Category: Turkiye

Balcioglu Selcuk Ardiyok Keki Attorney Partnership has advised Anatolia B.V., a subsidiary of agricultural exporter Tiryaki Agro Foods Industry, on the sale of 25.58% shareholding in Sunrise Foods International Inc. to Hassad Holdings Canada. Dentons advised Tiryaki on English law matters, while Herguner Bilgen Ozeke advised Hassad on the deal.

Tiryaki, which was founded in 1965, specializes in processing agricultural products. According to BASEAK, “Tiryaki expanded its operations in Turkey and around the world with production and warehousing activities in 20 facilities, importing from 25 countries and exporting to 80 countries.”

Sunrise, which was founded in 1997, is a Canadian supplier of organic grains and oilseeds.

BASEAK’s team consisted of Managing Partner Galip Selcuk, Counsel Yasemin Saris, Senior Associates Yasemin Hotan Tanyol and Arzu Inoglu, and Associates Aysegul Sifaver, Sena Mutlu, and Ceren Isiklar.

Dentons’ team was led by Istanbul-based Partner Nadia Cansun and included Toronto-based Partner Andrew Bourns and Associate Caitlin Choi.

A recent law proposal which provides significant changes to the Law on Regulation of Broadcasts via Internet and Prevention of Crimes Committed through Such Broadcasts (“Law No. 5651”) has been published on Grand National Assembly of Turkey’s (“TBMM”) website yesterday (“Proposal”). The Proposal mainly introduces obligations on social network providers with over 1 million daily access from Turkey.

Key Obligations Introduced by the Proposal

(i) Social Network Provider Definition

The Proposal defines social network provider as real persons or legal entities that enable users to create, view or share content such as text, images, sound, location for social interaction purposes on the internet medium.

(ii) Obligation to Appoint a Representative

Proposal obliges foreign based social network provider (“SNPs”) which secures more than one million daily access from Turkey to assign at least one person to be its representative in Turkey who will be capable of meeting the requests, notifications or notices that will be sent by the Information Communications and Technologies Authority (“ICTA”), Access Providers Union (“APU”), judicial or administrative authorities, and responding to the applications which will be made by individuals within the scope of the Law No 5651, and to fulfill other duties therein. In case the representative is a real person, this person must be a Turkish citizen.

SNPs must include the contact information of the representative in an easily visible and directly accessible manner on their website. SNPs are also obliged to report this person’s identity and contact information to the ICTA.

The Proposal suggests a 5-tiered sanction mechanism that would apply respectively in case the SNP continue to violate this obligation within the given periods: (i) administrative monetary fine of 10 (ten) million Turkish Liras, (ii) additional administrative monetary fine of 30 (thirty) million Turkish Liras (in case the obligation is not fulfilled within 30 days), (iii) prohibition for the resident tax payers to place advertisements on the social network provider (in case the obligation is not fulfilled within 30 days as of the second monetary fine), (iv) bandwidth throttling up to 50% (in case the obligation is not fulfilled within 3 months as of the advertisement ban decision) and (v) bandwidth throttling up to 90% (in case the obligation is not fulfilled within 30 days as of the first bandwidth throttling).

(iii) 48 Hours to Respond to Individual Requests

Pursuant to the Proposal, SNPs which secure more than one million daily access from Turkey, are obliged to provide a positive or negative response to the applications made with regard to the content that falls under the scope of Article 9 and 9/A of Law No. 5651 within 48 (forty eight) hours starting from the submission of the applications. In addition, negative responses should be given with the reasoning.

Administrative fine of 5 (five) million Turkish Liras might be imposed on SNPs which fail to comply with this obligation.

(iv) 24 Hours to Enforce Court Orders

Proposal provides that SNPs will be liable for all of the damages arising from failure to remove or block access to content which is deemed unlawful with a judge or court order, within twenty four (24) hours.

(v) Reporting Obligation

Proposal requires domestic or foreign based SNPs which secure more than one million daily accesses from Turkey notify ICTA semi-annually on the reports in Turkish language including statistical and categorical information (i) regarding implementation of removal of content and/or access ban decisions and (ii) regarding the applications that fall within the scope of the applications based on Article 9 and Article 9/A of the Law No. 5651.

