Category: Turkiye

On October 6, 2023, the Bozoglu Izgi Attorney Partnership announced it is joining forces with Dentons Turkish affiliate Balcioglu Selcuk Ardiyok Keki, with Elvan Sevi Bozoglu and Mehmet Feridun Izgi joining BASEAK as Partners alongside an additional 19 lawyers and two trainees from their team.

According to BASEAK, the Bozoglu Izgi Attorney Partnership was founded by Partners Elvan Sevi Bozoglu and Mehmet Feridun Izgi in 2013. “The two Partners will establish and co-lead a new Life Sciences sector group and will strengthen the existing Energy sector group at BASEAK. The combination will also complement the firm’s offerings in other practices, such as Compliance, Investigations and White-Collar Crime, Employment, and Dispute Resolution.”

According to the firm, Bozoglu has more than 20 years of experience in public law, with a focus on life sciences industry regulations, investigations, and anti-corruption. Before establishing her own firm, she spent 11 years with Gun + Partners, over three and a half of which as a Partner.

Similarly, Izgi has over 20 years of experience in “representing clients from the energy and life sciences sectors in commercial contracts, corporate law, litigation and dispute resolution, and employment law.” Before setting up Bozoglu Izgi in 2013, he practiced most of his career in-house, spending a year and a half as a Senior Legal Consultant with Actecon, almost two and a half years as a Senior Lawyer with Enerjisa, and five years with Hyundai Assan.

Bilge Gucsav – the third Partner of the Bozoglu Izgi law firm, who joined their team in 2020 – did not make the move together with her colleagues and will continue her private practice.

“This combination marks an exciting development for all team members – uniting our collective capabilities in essential industries to provide a deeper offering for our clients,” commented Bozoglu. “We are pleased to become a part of this strong international team and are very confident about the future success of the collaboration.”

“Having a similar culture and working principles, we are looking ahead to the future, and are committed to strengthening our leadership position in the legal industry,” Izgi added. “I am extremely excited and happy with this new venture.”

“We are delighted to welcome the BI Legal team to BASEAK,” Managing Partner Gelip Selcuk commented. “The team offers sophisticated, high-quality legal services across all major practice areas, and I am confident that this collaboration will enhance our ability to address the complex needs of our clients. In addition, they will bring a deeper sector specialization in Life Sciences, which is a priority sector for our firm.”

Cashless and contactless interactions have dramatically increased over the last few years, driven by several factors, such as the increasing adoption of smartphones, the growth of e-commerce, and the need for contactless payments during the COVID-19 pandemic. Digital transactions have become commonplace and straightforward daily for many users in every field. Most consumers switch from traditional payments with plastic cards to online payments via smartphone apps.

The total transaction value in the Digital Payments market is expected to reach US$ 76.18 billion by the end of this year, and this figure is expected to approximately double to US$ 137 billion in the next four years. The use of digital payments, along with the development of Fintech services, also points to a direct relationship with the development level of electronic commerce, consumer income level, and the competitive environment in the retail sectors of different countries.

Making Payments with Digital Wallets

Mobile payment is a type of digital wallet explicitly designed for use on devices such as smartphones, watches, and tablets. With mobile payment, customers carry out contactless payment transactions by saving their credit cards and debit cards in their wallets. GarantiBBVA’s BonusFlaşı and Yapı ve Kredi Bankası’s World Pay can be given as examples of these applications. In businesses that accept mobile payments, the customer can easily purchase the product he wants from a clothing store or filter coffee from a coffee shop by using his bank’s mobile payment application and does not have to take out his physical credit card or carry cash for these transactions.

Digital wallets, or e-wallets like BKM Express, Google Pay, Apple Pay, and Venmo, allow customers to securely store their bank card and bank account information and make payments for goods and services in-app or in-store. With some digital wallets, customers can save loyalty cards and coupons to their wallets without carrying a physical card. In this way, it enables easy tracking of the advantages. The customer makes online purchases without having to enter payment information each time.

When digital wallets are used to make contactless payments, the NFC (Near Field Communications) system and QR codes come into play. NFC, short for “Near Field Communication,” is the name of the technology that allows users to exchange data in an encrypted manner using radio waves between two devices nearby. When a customer holds his phone over a device to make a payment, the customer makes an NFC payment, also known as contactless, and users make payments safely and quickly. Since NFC payment readers can only connect to one device at a time, there’s no way another customer could be accidentally charged. Payments can be made with NFC technology using smart watches, payment bracelets, and fitness-tracking devices that fall into the wearable technology category.

Using these technologies, you can buy coffee with your smartwatch without returning home to get your wallet. QR codes store the information required for payment in the barcode and use the smartphone’s camera and scanning system. After the customer makes the payment by scanning the QR code, the system verifies that the payment has been sent to the correct person or business. In addition, payments can be made directly through the operator billing system. This method allows consumers to pay for goods or services online by crediting the transaction to their mobile phone bill. Customers do not have to enter credit card and bank account information on their phones to make purchases. All they have to do is enter their phone number to make the payment; going through a bank is unnecessary. Customers only need to have a smartphone with regular carrier payments.

Why Should Payment with Digital Wallet Be Preferred?

