Category: Turkiye

Paksoy has advised Dogan Sirketler Grubu Holding and members of the Aytemiz family on the sale of Aytemiz Akaryakit Dagitim to Tatneft.

The transaction remains contingent on regulatory approval.

Dogan Sirketler Grubu Holding is one of Turkey’s large conglomerates operating in the energy, media, industry, trade, insurance, and tourism industries. Aytemiz Akaryakit Dagitim operates in the fuel distribution and storage industry.

Tatneft is a Russian oil and gas company.

Paksoy’s team included Partner Serdar Ildirar and Associate Melisa Sevinc.

Paksoy did not respond to our inquiry on the matter.

Editor’s Note: After this article was published, KP Law announced it had advised Tatneft on the deal. The firm’s team included Managing Partner Onur Kucuk, Associate Partner Ozge Tuncel, Counsel Esra Agic, Junior Associate Beste Unsoy, and Legal Intern Selen Torun.

Initially regulated as a voluntary mediation system, through its official introduction to our legal system with the adoption of Law No. 6325 on Mediation in Civil Disputes in 2012, such was later accepted as “mandatory” in labor disputes, then in commercial disputes, and finally in consumer disputes.

We see that the scope of mediation system is once again expanded with the Law No. 7445 on the Amendment of the Execution and Bankruptcy Law and Certain Laws, which was published in the Official Gazette on April 5, 2023. Accordingly, the mediation system is now also accepted in disputes arising from immovable properties and lease agreements.

Mediation Regarding the Immovable Properties and Annotation Authorization of the Mediator

The amendments, which will enter into force on September 1, 2023, regulate the mediation procedure in disputes regarding the transfer of immovable property and the establishment of rights in rem on immovable property. Accordingly, mediation will be an option for disputes arising from the transfer of immovable property or the establishment of rights in rem on immovable property.

Regarding disputes with such scope, it will be possible to annotate the title deed and limit transfers via a request from the mediator in case that the parties agree to annotate the title deed in writing and the mediator records such agreement in minutes provided that such annotation is limited to the time period of mediation and does not extend beyond three months as of the annotation date.

In the event that the parties reach an agreement at the end of the mediation process, such agreement will be executed while adhering to the restrictions, procedures, and principles set forth in the laws regarding the transfer of immovable property or the establishment of in rem rights on immovable property.

According to the new regulation, it will be mandatory to obtain an annotation regarding the enforceability of the agreement from the civil court of peace in the jurisdiction of the immovable property’s location. The court will review the agreement’s content to determine whether it is suitable for mediation and enforcement as well as whether the restrictions, procedures, and principles set forth in the laws regarding the transfer of the immovable property or the establishment of rights in rem on the immovable property are followed and if necessary, the court may hold a hearing.

Without prejudice to cases where seeking an enforceability annotation is mandatory, agreements signed by both parties and their lawyers alongside the mediator, and in the case of commercial disputes, signed by the lawyers of the parties and the mediator will be deemed as a court ruling without the need of an enforceability annotation.

Mandatory Mediation in Lease Disputes and Elimination of Joint Ownership

As of September 1, 2023, applying to a mediator prior to filing a lawsuit will be mandatory for disputes relating to lease agreements, the division of movables and immovables and the elimination of joint ownership, as well as disputes arising from Condominium Law and neighbouring rights.

The Execution and Bankruptcy Law No. 2004 provides an exemption to this rule, allowing for the eviction of leased immovable properties through enforcement proceedings without court ruling. In this respect, it is acknowledged that the requests for evacuation and the removal of the objection to be submitted to the execution court are not subject to mediation. However, the provisions regarding mandatory mediation as a condition of litigation will be implemented if it is necessary to file a lawsuit in the civil court of peace over the proceedings without judgment.

Annotation regarding the enforceability of the agreement will be mandatory. Such annotation will be obtained from the civil court of peace where the immovable property is located in terms of the agreement related to an immovable property, and from the civil court of peace where the mediator works in terms of other agreements. The court will inspect the content of the agreement to determine whether it is suitable for mediation and enforcement as well as whether the limitations, procedures and principles set forth in the laws regarding immovable property are complied with. If necessary, the court may hold a hearing.