The Proposal also requires publication of the applications based on Article 9 and Article 9/A of the Law No. 5651 on SNP’s own website by redacting the personal data in these reports.

The first report that will be prepared per the foregoing provision would be notified ICTA and will be published on SNP’s own website in January 2021.

Administrative fine of 10 (ten) million Turkish Liras might be imposed on SNPs which fail to comply with this obligation.

(vi) Data Localization

The Proposal introduces data localization requirements and obliges domestic or foreign based SNPs which secure more than one million daily accesses from Turkey to take the necessary measures to keep the personal data of the users in Turkey, in Turkey.

(vii) RTBF Reference

The Proposal also allows judge to decide on not associating the applicant’s (whose personal rights are violated due to the content broadcasted on the internet) name with the websites subject to the decision. Per the Proposal, the decision will also indicate which search engines will be notified by the APU.

(viii) Notification Procedure

The Proposal enables notification of the administrative monetary fine decisions through electronic means to the foreign counter-parts and indicates that this notice (i) has the capacity of the notification regulated under the Notification Law with number 7201 and (ii) will be deemed to have been made at the end of the fifth day following the notification date.

(ix) Provisional Article

The Proposal provides a transition period with regards to the obligation to respond to individual requests within 48 hours and states that SNPs shall complete the necessary work to fulfil their obligations on this obligation within 3 (three) months.

The Proposal is currently submitted before the relevant commission for discussions. Once the Proposal is discussed and accepted by the TBMM, it will be sent to the President for review. Unless the President objects to the publication of the law and returns it to the TBMM, the President will then publish the law in the Official Gazette within fifteen (15) days. According to the current version of the Proposal, the proposed provisions will be effective immediately as of their publication.

By Gonenc Gurkaynak, Partner, Ceren Yildiz, Counsel, and Burak Yesilaltay, Associate, ELIG Gürkaynak Attorneys-at-Law

Turunc and Cooley have advised US-based private equity fund Riverwood Capital on its investment in Insider, a growth management platform for digital marketers. Riverwood led the USD 32 million investment round, which included participation from Sequoia, Wamda, and Endeavor Catalyst. 

Turunc’s team included Partners Kerem Turunc and Noyan Turunc, Counsel Esin Camlibel, and Associates Gizem Ginel, Beste Yildizili Ergul, Naz Esen, and Ecem Kutukculer.

Cooley’s team was led by Singapore-based Partner Matthew Bartus and included Associates Charles Guo and Miae Woo.

The Turunc Law Firm has advised a group of private investors led by Cetin Yilmaz on their acquisition of MCI’s majority stake in online travel agency Tatilbudur from Polish private equity fund MCI. The Yalcin Babalioglu Kemahli Attorney Partnership advised MCI on the deal, while Akol Law advised shareholder Is Girisim. Tatilbudur was reportedly advised by Yondem Yigit Uclertopragi.

Yilmaz was, in essence, repurchasing the stake he and other investors sold to MCI back in 2015. Is Girisim increased its stake in the company as a result of the transaction.

The Turunc team was led by Partner Kerem Turunc and included Partner Noyan Turunc and lawyers Esin Camlibel, Naz Esen, Beste Yildizili Ergul, and Ecem Kutukculer.

The YBK team was led by Partner Alican Babalioglu and included Counsel Inci Alaloglu-Cetin.

Akol’s team was led by Partner Tugce Tatari.

The Turunc Law Firm, working alongside Travers Smith, has represented Micro Focus in its acquisition of Atar Labs from founders Burak Dayioglu, Murat Tora, and Gokhan Say and investor Diffusion Capital Partners. The sellers were represented by Caliskan Okkan Toker.

Micro Focus is a large British multinational software and information technology company that’s part of the FTSE 250 Index. Atar Labs is a Turkish company that builds security orchestration, automation, and response platforms.

The Turunc team was led by Partner Kerem Turunc and included Partner Noyan Turunc and lawyers Esin Camlibel, Gizem Gunel, Naz Esen, Beste Yildizili Ergul, Ecem Kutukculer, Nursel Dere, and Nazli Bilhan.