The advantages of e-wallets over traditional payment methods need to be more obvious to ignore. We can list them as follows:

1.    Less commission fee: As the issuer and transaction operator of payment cards, the bank receives commission fees from businesses for the services it provides. The amount of commission fees varies depending on the turnover of the company. The higher the sales volume of the business, the higher the prices. While companies try to cut costs to make their businesses more profitable, they also face transaction fees imposed by banks. Therefore, one of the most suitable solutions for businesses is to set up their own branded payment cards and systems. Loyalty cards, payment cards, savings cards, discount cards, etc., are called closed circuit cards, which we can call the local version of Visa and MasterCard. Cards like these are very beneficial for businesses. However, to make a profit for a business, the system must implement applications that offer consumers digital payment opportunities suitable for smartphones instead of physical cards. This way, companies save on plastic card issuance costs while maintaining the full functionality of this solution. It also encourages a more competitive environment among businesses in the provision of goods and services.

2.    Fast purchasing processes: The second golden rule for a business after maintaining and improving profitability is to ensure maximum comfort for its customers. Customers are very prone to abandon their purchases due to both long queues and tensions at the checkout. Therefore, businesses retain customers as only a few seconds and touches are enough to make a payment through an e-wallet application. These solutions save customers time by eliminating the need to queue.

3.    Sustainable approach: Electronic tag technologies such as RFID reduce the use of printed materials and tons of paper used to produce brochures, billboards, and coupons. It provides businesses with the opportunity to save costs. Thanks to payments made through digital wallets, business owners can continue their operations without creating a carbon footprint and have the potential to attract customers with environmentally friendly practices.

4.    Maximum security: Security methods developed for contactless payments with NFC payment infrastructure ensure that cards are not exposed to attacks, cloned, and suspicious transactions are prevented. At the same time, since two NFC-compatible devices must be at least 4-10 cm away from each other for NFC to work, it minimizes fraud threats by malicious people. This way, the risk of customers’ card information and data being stolen during the payment process is shallow. 

What are the Current Regulations for Digital Wallets?

Legal regulations for digital wallets vary by country and region, depending on the digital wallet’s legal status, scope, and functionality. For example, in the European Union, digital wallets are subject to the Payment Services Directive (PSD2), which aims to promote innovation, competition, and security in the payments market. PSD2 requires digital wallets to comply with established licensing, authentication, data protection, consumer rights compliance, and dispute resolution rules. Again, Strong Customer Authentication (SCA) is a regulation in PSD2 that includes directions on using authentication information and biometrics, where multiple factors are foreseen for customer identity verification when making electronic payment transactions. It is designed to protect customer data and reduce fraud, especially for remote transactions. This applies to customer-initiated contactless payments in Europe; most card payments and all bank transfers require SCA. These rules for online card payments apply to transactions where the business and the cardholder’s bank are in the European Economic Area (EEA).

In the United States, the legal infrastructure of digital wallets is regulated by several federal and state laws and agencies, such as the Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC), Office of the Comptroller of the Currency (OCC). These laws and institutions include rules on consumer protection, anti-money laundering, and bank supervision.

In our country, issues related to digital wallets and payment services are covered by the Law on Payment Services and Electronic Money Institutions and the Law on Amendments to Certain Laws (“Law No. 6493”), the Regulation on Payment Services and Electronic Money Issuance and Payment Service Providers (“Regulation”), It is regulated in the Communiqué on Information Systems of Payment and Electronic Money Institutions and Data Sharing Services of Payment Service Providers in the Field of Payment Services (“Communiqué”) and in the Guide on Associating Business Models Offered in the Field of Payments with Payment Service Types (“Guide”). In our law, digital wallets are accepted as a means of payment, and payment service providers and licensed organizations can offer digital wallet services. At this point, the institutions providing digital wallet services must be authorized to issue or accept the payment instrument. Payment and electronic money institutions also should maintain a minimum equity capital. In the relevant communiqué where the regulation is foreseen, minimum equity amounts change yearly. In addition, the guide also determines in which situations and activities organizations providing payment services must obtain an electronic money license. In these aspects, the guide regulates the conditions requiring CBRT’s permission according to payment service, field of activity, and business models.

Another essential issue in payments made with digital wallets is data protection and confidentiality by payment and electronic money institutions. In accordance with the regulations in the Communiqué on this subject, these organizations are subject to KVKK in data processing. The board of directors is held responsible for ensuring the confidentiality and security of personal data. The obligation to take additional precautions for sensitive data stipulated in the legislation and to inform both the Personal Data Protection Authority and customers in case of a possible data leak is also included. In addition, these organizations are obliged to keep personal data and documents for the period stipulated in the legislation. When paying via a digital wallet, customers’ personal information, such as name, address, and payment information, may be collected by the merchant or payment processor. This information may be used for a variety of purposes, including:

• Payment processing
• Tracking purchase history
• Targeting with ads

Therefore, to avoid legal risks and license revocation, it is crucial to be aware of the consequences regarding privacy in digital payments and strictly follow the legal regulations.

Thanks to advanced technologies, customers seeking comfort and convenience are increasingly adopting digital wallets every day. It provides cost savings and profitability for business owners in digital wallet payments made by customers. Because digital payment solutions are reliable and secure, they change customer habits and reduce the need for physical cards. Digital payments, which enable customers to make faster transactions, are becoming increasingly popular and revolutionizing how businesses accept payments.