Mediators Will Inform the Parties about the Mediation Process

As of September 1, 2023, the mediator will be obliged to inform the parties about the mediation process. Thus, to ensure that the parties, including those represented by a lawyer, are engaged in the process, mediators will have an obligation to provide information without being subject to any limitations on communication method.

Regulation of Negative Declaratory Action for Those Who Have Been Subjected to Enforcement Proceedings after Applying to The Mediator

After the application to mediation services, if an enforcement proceeding is initiated against the applicant party regarding the subject of the dispute and the applicant party files and requests a negative declaratory action against this proceeding within two weeks from the date of the final report; the court hearing the negative declaratory action initiated before the enforcement proceedings may issue a preliminary injunction to stop the enforcement proceedings in return for a collateral not less than 15 percent of the receivable.

Mediation As a Condition of Litigation for Some Lawsuits Arising from Employment Contracts

With the amendment to the Labor Courts Law No. 6102 brought by the respective omnibus law, in addition to the lawsuits filed for employee or employer receivables and compensations based on the employment contract and the reinstatement claims, which are already subject to mandatory mediation, for actions regarding reclamation, annulment of objection and negative declaratory action related to employee or employer receivables and compensation based on the employment contract, mediation is made a prior condition of litigation.

Obligation of Annotation for the Execution of International Settlement Agreements

It is now mandatory to obtain an enforceability annotation from the commercial courts of first instance for execution of the international settlement agreements issued following a mediation procedure. Accordingly, the application for the enforceability annotation to be issued according to the examination made on the file – except in cases requiring a hearing- can be made to the court of the jurisdiction agreed upon by the parties. In the absence of an agreed jurisdiction, it is possible to apply to one of the commercial courts of first instance in the jurisdiction of residence of the parties, or if such is not present, in Ankara, Istanbul or Izmir.

By Nihat Ozbek, Partner, Guleryuz & Partners

In judicial proceedings, parties prefer arbitration because it is often faster than state courts. However, arbitration proceedings also require a certain period of time to reach a final arbitral decision. During this period, interim protection measures are needed to ensure that the proceedings achieve the desired goal and to guarantee the rights to be obtained as a result of the proceedings. In case of the protection of monetary receivables, a precautionary attachment is decided, and in case of the protection of rights other than money, a precautionary injunction is decided.

Pursuant to Article 414 of the Code of Civil Procedure (CCP) applicable to national arbitration, unless otherwise agreed, during the arbitration proceedings, the arbitrator or the arbitral tribunal may, at the request of a party, determine an interim injunction. The same regulation on the authority of arbitrators to decide on interim injunctions provision is made in Article 6 of the International Arbitration Law (IAA) applicable to disputes involving a foreign factor.

However, there are significant differences between the ICC and the CCP as to whether an interim protection order can be requested from state courts in cases where there is an arbitration agreement. The CCP significantly limits the power of state courts to issue interim protection decisions.

While the ICC does not authorize arbitrators to amend or cancel an injunction granted by the court, Article 414(5) of the CCP provides that the injunctions decided by the state courts may be amended or canceled by the arbitrator or arbitral tribunal.

The Supreme Court Decided That The Interim Injunction Decided By The Turkish Courts Before The Commencement Of The Arbitration Proceedings Under The International Arbitration Law Can Be Cancelled By The Court After The Commencement Of The Arbitration Proceedings

Pursuant to Article 6 of the International Arbitration Law (IAA), whether or not the seat of arbitration is in Turkey, the parties may obtain an interim injunction from Turkish courts.  After the arbitral tribunal is appointed, should the amendment or cancellation of the injunction be requested from the arbitral tribunal or from the Turkish court that decided the injunction? In other words, can an interim injunction decision from a Turkish court be amended or cancelled by the arbitral tribunal?

Article 6 of the IAA does not include this issue. In national arbitrations not regulated by the IAA, pursuant to Article 414(5) of the Code of Civil Procedure (CCP), an injunction obtained from the court may be amended or cancelled by the arbitral tribunal once the arbitral tribunal has been appointed. In 2017, the Istanbul 15th Regional Court of Justice decided that an injunction decided by the Turkish courts can be cancelled by the arbitral tribunal in arbitrations under the IAA. The Istanbul 45th Regional Court of Justice decided in 2021 that Article 414(5) of the CCP cannot be applied by way of analogy to arbitrations under the IAA and that the injunction decided by the Turkish courts cannot be amended or cancelled by the arbitral tribunal.

