for the customer to switch suppliers near the end of the year (“Suction effect”).

Safe Discounts

• Quantity Rebates: Discounts based strictly on volume (cost savings) are generally legal.
• Standardized Terms: Transparent discount policies applied equally to all.

Conclusion

Suppliers must ensure they only “recommend” prices. Dominant firms must carefully design their discount schemes to ensure they don’t foreclose the market to competitors.

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