Due to its dynamic structure, there are different regulations regarding digital wallets and payments in our country and foreign countries. With the amendment made in Turkey in 2018, the powers regarding regulating and supervising payment and electronic money institutions passed from the BRSA to the CBRT. Following this change, the issues regarding implementing the existing Law No. 6493 and the regulation were clarified with the publication of the Guide on Payment Services and Business Models. Since the legal rules complement each other in terms of scope, they should all be carefully evaluated by payment service providers. While the regulation regulates payment and electronic money institutions to obtain operating permits for the payment services they want to offer, more transparent information about what payment services is and their nature is included in the guide. Accordingly, in the manual, explanations are made according to the types of payment services, and the business models of these services are explained from a sectoral perspective. For example, the issuance or acceptance of a payment instrument is regulated as a payment service for which an operating permit must be obtained per Law No. 6493, and the guide includes the same issue for customers to give instructions to banks via their digital wallet as a means of payment. The reflection of this as a business model for the sector is mobile payment. Again, in the guide, since “Virtual POS” and “Physical POS” business models allow payment instruments in the workplace, in parallel, when looking at Law No. 6493, it is regulated to provide the necessary conditions and obtain permissions to provide this payment service. In addition, the guide also includes the necessity of the evaluation to be made by BRSA within the framework of the Debit

Cards and Credit Cards Law No. 5464 for Virtual POS and Physical POS.

As mentioned above, the Laws, Regulations, and Communiqués in force must be examined in detail by organizations applying for an operating permit. Because the audits are carried out after the license is granted by the CBRT, they can be cancelled if compliance with the relevant legislation is not ensured, and irregularities are detected. Some of the regulations envisaged by the CBRT regarding the cancellation of the license are that an organization providing mobile payment services does not keep personal data and records for the period stipulated in the legislation, contracts signed with third parties are not shared with customers within the scope of the information obligation, and risk management departments are not established in the organization of the organization as foreseen. Considering the Communiqué on the minimum equity obligations of electronic money institutions issued by the CBRT, we can say that following the legislation is very important for payment and electronic money institutions.

Considering the speed of technology, we expect new regulatory steps in the coming days as new legal regulations come into force with every innovation regarding payment services. However, since the existing and new legislations include regulations that overlap in terms of subject and scope, there will always be a need for explanatory and informative guides, just like in the manual. Regular legislation monitoring must be carried out meticulously, especially by payment and electronic money institutions.

By Onur Kucuk, Managing Partner, and Ezgi Anasiz, Associate, KP Law

For almost every industry, sustainability involves adopting environmentally and socially responsible practices throughout a company’s operations, from sourcing and production to sales and customer engagement. This includes reducing carbon emissions, promoting fair labor practices, supporting the product lifecycle, leveraging blockchain and digital systems, ensuring supply chain transparency, and maintaining ethical governance standards. Therefore, environmental sustainability policies need to be integrated into internal company rules, and, in particular, stakeholders in every sector need to take more responsibility for ESG practices.

Especially as customers become more conscious about sustainability in their purchasing processes, they want companies to be more accountable. This situation also puts pressure on the markets due to investor expectations. As analysts begin to score companies on their ESG contributions, the London Stock Exchange has unveiled plans for a Voluntary Carbon Market (VCM) to make it easier for companies to meet their net-zero targets. The US Securities and Exchange Commission (SEC) and the EU Sustainable Finance Disclosure Regulation (SFDR) require publicly traded companies to report their ESG performance by January 2024. According to the Green Deal and other regulations adopted by the European Commission in 2020, it aims to reduce emissions by 55% by 2030 and to achieve a net-zero economic transformation by 2050. The EU Taxonomy Regulation reveals which activities and transactions of companies are compatible with the Green Deal and net-zero targets.activities and transactions of companies are compatible with the Green Deal and net-zero targets.

The Border Carbon Regulation Mechanism (SKDM), which envisages that the costs determined according to the carbon intensity of the production of commercial products within the EU borders will be applied as taxes to third countries for goods imported into the EU countries, is of great importance. Per the SKDM, it regulates the taxation of companies that reach certain thresholds in the production process for products exported to the EU, such as iron, steel, cement, aluminum, fertilizer, hydrogen, and electricity, which may be at risk of carbon leakage, according to the amount of greenhouse gas tons released, starting from 2026. According to TUSIAD data, in scenarios where the carbon price is 30 €/ton, it is predicted that Turkey will pay 1,074 billion € annually to the EU, and if it is 50 €/ton, the figure will be approximately 1,777 billion €.    
 
The SKDM transition process will start in the EU on October 1, 2023, and is expected to last until October 31, 2023. During this period, importers in the EU are obliged to report emissions every three months. As of December 31, 2024, companies must obtain “SKDM declarant” status to import products within the scope. It is expected that the financial obligations will be in the regulation, which is likely to come into force permanently on January 1, 2026; the situation of exporters in non-EU countries and countries that do not implement the Emission Trading System (ETS) and other additional obligations will be clarified over time.
 As of January 1, 2026, importers established in the EU must declare each year the number of products imported into the EU in the previous year and their embodied greenhouse gas emissions.

What should Turkish companies do?

Although SKDM imposes a non-financial reporting obligation on importing companies in the EU, these companies will request that non-EU companies conduct a study on the products supplied in their supply chains. For this reason, exporting companies in Turkey must first complete a detailed analysis of whether the products subject to export are within the Customs Tariff Statistics Position (GTİP) scope. If the product exported by Turkish companies is in this category, a report must be prepared for importing companies in the EU, specifying carbon footprint measurement and direct and indirect emission amounts, as stipulated in the SKDM.