The difference in jurisprudence between the decisions of the Istanbul 15th and 45 Regional Courts of Justice was resolved by the 6th Civil Chamber of the Supreme Court.

The Supreme Court stated in its decision that the regulation on interim legal protection measures for disputes subject to international arbitration is regulated in Article 6 of the IAA, and for disputes subject to national arbitration, it is regulated in detail in Article 414 of the CCP, but there are significant differences between these regulations. According to the Supreme Court, while Article 414 of the CCP authorizes the arbitral tribunal to amend and cancel the interim legal protection measures decided by the courts, the fact that the IAA does not include this authority for arbitrators and that no law amendment to the IAA following the CCP shows that the legislator has made a conscious choice.  When the letter of Article 6 of the IAA and the reasoning of the Article are evaluated together, it is understood that the arbitral tribunal does not have the authority to amend or cancel the injunction decided by the court. In this regard, it does not matter whether the interim injunction is decided before or after the arbitration proceedings commence.

As a result of all these reasons, the 6th Civil Chamber of the Supreme Court decided that, despite the existence of an arbitration agreement, an interim injunction may be requested from the Turkish courts in relation to a dispute involving a foreign factor, as well as the objection to the interim injunction decisions decided by the Turkish courts may be decided by the Turkish courts.

By Cemile Demir Gökyayla, Partner, Beyza Sila Sürmeli, Trainee, KP Law

On April 6, 2023, Gide Turkish affiliate Ozdirekcan Dundar Senocak announced that Saint-Gobain’s plaster and plasterboard joint venture deal with Dalsan in Turkey (reported by CEE Legal Matters on May 4, 2022) was completed.

According to Gide, this marks the completion of a transaction that saw Saint Gobain Weber Yapi Kimyasallari acquire 50% of shares in Dalsan Alci from Dalsan Yatirim ve Enerji and sell 50% of its shares in Saint-Gobain Rigips Alci to Dalsan Yatirim ve Enerji.

As previously reported, Consulturk advised Dalsan Alci and Ozdirekcan Dundar Senocak advised Saint Gobain on the joint venture. 

Established in 1932, Dalsan is a Turkish manufacturer and exporter of materials including plasters, mortars and silo systems, plasterboards, exterior sheathing boards, flooring, roofing, and steel framing.

Saint-Gobain designs, manufactures, and distributes materials and services for the construction and industrial markets.

According to Gide, “both Saint-Gobain Rigips and Dalsan Alci are active in the business of production and sale of building materials. Following this transaction, Saint-Gobain Rigips and Dalsan Alci will be unifying their operations, in particular regarding the plaster and gypsum business line, under a single roof. With this partnership, the parties expect to develop the building materials business in Turkey and overseas.”

Consulturk’s team included Partner Kadir Cevikbas.

The Ozdirekcan Dundar Senocak team included Partner Bulent Ozdirekcan, Senior Associate Mehmet Kosoglu, and Associates Nil Duman and Mustafa Karadas.

Egemenoglu has advised Koza Polyester on its IPO, with Garanti Yatirim Menkul Kiymetler as the intermediary institution.

The publicly offered shares will be traded on the Borsa Istanbul Yildiz Market.

Koza Polyester is a Turkish polyester company headquartered in Gaziantep. It was established on November 03, 2011, and operates in the container manufacturing industry.

Egemenoglu’s team included Partner Efra Aydin Can and Associate Buse Yonat.

The Capital Markets Board [the “CMB”] introduced critical amendments to the sale methods and distribution principles to be applied to initial public offering of shares of non-public companies with the publication of its Decision No. i-SPK.128.21 [the “Decision”] on March 30, 2023. Accordingly, the relevant provisions of the Communiqué on Sales of Capital Market Instruments No. II.5.2 of the CMB will be superseded by the rules outlined in the Decision until a contradicting decision is made.

