Competition Law and distribution agreements

The production is followed by the distribution activity, which aim the penetration of the products to the relevant market and starch them with resailers of different steps and with the consumers. The producer will choose, depending to its necessities, character of the product and specialties of the relevant market, from two different distribution models. The first of these models will be the distribution conducted by the dependant dealers such as bagmen, commercial respresentants. And the second concerns a distribution channel composed of independent distributors. This second model may be organized in a form of exclusive, selective or simple distribution channel, inconformity with the commercial concerns of the producer. Each step of this second model is composed of distribution agreements concluded between the producer and distributor/distributors of different levels.. Distribution agreements are vertical agreements. Thus they are concluded between the undertakings active on different levels of production or distribution, in other words, between non-competing undertakings. The effects of distribution agreements on competition are under examination for the last 30 years. These agreements contain positive effects, such as rationalization on distribution and marketing of the products, rise of inter-brand competition, and prevention of free-riding. However, due to the territorial and clientele restrictions they usually contain, distribution agreements they also cause negative effects on competition, such as restriction of intra-brand competition, market repartition, strengthening of barrer to entry. The distribution agreements, due to their bilateral character, are subject to detailed regulations and watched very closely by the competitions authorities. Infact the individual and block exemption applied to the distribution agreements stands on the analyse of the bilateral character of the said agreements on the competition. The agreement will benefit from exemption, if its positive effects overbalance its negative effects.According to a general definition, distribution channels are established by the producer or provider undertaking and systematized in accordance with their priorities and demands. In classic distribution relation, the producer or the provider who owns the product was the party holding economic power. However, a new distribution model has been showed up for the last 10-15 years, namely ?modern distribution?, ?grand distribution? veya ?fast moving consumer goods? (FMCG). In this new model, the role of foundator has been played by the distributors or distribution groups who offers the products for sale in their shops of different concepts and types. Different from classic distribution, in grand distribution the distributors buys different sorts of consumer products (such as food, clothing, cleaning ie.) from the providers under the most favorable conditions they can, and provide to the consumers the best price and best service quality (publicity and promotion, inside or outside sample product distribution, tasting possibilities, confortable and wide shopping space, expansive distribution channel, parking, transfer services). In this new type, instead of producer, the distributor or distributor groups hold economic power and force impose to the producer ad providers their commercial conditions. Such distribution model continue its expansion in food retailing market due to the rise of urbanization and change in consumer habits. The rise of FMCG market causes anti-competitive effects for the traditional retailers and also for the producer and providers. These problems have been tried to be resolved in French and German competition law with ?relatively powerfull undertaking? ?abuse of buyer power? and ?prohibition of loss selling? theories. In our country, the legislation works on the FMCG market is started at the beginning of the years 2000. Actually, there are three law project recalled in commissions of the Turkish Grand National Assembly.