Since it is anticipated that financial reporting and exporting companies will also be included in the regulation, which will come into force permanently on January 1, 2026, It is vital for Turkish exporting companies operating in sectors such as iron, steel, cement, aluminium, fertilizer, hydrogen, and electricity to start preparations to fulfill their obligations under the regulation and to follow the additional obligations that will be foreseen in the process.

By Ezgi Anasiz, Associate, KP Law

Bagzibagli, Erdem & Sahin has advised Enqura Bilgi Teknolojileri on its USD 2.9 million investment round from Eksim Ventures, Hedef Portfoy Startup Burada GSYF, Lima Ventures, Doga Girisim, Echo Cagri Merkezi, Sistem Global, and private investors. 

Founded in 2014, according to Bagzibagli, Erdem & Sahin, “Enqura offers innovative and end-to-end solutions to many sectors, mostly to finance and insurance. In addition to its digital banking and insurance platform, Enqura also provides digital enablement solutions, data, AI, and Blockchain platforms.”

The Bagzibagli, Erdem & Sahin team included Partner Orhan Erdem and Attorney Ilayda Goktas.

One of the important advantages of arbitration proceedings is that the parties can appoint co-arbitrators. Thus, the parties can ensure that those whose impartiality, knowledge and fairness they trust will decide on their dispute. This opportunity raises the question of who the party-appointed arbitrators should be and the criteria by which the parties should appoint the party-appointed arbitrators. 

Since the experience and knowledge of the arbitral tribunal will determine the fate of the award, we have presented below some of the criteria to be considered in the appointment of co-arbitrators. Of course, this enumeration is not exhaustive. Different criteria may emerge according to the characteristics of the case.

1- Independency and Impartiality 

The fact that the parties are empowered to appoint the arbitrator does not mean that the arbitrator will act in favour of the party that has appointed him/her, or that he/she will act as a representative of that party. The co-arbitrators and the presiding arbitrator must be independent and impartial. 
 
2- Expertise

It is important, but not sufficient, that the arbitrators selected are knowledgeable and experienced in arbitration proceedings. The arbitrator should have legal and sectoral knowledge and experience about the dispute. For example, appointment of a co-arbitrator who knows the basic technical terms related to the dispute and lex causae may facilitate the resolution of the dispute.

3- Availability in terms of Time

Another issue to be taken into account in the appointment of an co-arbitrator is whether the arbitrator’s workload is suitable to allocate the necessary time for the resolution of the dispute. Especially in complex arbitration proceedings involving technical problems, hundreds of pages of pleadings and evidence may be submitted. Arbitrators are expected to allocate the time necessary for the resolution of the dispute in detail.  In this regard, the Istanbul Arbitration Centre requires arbitrators to declare their workload when they are notified of their appointment and to undertake in writing that they will be able to allocate the necessary time for the proceedings. Failure of the arbitrator to allocate the necessary time may result in the arbitration being protracted and may even result in the denial of the right to be heard.  

4- Language of Arbitration

The Party-appointed arbitrator should have sufficient knowledge of the language of arbitration to conduct a proceeding, to participate in hearings, to express himself/herself comfortably in meetings between arbitrators, and to write the arbitral award.

5- Approach to the Dispute

In some disputes, the validity of the arbitration agreement relied upon by the claimant may depend on the legal understanding of the arbitrators and whether they adopt an approach to the interpretation of the arbitration agreement that is arbitral friendly. Of course, it is not possible to know in advance what the arbitrator will decide on the dispute or to discuss it with him/her. Indeed, it is very difficult to conclude that co-arbitrator who expresses an opinion on the dispute before being appointed as an arbitrator is impartial and unbiased.  Therefore, persons who are proposed to be arbitrators cannot discuss the dispute or express their views with the parties or their representatives. However, if the proposed arbitrator has publications on controversial legal issues, these should be examined. 
Under some institutional arbitration rules, arbitral awards are published unless a party objects. This is the case, for example, under the ICSID and ICC Arbitration Rules. The decisions of an arbitrator in similar disputes may give the parties an idea about the arbitrator’s approach to the issues.  

6- Previous Experience

Knowing the attitudes of the arbitrators in other arbitral proceedings in which they have acted as an arbitrator or a counsel may be an important criteria in deciding whether or not to appoint that arbitrator. For this reason, it is very useful to work with lawyers who have previously acted as arbitrators or counsel in arbitral proceedings.

By Cemile Demir Gokyayla, Partner, and Arzum Beyza Cimen, Trainee, KP Law

The European Commission (“Commission”) has been in the process of what can be called a reform of secondary legislation for the last few years. The Commission has issued several legislative developments that have reformed European competition law. After a long period of work, in May 2022, The Commission launched the new VBER with extensive changes. This year, the Commission made further changes on the EU Merger Regulation, extended the EU Motor Vehicle Block Exemption Regulation (MVBER), introduced the new EU Revised Horizontal Block Exemption Regulation, introduced Guidelines on Exclusionary Abuses, and announced public consultation under Digital Markets Act (DMA).