Implications of the Decision

According to the Decision, key provisions to be applied in the initial public offering of non-public companies are as follows:
(i) In case the market value of the shares offered to the public is above 750 million Turkish liras and the sale method by way of book-building is applied, the rules below will be followed:

• Investors in an individual investor group will only be allowed to receive equal distributions, and not proportionate distributions.
• Investors individually will not be allowed to bid in excess of a quarter of the total number of shares allotted to the relevant investor group.
• For domestic institutional investor, if there is sufficient demand, it will be necessary to calculate the number of shares to be divided among each investor within a cap of one percent of the total number of shares offered to the public. Such limitation will be implemented to the funds, of which a portfolio management company is the founder and/or manager, on the basis of the portfolio management company and at a rate of three percent.
• If at the end of the book-building period, a sufficient number of bids are received for a specific investor group, the shares allocated to the relevant group shall not be reallocated to another investor group. If there is an investor group which has not made sufficient demand, the remaining shares of that group will first be reallocated to meet the bids of domestic individual investors, if any, and if there is no such demand or if any left, only then the remaining shares can be reallocated to other groups.

(ii) In case the market value of the shares offered to the public is 750 million Turkish liras or below, only the sale on stock exchange method can be applied.

(iii) Shares purchased by institutional investors for their own portfolios may no longer be transferred to individual investor accounts.

(iv) In the event of a distribution, investors who purchase shares will not be able to engage in certain transactions with the shares that have been transferred to their accounts after the distribution list has been finalized. For 90 days from the day the shares are transferred to their accounts, the investors will not be able to sell the shares outside of the stock market, transfer them to other investor accounts, or subject them to a special order and/or wholesale transaction. For the shares held by the existing shareholders (except for the shares sold within the scope of the respective offering), such restriction will continue for 180 days as of the approval date of the offering circular and will also apply to any sale in the stock exchange.

Conclusion

The CMB clearly states in its Decision that the need to introduce these new rules stems from the fact that some transactions have become unbalanced among investors considering the high demand for public offerings. It can be said that with the new regulations, the aim is to prevent the concentration of shares in certain groups, and capital inclusion is taken into consideration.

By Zahide Altunbas Sancak, Partner, and Beliz Boyalikli, Associate, Guleryuz & Partners

On 1 April 2023, the Information Technologies and Communications Authority (ITCA) published decision no. 2023/DK-İD/119, dated 28 March 2023, regarding the new set of Principles and Procedures for Social Network Providers (“New Principles and Procedures”) in the Official Gazette no. 32150.

Recent Developments

The New Principles and Procedures provide details and clarification on the amendments to the Law on the Regulation of Internet Publications and Prevention of Crimes Committed through these Publications No. 5651 (“Internet Law”), which was adopted on 13 October 2022. The New Principles and Procedures are available online here (in Turkish).

What’s new?

The ITCA’s New Principles and Procedures is an updated version of the ITCA’s previous Principles and Procedures for Social Network Providers dated 2 October 2020. The New Principles and Procedures mainly reiterate the ITCA’s position regarding the new amendments to the Internet Law in October 2022, but also provide further clarifications on some of the requirements therein. The summary of the new and/or clarified provisions in the New Principles and Procedures are as below.

1. Scope

The New Principles and Procedures clarify the scope of social network provider regulations. In this regard, the following providers will be out of scope:
• Persons that publish content for the purpose of social interaction that is only in a limited space on the platform (i.e., limited social interaction functionality)
• Platforms, such as personal websites, e-commerce platforms and news websites, that provide a social interaction functionality as a secondary or an ancillary service.

2. New Requirements

i. Representative:

The New Principles and Procedures initially reiterate the representative requirements for social network providers (e.g., “1 million daily access” requirement for appointing a representative as real person/legal entity and “10 million daily access” requirement for establishing a branch in the form of an equity company). The representative of a social network provider with more than 10 million daily accesses has full technical, administrative, legal, and financial liability for social network provider’s compliance.

Incorporation requirements

ITCA states that the entity that meets the following requirements is deemed as the representative:

• The name of the representative must bear the unique tradename of the social network provider and the province where the entity is incorporated (e.g., Istanbul).
• All of the entity’s shares must be owned by the social network provider.
• The articles of association must state that the representative is incorporated within the organization of the social network provider and is affiliated to the social network provider.
• Principal capital must be at least TRY 100 million (approx. USD 5 million).
• The articles of association must state that the social network provider holds the representative fully authorized, and the representative has full technical, administrative, legal, and financial liability.