The Travers Smith team was led by London-based Partner Mohammed Senouci.

The Caliskan Okkan Toker team consisted of Partner Enver Sezer Caliskan and Senior Associate Hazal Boduroglu.

Cakmak has advised Landesbank Baden-Wurttemberg and KfW IPEX-Bank GmbH on the financing of 132 MW Phase 2 investment in Lodos Karaburun Elektrik Uretim A.S’s wind farm in the Izmir province of Turkey.

Cakmak had advised the same lenders on the financing of the initial 120 MW Phase 1 investment in 2012. In Phase 2 the wind farm increased its capacity to 252 MW, making it one of Turkey’s largest.

The financing included a Euler-Hermes backed senior loan facility of approximately USD 95 million, and a mezzanine loan facility of EUR 35 million.

Cakmak’s team was led by Partners Mesut Cakmak and Mustafa Durakoglu, working with Senior Associate Erdem Basgul and other associates from the firm’s Ankara and İstanbul offices.

BTS & Partners has advised QNBeyond Ventures, the venture arm of QNB Finansbank, on an unspecified investment in cloud-based accounting software and financial application platform Kolaybi. The Uysal Law Firm reportedly advised Kolaybi’s shareholders, including its founders and HUB Venture Capital.

Kolaybi is valued at TRY 13.7 million. The transaction value was not disclosed.

The BTS & Partners team was led by Senior Counsel Okan Arican and Senior Associate Ecem Gunduz and included Associates Yeşeren Sozuer, Selen Zengin, and Burcu Cinar.

The long-lasting bill of Law on The Act on the Protection of Competition (The Competition Act) was ratified by Turkish Parliement on 06.16.2020. This amendment is the most extensive reform of antitrust enforcement system since the enactment of the Competition Act in 1994. The most significant changes are explained below:

1. Legal Uncertainties Regarding Exemption Regime Has Been Clarified:

The exemption regime has been already changed in the 2005 amendment and the application for exemption has been turned to be optional since then. The current amendment aims to reinforce and clarify that the officialapplication is optional and that the undertakings do has the option of submitting an application when they are not clear about the legality of the conduct or when they seek legal certainty.

Accordingly; the first paragraph of Article 5, which defines the exemption regime in the Act No. 4054, has been changed as follows and the following paragraph has been added to the article after the first paragraph.

“In case all the terms listed below exist, agreements, concerted practices between undertakings, and decisions of associations of undertakings are exempt from the application of the provisions of Article 4:

a) Ensuring new developments and improvements, or economic or technical development in the production or distribution of goods and in the provision of services,

b) Benefitting the consumer from the abovementioned,

c) Not eliminating competition in a significant part of the relevant market,

d) Not limiting competition more than what is compulsory for achieving the goals set out in sub-paragraphs (a) and (b).

The undertakings or associations of undertakings may apply to the Authority to determine by the Board that the agreement, concerted action or decisions of associations of undertakings under the Article 4 meets the exemption conditions. ” 

This new design of the article clarifies the “optionality” of exemption application and legal uncertainties are eliminated.

2. Test Change in the Merger-Acquisition Control

So far, TCA has been carrying out merger control based on dominance test. The current amendment introduce the “significant impediment of effective competition test” (SIEC test) to merger control regime and a hybrid model is being built. The Article 7 of the Act that defines the merger control is amended as such:

“Merger by one or more undertakings, or acquisition by any undertaking or person from another undertaking-except by way of inheritance-of its assets or all or a part of its partnership shares, or of means which confer thereon the power to hold a managerial right, which would result in significant lessening of competition, especially create or strengthen a dominant position of one or more undertakings,  in a market for goods or services within the whole or a part of the country, is illegal and prohibited.”

Accordingly, more prohibition decisions are expected in merger cases.