Vertical Guidelines and Vertical Group Exemption Regulation (VBER)

In May 2022, The European Commission adopted new Vertical Guidelines and Vertical Group Exemption Regulation (VBER). VBER is the regulation that provides exemptions from certain competition law rules for certain types of agreements between companies operating at different levels of the supply chain. It focuses on vertical agreements, which are agreements between businesses that operate at different levels of the distribution chain, such as agreements between manufacturers and distributors or suppliers and retailers. 

The New Vertical Guidelines and VBER entered into force on June 1, 2022. The revised rules generally aimed to provide businesses with clearer and up-to-date guidance in line with the last decade. In addition, the new rules shed light on supply/distribution agreements and their assessment of compliance with EU competition rules, particularly in the context of e-commerce and online sales. 

The changes introduced by the revised rules are as follows:

• Agreements between companies operating at different levels of the production or distribution chain are exempted from the prohibition in Article 101(1) of the Treaty on the Functioning of the European Union (TFEU), subject to certain conditions.
• The new rules provide a safe harbor from which certain agreements are exempted. Accordingly, the new amendments focus on adjusting the safe harbor so that it is neither too wide nor too narrow.
• The scope of the safe harbor has been narrowed in relation to (i) dual distribution (both distributor and direct sales), i.e. where a supplier sells its goods or services through independent distributors and at the same time directly to end customers, and (ii) equality obligations, i.e. essentially obligations to ensure that the supplier does not offer its customer terms that are more disadvantageous than those offered to another customer. This means that certain aspects of bilateral dispatch and certain types of parity are no longer exempt under the new VBER, but must instead be assessed separately under Article 101 TFEU.
• The scope of the safe harbor has been extended in relation to (i) certain restrictions on a buyer’s ability to actively approach individual customers (ii) certain practices in relation to online sales, i.e. different wholesale pricing for products to be sold online and offline to the same distributor and different criteria for online and offline sales in selective distribution systems. These restrictions are now exempted under the new VBER, provided all other conditions for exemption are met.

Observing the changes, the updated VBER regulations have been made clearer and more straightforward, aiming to enhance their usability for individuals applying them in their daily work. These rules have undergone targeted revisions, particularly concerning the evaluation of online limitations, agreements within the platform economy, and accords pertaining to sustainability goals, among other aspects. Furthermore, the accompanying instructions furnish comprehensive direction on various subjects including selective and exclusive distribution, as well as agency agreements.

EU Merger Regulation

The European Commission adopted a package to further simplify and expand the scope of the Commission’s review process of unproblematic mergers (‘simplified cases’) under the EU Merger Regulation. The package includes (i) a revised Merger Implementing Regulation (‘Implementing Regulation’), (ii) a Notice on Simplified Procedure (‘Notice’), and (iii) a Communication on the transmission of documents (‘Communication’).

The new package contributes to achieving the Commission’s objective to reduce reporting requirements by 25%, as announced in its Communication on the Long-term competitiveness of the EU. It aims to simplify and expand the scope of the Commission’s review process of unproblematic mergers (‘simplified cases’). It also seeks to reduce the amount of information required for notifying transactions in all cases and to optimize the transmission of documents.

The main changes to the previous rules seek to simplify and streamline both the simplified and normal merger review procedures. In particular, the new rules:

• Expand and/or clarify which cases can be treated under the simplified procedure.
• The Notice identifies two new categories of cases that can benefit from simplified treatment. These are cases where under all plausible market definitions:
• The individual or combined upstream market share of the merging parties is below 30% and their combined purchasing share is below 30%; and
• The individual or combined upstream and downstream market shares of the merging parties are below 50%, the market concentration index (‘HHI delta’) is below 150, and the company with the smallest market share is the same in the upstream and downstream markets.

The Notice also grants the Commission discretion to treat certain cases under the simplified procedure even if they do not fall under any of the default categories for such treatment. In particular, the Notice includes the following flexibility clauses:

• For horizontal overlaps where the combined market shares of the merging parties are 20-25%;
• For vertical relationships where the individual or combined upstream and downstream market shares of the merging parties are 30-35%;
• For vertical relationships where the individual or combined market shares of the merging parties do not exceed 50% in one market and 10% in the other vertically related market; and
• For joint ventures with turnover and assets between €100 million and €150 million in the European Economic Area (‘EEA’).

It also provides a clearer and more detailed list of circumstances in which the Commission may investigate a case that technically qualifies for simplified treatment under the normal review procedure.

In order to streamline the review of simplified cases, the Implementing Regulation introduces a new notification form (“tick-the-box” Short Form CO). This form includes primarily multiple-choice questions and tables, and streamlined questions on both the jurisdictional and substantive assessment of cases. The Notice also identifies categories of cases that can benefit from a “super-simplified” treatment, whereby parties are invited to notify directly without prior engagement with the Commission.

In terms of the streamlining the review of non-simplified cases the Implementing Regulation reduces and clarifies the information requirements in the notification form (Form CO). This now includes clearer information on waiver possibilities, introduces tables for information on affected markets, and eliminates certain information requirements.

As it is seen, the said regulation aims to optimize the transmission of documents to the Commission, by introducing electronic notifications by default. All these changes entered into force on  1 September 2023 and they are expected to simplify pre-notification contacts overall, further reduce the time needed for these discussions.