Documentation attesting the above and the following documents must also be submitted to the ITCA:

• The representative’s article of association
• Trade registry gazette and other incorporation-related documentation
• Signature circular or other documentation showing the authorization of responsible individuals of the representative entity (i.e., authorized signatories of the representative)
• Identity and contact information of the authorized signatory(ies).

Additionally, if the representative is a real person where the social network provider’s daily access from Türkiye does not exceed 10 million, documents showing that the representative is a Turkish citizen and resident in Türkiye must be submitted to the ITCA.

Any changes to the above documentation or information must be notified to the ITCA immediately and no later than 72 hours.

Duties of the representative

The representative has the following duties:

• Taking the necessary actions to comply with the notifications, notices or requests from the ITCA, Access Providers’ Union or administrative authorities
• Responding to individual applications
• Compliance with reporting obligations (i.e., semi-annual/transparency reports)
• Complying with the obligations of the social network provider, which arise from the content provider or hosting provider status of the social network provider
• Compliance with other obligations under the Internet Law

Other requirements

• Representative’s notification address and email address (including registered email address*) must be easily accessible on the social network provider’s platform
• Any changes to the representative’s contact information must be updated on the platform

*Having a registered email address (i.e., KEP address) was not a regulatory requirement for representatives previously. It appears that this was introduced to facilitate the delivery of notifications to the representative.

Penalty for non-compliance: Failure to comply with representative requirement are as follows (sanctions are implemented on a stage-by-stage basis):
1. ITCA issues warning
2. Administrative fine of TRY 10,000,000 (approx. USD 520,000) for failure to comply within 30 days of the receipt of the ITCA’s warning
3. Administrative fine of TRY 30,000,000 (approx. USD 1,560,000) for failure to comply within 30 days of the implementation of the first set of fines
4. Advertisement ban for failure to comply within 30 days of the implementation of the second set of fines
5. Internet bandwidth reduction by 50% for failure to comply within three months of the issuance of advertisement ban
6. Internet bandwidth reduction up to 90% for failure to comply within 30 days of the implementation of the initial bandwidth reduction (the judgeship cannot issue a bandwidth reduction order below 50%, but it can determine a percentage below 90% depending on the nature of the service)

*If the social network provider fulfills the representative requirement, only one-quarter of the administrative fines will be collected.

ii. Response to user requests:

As per the Internet Law, social network providers are required to respond to the requests of users under Article 9 and 9/A of the Internet Law within 48 hours.

The New Principles and Procedures indicate that the social network providers must facilitate the receipt of the individual applications. Accordingly, users should be able to send their requests in Turkish language, and social network providers must respond to such requests in Turkish.

Penalty for non-compliance: Administrative fine of TRY 5,000,000 (approx. USD 260,000)

*Upon the complaint of a user to the ITCA, the ITCA evaluates whether the social network provider is complying with its requirements to respond to users. The ITCA evaluates the user complaints collectively during the semi-annual (transparency) report periods. In its evaluation, the ITCA takes into account whether the social network provider does the following:
• Established relevant systems to effectively respond to users
• Responds negatively to certain users or authorities on a regular basis,
• Complies with the timeframes envisaged in the Internet Law systematically
• Includes in its responses the rationale for objection/rejection of the application

iii. Semi-annual (transparency) reports:

The New Principles and Procedures set out that the reports must include the following additional information:
• Technical infrastructure, personnel and administrative capacity to ensure the enforcement of content takedown procedures and responding to individual applications
• Duration, geographical aspects and means of execution/implementation of decisions
• Categorical and statistical information on the process of handling individual applications, such as the number and type, positive and negative evaluation of applications, reasons for a negative response, response time
• Categorical and statistical information on the decisions of authorities, including the authority, means of receipt of the decisions, legal basis of the takedown order (e.g., Article 8 of the Internet Law), and timeframe for complying with the takedown order
• Categorical and statistical information on the self-assessment process
• Measures for equal and unbiased treatment of users
• Measures that allow users (i) to update their preferences regarding “recommended content” and (ii) to limit the use of personal data
• Information on the algorithms and transparency policies regarding hashtags, featured or restricted content
• Measures regarding the non-publication of content and hashtags relating to crimes under the Internet Law
• Advertisement policies
• Advertisement library

The report to be prepared on the individual applications (i.e., Article 9 and 9/A requests) must also be published on the social network provider’s website without revealing any personal data.

