Author: Merve Bakırcı
Introduction
Selective distribution systems refer to a type of distribution system in which suppliers commit to selling the contracted goods or services directly or indirectly to distributors selected based on specified criteria, while the distributors commit not to sell the said goods or services to unauthorized distributors.[1] These systems limit the number of authorized distributors and their resale activities, and therefore inherently contain provisions that restrict competition. Therefore, competitive concerns such as reduction of intra-brand competition, closure of the market to certain types of distributors and facilitation of cooperation that restricts competition between suppliers or distributors, may arise. On the other hand, under certain conditions, these restrictions in selective distribution systems can benefit from the group exemption introduced by the Block Exemption Communiqué on Vertical Agreements No. 2002/2 ("Communiqué No. 2002/2").
Characteristics of Selective Distribution Systems
Suppliers may prefer selective distribution systems to ensure that certain criteria regarding the qualifications of sales personnel or the location of the sales points are met in order to establish and maintain brand image. Indeed, it is presumed that the sale of products classified as luxury or products that are technologically complex or require technical knowledge (durable consumer goods, cosmetic products, jewelry, motor vehicles, etc.) in places that meet certain standards and by individuals with technical knowledge will have a positive impact on consumer demand.