Other than the EU, The Federal Trade Commission and the Department of Justice also released a draft update of the Merger Guidelines on July 19th, which describe and guide the agencies’ review of mergers and acquisitions to determine compliance with federal antitrust laws. The objective of this update is to enhance the alignment with modern economic practices in assessing the impact of mergers on competition and to provide a more comprehensive evaluation of proposed mergers according to existing laws. This is achieved by describing the frameworks established in prior versions and delving deeper into the methodology, including the tools utilized in merger analysis for each guideline. It is important to emphasize that these updates do not replace the law itself nor do they introduce new rights or obligations. Both agencies encourage the public to review the draft and provide feedback through a public comment period that will last 60 days which is until September 18, 2023. 

EU Motor Vehicle Block Exemption Regulation (MVBER)

In May 2023, the European Commission extended the duration of the Motor Vehicle Block Exemption Regulation (MVBER) for an additional five years, meaning it will remain in effect until 31 May 2028. Moreover, the Supplementary Guidelines for the automotive sector have been revised to assist companies in evaluating the compliance of their vertical agreements with the competition rules of the European Union. These updated guidelines also guarantee that aftermarket operators, such as garages, will retain the necessary access to vehicle-generated data for repair and maintenance purposes.

The Commission’s decision to extend the regulation allows for timely responses to potential market changes resulting from vehicle digitalization, electrification, and new mobility patterns. The revised Supplementary Guidelines include the following:

• Emphasize that data produced by vehicle sensors can be crucial for providing repair and maintenance services. In accordance with Article 101 of the Treaty on the Functioning of the European Union (TFEU), authorized and independent repairers should have equal access to this data. The existing principles for sharing technical information, tools, and training necessary for repair and maintenance services now explicitly cover vehicle-generated data.
• Specify that vehicle suppliers should apply the principle of proportionality when deciding whether to withhold inputs, including vehicle-generated data, due to potential cybersecurity concerns.
• Highlight that Article 102 TFEU may apply if a supplier unilaterally denies independent operators access to an essential input, such as vehicle-generated data.

EU Revised Horizontal Block Exemption Regulation

At the beginning of June, the Commission delivered its most innovative and reforming decision in recent times. The European Commission adopted a revised Horizontal Block Exemption Regulation in terms of Research and Development (R&D) and Specialization Agreements (HBER). The Regulation and the Guidelines aim to provide clearer and more up-to-date guidance to help businesses assess the compliance of horizontal cooperation agreements with EU competition rules and recent enforcement practices. Accordingly, the changes introduced by the new revised rules are as follows;

• The scope of the Specialization Group Exemption Regulation has been extended to cover more types of production agreements concluded by more than two parties and guidance has been provided.
• Clarity and flexibility regarding the calculation of market shares under the R&D Group Exemption Regulation have been increased and guidance has been provided. Accordingly, the Commission and national competition authorities are authorized to withdraw the right to benefit from the group exemption in cases where it is not possible to calculate the market share which aims to protect the innovation competition.
• The preamble of the Horizontal Guidelines has been updated in line with recent case law, followed by new guidance on the application of Article 101 TFEU to agreements between joint ventures and their parent companies.
• A new chapter on Mobile Telecommunications Infrastructure Sharing Agreements has been published, setting out the factors for assessing these agreements and including a list of minimum conditions to be complied with in order for companies to reduce their risk of infringing competition rules.
• The section of the Guidelines on Purchasing Agreements has been expanded to reflect recent practice. This section clarifies the distinction between joint purchasing and buyer cartels and clarifies that joint purchasing includes arrangements in which buyers jointly negotiate the terms of their purchases, as well as arrangements in which each buyer makes purchases independently.
• The section of the Guidelines on Commercialization Agreements has been expanded to create a new section on procurement consortia and to include guidance on the bid-rigging distinction.
• The section of the Guidelines on Information Exchange has been expanded to provide guidance on (i) the concept of commercially sensitive information; (ii) the types of information exchange that may objectively amount to a restriction of competition; (iii) the potential pro-competitive effects of data repositories; (iv) indirect forms of information exchange, including hub-and-spoke arrangements; (v) anti-competitive signaling through public announcements; and (vi) measures that firms can take to avoid infringements.
• The section of the Guidelines on Standardization Agreements has been revised to provide that (i) it is not anti-competitive for the parties to a standardization agreement to disclose the maximum cumulative royalty rate and (ii) participants must disclose their relevant intellectual property rights.
• A new section on sustainability agreements has been added to the Horizontal Guidelines to clarify that antitrust rules do not prevent agreements between competitors for sustainability purposes. The new rules provide a soft safe harbor for sustainability standardization agreements that meet certain conditions. In addition, the types of benefits that can be taken into account are defined and it is also clarified how a sustainability agreement can be exempted.

Overall, the Regulation and the Guidelines provide a safe harbor where certain agreements are exempted from competition rules.

EU Guidelines on Exclusionary Abuses

The Commission has launched a Call for Evidence to gather comments on the adoption of Guidelines on exclusionary abuses of dominance. In parallel, it has issued a Communication (and Annex) updating its 2008 Guideline on enforcement priorities for exclusionary abuses. The package was announced at the end of March and is the first significant policy move since 2008 in the area of abuse of dominance laws (Article 102 of the TFEU). Article 102 TFEU is one of the few areas of European competition law where no Guidelines define its applicability.