In addition, the ITCA states that social network providers must comply with accountability principles and submit any necessary information and documentation as requested by the ITCA to ensure transparency.

Penalty for non-compliance: Administrative fine of TRY 10,000,000 (approx. USD 520,000)

iv. Advertisement library:

In line with the amendments to the Internet Law, the social network providers are now required to prepare an advertisement library and provide information on this in the semi-annual reports. As per the New Principles and Procedures, the advertisement library must include the following:
• Details of the advertisement
• Type of the advertisement
• Ad provider
• The airtime of the advertisement
• The target audience of the advertisement and parameters used to define the target audience
• Number of individuals and groups reached with the advertisement

The advertisement library must be easily accessible on the social network provider’s website.

Penalty for non-compliance: Administrative fine of TRY 10,000,000 (approx. USD 520,000) (in connection with the transparency report requirements)

v. Disclosure of user data to authorities:

The New Principles and Procedures re-establish that the social network provider’s representative must provide the information requested by public prosecutor’s offices and courts during legal proceedings for the following offences:
• Sexual abuse of children (Article 103 of the Penal Code)
• Public dissemination of misleading information (Article 217/A of the Penal Code)
• Disruption of the unity and territorial integrity of the state (Article 302 of the Penal Code)
• Offences against the constitutional order and its functioning (Articles 309, 311, 312, 313, 314, 315, 316 of the Penal Code)
• Crimes against state secrets and espionage (Articles 328, 329, 330, 331, 333, 334, 335, 336, 337 of the Penal Code)

The ITCA clarifies that the representative must directly respond to user data requests related to the above offences.

Penalty for non-compliance: The public prosecutor’s office or court may apply to the Ankara Judgeship of Peace to request an internet bandwidth reduction of up to 90%. The internet bandwidth reduction order is notified to the ITCA (who subsequently notifies the access providers). Access providers should execute the order promptly and no later than four hours.

If social network providers comply with the user data/information request, the internet bandwidth reduction order is revoked.

vi. Data localization:

As per the Internet Law, social network providers must store Turkish users’ data within Türkiye.

The New Principles and Procedures clarify that the basic user information and information that may be required by the ITCA must be prioritized during the exercise of the data localization requirement.

Penalty for non-compliance: Administrative fine up to 3% of the previous calendar year’s global turnover

vii. Services designed for children:

In line with the amendments to the Internet Law, social network providers must take the necessary measures for providing services dedicated to/designed for children.

The New Principles and Procedures clarifies that social network providers must take into account the following during the display of content, advertisements and provision of services to children:
• Age of the children
• Best interest of the children
• Protection of the physical, psychological and emotional development of the children
• Prevention of child abuse and commercial exploitation of the children
• Processing of minimum children data by applying high privacy settings
• Display of a user agreement, privacy policy and user settings in a manner that is understandable by children.

Penalty for non-compliance: Administrative fine up to 3% of the previous calendar year’s global turnover

viii. Protection of user rights:

The New Principles and Procedures provide further requirements regarding the protection of user rights:
• Social network providers must treat users equally and in an unbiased manner
• Social network providers must take measures to allow users to update their settings as to the recommended content and restriction on the use of personal data
• Social network providers must notify the users accessing the platform from Türkiye and the ITCA in cases of serious security breaches that directly or indirectly affect users from Türkiye within 72 hours
• Social network providers must make available in an easily accessible manner any update that affects the rights of the users
• Social network providers must provide information on the website as to which parameters the social network provider uses when recommending content to users in a clear, comprehensible and easily accessible manner
• Social network providers must provide understandable and easily accessible reporting channels (available in Turkish) for users to reach out in case of stolen and imposter accounts, and finalize the applications of users within due time.
• Social network providers must follow any additional guidance that may be given by the ITCA regarding user rights.

Penalty for non-compliance: Administrative fine up to 3% of the previous calendar year’s global turnover

ix. Establishment of an application mechanism:

As per the Internet Law, social network providers are obliged to establish an effective application mechanism in cooperation with the ITCA for the removal of hashtags and featured content through a warning method.

The New Principles and Procedures state that the social network providers must inform the ITCA regarding this mechanism as part of semi-annual reports.