3. Structural Measures for Termination of the Violation:

Article 9 of the Act contains provisions for the termination of the violation and interim measure. The current design of the Article allows the Authority to impose behavioral measures along with final violation decision. The current amendment empowers the Authority to impose structural measures when necessary to terminate the violation. Accordingly, the first paragraph of Article 9 of the Act has been changed as follows:

“If the Board determines that the article 4, 6 or 7 of the Act has been violated upon notice, complaint or the request of the Ministry or ex officio, notifies the relevant undertakings or associations of undertakings about the behaviors that must be followed or avoided for the establishment of competition, and/or structural measures in the form of transferring certain activities or partnership shares or assets. Behavioral and structural measures should be proportionate with the violation and necessary for the effective termination of the violation. Structural measures may applied only in cases where the behavioral measures introduced earlier do not yield results. If it is determined by the final decision that the behavioral measures do not yield results, at least 6 months are given to the relevant undertakings or associations of undertakings to comply with the structural measure.”

Thus, it has been clarified that in cases where the Competition Authoraity detects violations, it may take structural measures as well as behavioral measures.

4. On the Spot Investigation Powers Regarding Digital Documents of Digital Media

Paragraph (a) Article 15 of the Act has been changed as follows:

“May examine its Notebooks, any data and documents kept in the physical and electronic media and information systems, and take their copies and physical samples”

Accordingly, The Turkish Competition Authority’s on-the-spot investigation powers regarding electronic data and digital media have been clarified.

5. De Minimis Application

“De Minimis” has been introduced to the Act as such:

“The Board, except for hardcore violations such as price determination,  territory or customer sharing, and restriction of supply among competitors based on criteria such as market share and turnover, may not initiate an investigation against the decisions and actions of the associations of undertakings, agreements, and concerted practices that do not significantly restrict competition in the market. The procedures and principles regarding the implementation of this paragraph are determined by the communiqué issued by the Board.”

With the implementation of this practice, the Competition Authority has been granted discretion not to open an investigation in violations other than certain types of severe violations.

6. Settlement and Commitment

The title of the article 43 of the Act has been changed as “Starting an Investigation, Commitment and Settlement” and the following paragraphs have been added to the Article as follows.

“A commitment may be submitted by the relevant undertakings or associations of undertakings to eliminate the competition concerns that arise under Article 4 or 6 during a preliminary investigation or investigation in progress. If the Board considers that the competition concerns can be resolved through these commitments, it may be decided not to open an investigation or to terminate the investigation by making these commitments binding for the relevant undertakings or associations of undertakings. Commitment are not accepted for hardcore violations such as price determination, territory or customer sharing or restriction of supply among competitors. The procedures and principles regarding the implementation of this paragraph are determined by the communiqué issued by the Board.

After the Board makes a decision according to the third paragraph of this Article, it may initiate an investigation in the following cases:

a) There is a substantial change in any element that constitutes the basis for decision.

b) The related undertakings or associations of undertakings violate the commitments.

c) The decision has been based on incomplete, incorrect or misleading information provided by the parties.

After the investigation is initiated, the Board may initiate the procedure of settlement, at the request of those concerned or ex officio, taking into account the procedural benefits arising from the rapid completion of the investigation process and differences of opinion regarding the existence or scope of the violation. The Board may reconcile with undertakings or associations of undertakings that have undertaken an investigation and accepted the existence and scope of the violation before the notification of the investigation report.

As a result of the settlement procedure, up to twenty-five percent reduction in administrative fines can be applied. The reduction in administrative fines in accordance with this article does not prevent the reduction under the sixth paragraph of article 17 of the Law of Misdemeanor.

The Board gives the parties a certain time to submit a declaration of settlement, through which they accept the violation and explain the scope of the violation. Notifications made after the given period are not considered. The investigation is ended with a final decision involving a violation decision and the administrative fine.

In the event that the process results in settlement, the administrative fines and the matters included in the settlement text cannot be the subject of case by the parties.

Other procedures and principles regarding reconciliation are determined by the regulation issued by the Board. ”

Settlement and commitment institutions will ensure the procedural economy in the investigations carried out and to reestablish competition in the markets as early as possible.