The Commission stated that since 2008, the EU Courts have delivered 32 judgments on the exclusionary abuses framework, as well as decisions of the competition authorities of the Member States, all of which have developed the case law in favor of the effects-based enforcement of TFEU 102. It is also stated that, unlike other competition law areas, the Commission has no guidelines on applying Article 102 TFEU; the Commission only published guidelines on its enforcement priorities in the area of exclusionary abuses in 2008, which does not constitute a statement of law, does not comment on the concept of abuse of dominant position, and only sets out the Commission’s approach to the selection of cases that it intends to pursue as a priority. The new guideline is intended to increase transparency on the principles underpinning the Commission’s approach and to reflect developments in the Commission’s case law over time.

As a result, the Commission issued a Call for Evidence to develop Guidelines on the applicability of Article 102 TFEU to exclusionary behavior which will be open for comments from all interested parties for four weeks. The Commission intends to provide a draft of the Guidelines for public comment by the middle of 2024, with the goal of adopting them in 2025.

Until the final Guidelines are adopted, the Commission clarifies its approach for determining whether to pursue complaints of exclusionary conduct on a priority basis. In order to revise some sections of the 2008 Guidelines, the Commission has adopted a communication. The modifications reflect substantial advances in EU court case law on Article 102 TFEU while also considering market trends. With respect to abusive exclusionary conduct, it intends to increase clarity about the values that guide the Commission’s enforcement priorities following the notion of good administration.

The Amending Communication has revised the Guidance on enforcement priorities as follows, with the objective of providing stakeholders with increased transparency on the Commission’s priority setting:

• it is appropriate to clarify that the concept of ‘anti-competitive foreclosure’ refers not only to cases where the dominant undertaking’s conduct can lead to the full exclusion or marginalization of competition but also to cases where it is capable of resulting in the weakening of competition, thereby hampering the competitive structure of the market to the advantage of the dominant undertaking and the detriment of consumers. 

• it is not appropriate, as regards price-based exclusionary conduct of a dominant undertaking, to pursue as a matter of priority only conduct that may lead to the market exit or the marginalization of competitors that are as efficient as the dominant undertaking in terms of their cost structure.
• the price-cost “as-efficient competitor test” is only one of several methods for assessing, together with all other relevant circumstances, whether conduct is capable of producing exclusionary effects. The Court of Justice has also clarified that the use of an ‘as efficient competitor test’ is optional and that a test of that nature may be inappropriate depending on the type of practice or the relevant market dynamics.
• it is important to distinguish situations of outright refusal to supply from situations where the dominant company makes access subject to unfair conditions (“constructive refusal to supply”). In situations of constructive refusal to supply, it is not appropriate to pursue as a matter of priority only cases concerning the provision of an indispensable input or access to an essential facility.

it is not appropriate to pursue as a matter of priority margin squeeze cases only where those cases involve a product or service that is objectively necessary to be able to compete effectively on the downstream market.

The Digital Markets Act (DMA)

The Commission is seeking feedback on a proposed template for reporting consumer profiling techniques used by platforms, known as gatekeepers, as part of their obligations under the Digital Markets Act (DMA). Gatekeepers are required to submit this description to the Commission. The goal is to increase transparency and accountability in profiling methods, preventing deep consumer profiling from becoming the industry norm and enabling competitors to offer better privacy protection.

The draft template outlines the minimum information gatekeepers should provide to enhance transparency. It also requires an independent audit of the description, which must be annually updated and published in a meaningful and non-confidential manner. All interested parties, including potential gatekeepers, consumer interest groups, data experts, national competent authorities, platform business users, and auditors, are encouraged to provide feedback within the six-week consultation period ending on 15 September 2023.

By collecting stakeholder input, the Commission aims to consider all relevant aspects of consumer profiling, ensuring effective supervision and transparency. The gatekeepers will be officially designated under the DMA by 6 September 2023, and they will have six months to comply with the DMA’s obligations and prohibitions once designated.

In conclusion, the steps taken by the authorities offer many innovations both in terms of regulations and by laws and their harmonization. In this context, it would not be wrong to conclude that especially the Commission’s perspective has also evolved and developed. In general, amendments aimed at providing guidance to make regulations clearer and more understandable as well as providing easier examinations for the authorities.

By Metin Pektas, Partner, Beyza Saripinar, Associate, and Zeynep Berfin Kiziltas, Legal Intern, Nazali Tax and Legal

Baker McKenzie’s Turkish affiliate Esin Attorney Partnership has advised Denizbank on its USD 109 million loan from the EBRD. Reportedly, Clifford Chance and its Turkish affiliate Ciftci Attorney Partnership advised the EBRD.

 The loan is within the scope of the Turkiye Disaster Response Framework. According to Esin, the framework was “launched in the aftermath of the earthquakes that caused more than 50,000 fatalities and more than USD 100 billion in damage to the Turkish economy. The loan will help to ensure financial access for the region’s businesses facing these challenges while recovery and reconstruction efforts are underway.”

The Esin Attorney Partnership team included Partners Muhsin Keskin and Simon Morgan and Associate Seray Karaalp.

Aksan has advised APY Ventures on its new investment in Poliark.

APY Ventures is a venture capital firm focused on early-stage technology start-ups.

Poliark is an artificial intelligence and digital twins technology company. According to Aksan, it is building a more sustainable, efficient, and environmentally friendly future by completely changing the planning, design, construction, and operation of buildings and cities.

The Aksan team included Partner Alper Onar and Associate Rezan Bilge Nisli.

