New Block Exemption Communiqué on Specialization Agreements Published.

The Block Exemption Communiqué on Specialization Agreements (Communiqué No: 2025/2) ("New Communiqué") has been published in the Official Gazette on June 26, 2025, and has entered into force. With the enactment of the New Communiqué, the Former Communiqué No: 2013/3 has been repealed. This article briefly explains the significance of specialization agreements in competition law practice and highlights the main changes introduced by the New Communiqué.

1.      Specialization Agreements in General Terms[1]

Agreements concerning specialization in production can enable undertakings to focus on the manufacture of specific products, thereby allowing them to operate more efficiently. These agreements contribute to the improvement of goods' production and distribution, leading to the availability of goods at lower prices. Specialization agreements can also result in similar advancements in the provision of services. Consequently, it is highly probable that consumers will also benefit from these agreements, provided that effective competition is not restricted. Specialization agreements are generally formed in three ways.

Unilateral specialization agreements: One of the parties actively operating in the same product market agrees to completely or partially cease the production of certain goods and to procure these goods from a competing undertaking, while the competing undertaking agrees to produce or supply those goods.

Reciprocal specialization agreements: Two or more parties actively operating in the same product market mutually agree to completely or partially cease the production of certain and different products. They then agree to purchase these products from the counter-party that has undertaken to produce and supply them.

Joint production agreements: Two or more parties, either actively operating in the same product market or seeking to enter a product market through a specialization agreement, agree to jointly produce specific products.

2.      Key Changes Introduced by the New Communiqué

Changes in Definitions

The New Communiqué has updated some fundamental definitions, ensuring terminological consistency. While the definitions in the Former Communiqué and the New Communiqué are largely similar, two significant changes stand out:

Definition of Potential Competitor: In the Former Communiqué, a “potential competitor” defined as an "undertaking likely to enter the market within three years by incurring the necessary conversion costs, should there be a small but permanent increase in prices in the absence of a specialization agreement."The New Communiqué has amended this definition to an "undertaking likely to enter the market within a period not exceeding three years by incurring the necessary costs or making additional investments, based on serious indications that are not based merely on abstract probability."

This revision removes the previous criteria based on a hypothetical small price increase, instead adopting an assessment based on serious and concrete indicators. This change ensures that the concept of a potential competitor is evaluated more realistically and evidence-based, emphasizing serious indications of market entry rather than merely theoretical possibilities.

This adaptation is considered to aim at ensuring terminological consistency with EU practice and rendering the assessment of potential competition more accurate.

Definition of Distribution: In the Former Communiqué, distribution defined as the activity encompassing the sale of goods and the provision of services. The New Communiqué broadens the concept of distribution to include "the activity of selling and supplying specialized products to customers, including the commercialization of these products." This explicit inclusion of commercialization (marketing) activities within the scope of the definition ensures that all stages of bringing specialized products to market are covered.

Changes in Market Share Thresholds

The New Communiqué introduces a change in the market share threshold that determines the maximum aggregate market share parties may hold for a specialization agreement to benefit from a block exemption. The New Communiqué significantly tightens this threshold. The total market share limit, which was 25% under the Former Communiqué, has been reduced to 20% with the New Communiqué. In other words, if the parties' aggregate share in any relevant market concerning the products or services subject to the specialization agreement exceeds 20%, the block exemption will no longer apply.

The New Communiqué introduces a specific provision for situations where the product subject to specialization is an essential input in a downstream market. If the product covered by the specialization agreement is used as an essential input in the production of goods in a downstream market where the parties also operate, then for the block exemption to apply, the parties' aggregate market share must not exceed 20% in both the relevant upstream market (the specialization product market) and the downstream market. While the Former Communiqué's Article 7, concerning market share thresholds, indirectly considered downstream markets within its "relevant market" definition, the New Communiqué's Article 7 explicitly addresses the market share threshold for downstream markets in a separate sub-paragraph.

The New Communiqué also introduces changes to the calculation of market share. Under the Former Communiqué, market share was calculated based solely on the sales data of the agreement parties from the preceding calendar year. However, the New Communiqué stipulates that if the previous year's data does not accurately reflect the parties' market position, the average of the preceding three calendar years may be used as the basis for calculation.

Duration of Exemption Upon Exceeding Market Share Threshold

Regarding the duration of the exemption if the market share, initially below the threshold, subsequently exceeds it, the Former Communiqué provided for a two-tiered period when the 25% threshold was surpassed. Accordingly, if the parties' aggregate market share exceeded 25% but did not exceed 30%, the exemption continued to be valid for two years following the first year of excess. If the market share also exceeded 30%, the exemption was maintained for only one year. Furthermore, the Former Communiqué stipulated that these periods could not be combined consecutively, and an extension exceeding a total of two years was not permissible.

The New Communiqué, simplified this complex structure, making it more predictable. If a specialization agreement, initially below the 20% market share threshold, subsequently exceeds this threshold, the exemption will remain valid for two years following the first year the threshold is exceeded. Separate durations for different threshold levels (such as the 25%–30% range) are no longer stipulated. By establishing a single extension period (two years), the exemption regime has been streamlined.

Transition Period and Entry into Force

The New Communiqué, effective from its date of entry into force (May 26, 2025), provides a specific transition period for agreements that had gained exemption under the Former Communiqué but do not meet the new conditions. This provision is critically important for ensuring compliance with the revised rules and preventing loss of rights.

According to Provisional Article 1, existing agreements benefiting from a block exemption under the former Communiqué No: 2013/3, but which do not satisfy the conditions of the New Communiqué, must be brought into compliance with the New Communiqué within two years following the year of its entry into force (i.e., by the end of 2027 at the latest). During this two-year transition period, the prohibition set forth in Article 4 of the Law will not apply to these agreements.

3.      Conclusion

The New Communiqué No: 2025/2 has significantly revised the block exemption regime for specialization agreements. The reduction of the market share threshold from 25% to 20% and the tightening of related calculation rules have narrowed the scope of the exemption. Conversely, definitions and terminology have been updated to enhance alignment with EU legislation, and ambiguities encountered in practice have been addressed. It's clear that the innovations introduced by the New Communiqué will have practical implications. Existing specialization agreements should be re-evaluated in light of the New Communiqué. If current agreements do not meet the new thresholds and conditions, the necessary amendments must be made within the specified transition period.

[1] This section is sourced from the Competition Terminology Glossary published by the Turkish Competition Authority.