By Metin Pektas, Antitrust and Compliance Partner, Nazali Tax & Legal

On 28 June 2020 issue of official gazette Turkey Payment and Electronic Money Association Statute is published and with that Turkey Payment and Electronic Money Association is formed. Pursuant to Article 7 of this statute, “All payment and electronic money institutions are obliged to become a member of the association within one month after obtaining an operating license. Organizations that do not fulfill this obligation by the association shall be notified to the Central Bank of the Republic of Turkey.“

Article 6 of the Statute Turkey Payment and Electronic Money Institutions Union’s duties and powers are regulated the most important regulations are as follows;

1. To form an arbitral tribunal in line with the procedures and principles approved by the Bank, to ensure that the Disputes between members and their individual customers are evaluated and resolved, without prejudice to the provisions of the Law No. 6502 on Consumer Protection dated 7/11/2013 and other laws.
2. To report the results of the transaction to the Bank by evaluating the complaints made about its members and to share them with the members.
3. To follow the implementation of the decisions and measures taken by the Association, to impose the disciplinary penalties stipulated in this Statute about the members who do not comply with them in time.

On 28.06.2020 Statute of Turkey Payment and Electronic Money Institutions entered into force to establish an arbitration committee to evaluate the conflicts between individual customers and Association members. And to solve the conflicts with the principles and procedures approved by the Central Bank to ensure the resolution. This arbitral tribunal’s aim is to resolve disputes between individual customers and member organizations in an agreed manner. However, since the association, is a very new entity, the general assembly has not assembled, because of that there is not a board of directors. So, payment and electronic money institutions who need to apply for a membership should apply directly to the Central Bank.

Although the structure and management of the union is clearly and precisely determined by the status, how the system will work in practice is already a question mark, but we think that the existence of the union will facilitate the settlement of disputes between consumers and organizations and will serve as a bridge between individual customers and organizations.

For detailed information and consultancy service on the subject, please contact us.

By Guden 

On June 10, 2020, CEE Legal Matters reported that Allen & Overy and Gedik & Eraksoy had advised on an ESG-linked syndicated loan facility for Turkey’s Garanti BBVA. We spoke to Ebru Dildar Edin, Executive Vice-President at Garanti BBVA, to learn more about the facility.

CEELM: Can you explain to our readers what an ESG-linked syndicated loan is, compared to a standard syndication facility?

Ebru: We have taken the process a step further by adding some sustainability KPIs to our standard syndication facility. In recognition of this aim, the facilities will include a sustainability-linked margin adjustment, [in which] the margin will be determined according to our performance against the relevant KPIs over the life of the facilities. Our short-term ambition is to maintain a zero percent share of coal power plants in our project finance greenfield electricity production portfolio and to source at least 80% of our energy from renewable sources in an effort to reduce Scope 2 GHG emissions. 

CEELM: What would you say were the most complex aspects you had to deal with in terms of this loan? 

Ebru: Fitting the margin mechanism and test days were the most complicated points for us. However, we also found solutions at these points by considering the investors’ expectations. The proposed ratchet sets out a margin adjustment based on KPI figures in a given testing period (each quarter) compared to the targets set. We will publish its results on a quarterly basis on our website and provide limited assurance from a third party. 

CEELM: This was the first ESG-linked loan in Turkey. What were the hurdles you had to overcome, in the absence of a precedent in the country?

Ebru: We strongly believe that operating sustainably is a key driver to the long-term success of our bank, and we aim to be a leader in introducing and implementing sustainable banking in Turkey. As it is a new structure, we received many questions from investors regarding this mechanism. In order to address all the questions, we organized a sustainability-focused investor call with the presence of our ESG experts.

CEELM: According to Allen & Overy, this is the world’s first ESG-linked loan for a bank. Do you expect others to follow suit? 

Ebru: Sustainability issues are gaining importance all around the world and Turkish society, and are increasingly impacting the banking sector. Firsts are always unknown and we eliminated this obscurity. Therefore, we believe that others will follow. 

CEELM: We know Allen & Overy advised Standard Chartered Bank and Bank of America as the arrangers. Did Garanti use any external counsel for this? 

Ebru: We did not use any other external counsel for the ESG mechanism. Bank of America acted as sole sustainability coordinator in connection with the facility. Our experienced sustainability team and Bank of America worked together for this issuance.