Aksan did not respond to our inquiry on the matter.

Paksoy has advised Turkish baby goods retailer Ebebek Magazacilik on its TRY 1.86 billion IPO.

Ebebek Magazacilik operates an online shopping site and stores. According to the firm, the offering was significantly oversubscribed by investors and amounted to roughly USD 70 million. The company has been trading on Borsa Istanbul’s Star Market since September 7, 2023.

“This transaction marks a relative sign of interest from a significant number of international investors in Turkish shares after a long period,” Paksoy reported.

The firm’s team was led by Partner Omer Collak and included Associate Bulent Ozturk.

On 21 October 2022, the Banking Regulatory and Supervisory Authority (“BRSA”) published BRSA Decision No. 10389 (“Tightening Decision”) to tighten the restrictions set forth under the BRSA Decision No. 10250 dated 24 June 2022 (“Restriction Decision”), which introduced Turkish lira borrowing restrictions for non-financial institutions that are subject to independent audit and BRSA Decision No. 10265 dated 7 July 2022 (“Decision No. 10265” and together with Tightening Decision and Restriction Decision, “Decisions”), which in turn aims to clarify and ensure the effective application of the Restriction Decision.

You may refer to our legal alerts dated 27 June 2022, 19 July 2022, and 24 October 2022, for the Turkish lira borrowing restrictions introduced by the BRSA. 

The BRSA clarified the implementation of these restrictions with the BRSA Decision No. 10659, dated 4 September 2023 (“Decision No. 10659”).

What does Decision No. 10659 say?

Pursuant to the Decisions, in order for companies subject to independent audit (other than banks and financial institutions) (“Companies“) to be eligible to utilize Turkish lira cash loans, they must declare and undertake that their foreign currency assets (“FX Assets“) do not exceed TRY 10 million, and even if exceeding TRY 10 million, their FX Assets do not exceed 5% of the greater of the net sales revenue of the last 1 year, effective as of 1 November 2022, and certify the accuracy of such declarations and undertakings to the relevant bank by the evening of the last business day of the month following the end of each quarterly calendar period.

If the Companies do not submit the information and documents approved by an independent audit firm or a sworn public accountant (“SPA“) to the bank within the abovementioned periods, or if it is discovered that they must be included in the loan restrictions within the scope of the Decisions in accordance with the information and documents submitted, no new cash commercial loans will be extended to the company by the relevant bank. Moreover, a 500% risk weight was applied to all Turkish-lira-denominated cash loans extended to these Companies as of 1 November 2022, pursuant to a notification made by the relevant bank regardless of the approach used to calculate the amount subject to credit risk within the scope of capital adequacy ratio calculation without taking into account credit risk mitigation techniques, credit ratings and real estate mortgages. 

With Decision No. 10659, the sanctions imposed on Companies for not submitting the aforementioned documents in due time or in accordance with the procedure set out in Decision No. 10265 (including the event that foreign currency cash asset determination was not made on the date of loan disbursement or on the date deemed to have been disbursed, documents were signed by unauthorized persons pursuant to the Decisions) will be revoked if they submit to all banks and financial institutions with which they have a credit relationship the documents prepared in accordance with the Decisions and approved by independent audit institutions, SPAs or certified public accountants (“CPA”), as relevant, certifying their status does not constitute a violation of the limitations determined as of the dates on which the loan was extended or deemed to have been extended in accordance with the Decisions, or that the Companies are not subject to independent audit.

Sanctions applied to the Companies whose FX Assets exceed TRY 10 million and whose FX Assets exceed 5% of the greater of their total assets or net sales revenue for the last 1 year, or who are found to have made false declarations that they are not subject to independent audit will be revoked if they;

1. declare to all banks and financial institutions with which they have a credit relationship that their current situation does not constitute a violation of the abovementioned restrictions through documents prepared in accordance with the Decisions and approved by independent audit institutions or SPAs, as relevant; and
2. declare and undertake to all banks and other financial institutions with which they have a credit relationship that the averages of the limitations calculated as of the business days between the date of certification of the curing of the breach and the beginning date of the three-month accounting period following the curing of the breach and the averages of the limitations calculated as of the business days within the three-month accounting period following the curing of the breach will meet the limitations determined within the scope of the Tightening Decision.

Pursuant to Decision No. 10659, the Companies are required to submit to all banks and other financial institutions with which they have credit relations until the evening of the last business day of the month following the relevant quarterly accounting period the documents prepared in accordance with the Decisions and approved by independent audit institutions or SPAs, as relevant, evidencing the accuracy of the declaration and undertaking given pursuant to paragraph (b) above.

In addition, in the event that the declaration and commitment given by the Companies pursuant to paragraph (b) above is found to be incorrect or false, the sanctions described above will be applied for six months without interruption from the date of notification of this non-compliance, and the Companies can only repeat their request for revocation of the sanctions the scope of the procedures and principles set out in paragraphs (a) and (b) above after the said six months.

If the said Companies utilize a new cash loan in TRY during the period in which they will submit the documents confirming their declarations and commitments regarding the averages of the limitations calculated by business days by curing their non-compliance within the scope of Decision No. 10659, they will not be required to submit additional documents within the framework of the procedures and principles set out in the Decisions.

By Muhsin Keskin, Partner, Busra Cavas, Associate, and Ali Cetin, Trainee, Esin Attorneys Partnership