Penalty for non-compliance: Liability for the content, in case of a failure to take down the content promptly and at the latest within four hours upon the notification of the illegal content

x. Content risking the life and safety of users:

In line with the amendments to the Internet Law, if social network providers become aware of content that risks life and property of individuals that is also a case of urgency, it must notify authorized law enforcement authorities of the content and the content provider (i.e., user).

Penalty for non-compliance: Administrative fine up to 3% of the previous calendar year’s global turnover

xi. ITCA’s information request authority:

In line with the Internet Law, the New Principles and Procedures regulate that the ITCA is authorized to request from a social network provider, all explanations relating to the social network provider’s compliance with the Internet Law, including its corporate structure, information systems, algorithms, data processing mechanisms and commercial stance (tr. ticari tutum).

Social network providers must provide the requested information and documentation within no later than three months.

Penalty for non-compliance: Administrative fine up to 3% of the previous calendar year’s global turnover

xii. Crisis management plan:

As per the Internet Law, the social network providers are required to prepare a crisis management plan.

The New Principles and Procedures state that the ITCA may inform the social network providers regarding the aspects of preparation and disclosure of the crisis management plan.

Penalty for non-compliance: Administrative fine up to 3% of the previous calendar year’s global turnover

xiii. Content takedown:

The New Principles and Procedures reiterates the measures in the case of non-compliance and states the following:
• The social network provider is responsible for the indemnification of damages due to non-compliance with a content takedown order/decision within 24 hours. This legal responsibility does not require filing of a separate lawsuit for this purpose.
• The social network provider is legally responsible for crimes committed through hashtags or featured content if it fails to takedown the content promptly and within no later than four hours from the official notification.

Penalty for non-compliance: Failure to comply with the ITCA’s content takedown orders (e.g., takedown orders on the basis of Articles 8 or 8/A of the Internet Law) will result in the following:

1. Punitive fine of up to TRY 5,000,000 (approx. USD 260,000) or an administrative fine of up to TRY 1,000,000 (approx. USD 50,000)
2. The ITCA can issue an advertisement ban for up to six months (the advertisement ban is not automatically lifted following compliance with the ITCA order)
3. The ITCA can request from the judgeship of peace to order an internet bandwidth reduction by 50% (irrespective of the advertisement ban)
4. Internet bandwidth reduction by 90% for failure to comply within 30 days of the initial internet bandwidth reduction decision

3. Additional Provisions

Failure to comply with administrative fines: In cases where the social network provider fails to pay administrative fines more than once in a year, an advertisement ban for up to six months may be applicable. The administrative fines are subject to increase based on the revaluation rate of the previous year.

On-site inspection: The ITCA is authorized to conduct on-site inspections of a social network provider’s compliance with the Internet Law at all of the social network provider’s facilities.

Requests related to number of daily access: A social network provider may request the ITCA to assess the situation where its daily access from Türkiye is consistently below 1 million or 10 million. The ITCA will notify the social network provider if the request is approved. However, if the ITCA determines that daily access from Türkiye exceeds the threshold again, it will notify the social network provider in this respect.

Entry in force: The New Principles and Procedures entered into force on the date of publication, 1 April 2023.

Conclusion

The New Principles and Procedures, in line with the amended Internet Law, provides further guidance to the details of the social network providers’ obligations. Social network providers must assess the requirements and procedures within the New Principles and Procedures, while establishing mechanisms to comply with their new obligations under the Internet Law.

By Can Sozer, Partner,  Yigit Acar, Berfu Oztoprak, Ecenur Etiler, Basak Dadas, Associates, Esin Attorney Partnership

Dentons Turkish affiliate Balcioglu Selcuk Ardiyok Keki Attorney Partnership has advised Revo Capital on its investment in DefensX.

DefensX is a New York-headquartered company that provides secure browser services by deploying zero-trust threat prevention technology.

Revo Capital is a venture capital fund investing in seed and early-stage technology ventures in Turkey and CEE.

The BASEAK team was led by Partner Okan Arican and included Associates Dilruba Guldogan, Simge Yilmaz, and Efe Ozen.

BASEAK did not reply to our inquiry on the matter.

The fast-moving consumer goods (FMCG) retail sector has been put under the spotlight by the Turkish Competition Authority (the “TCA”) once again.

The TCA had previously published the Preliminary Sector Study Report on the Fast-Moving Consumer Goods Retail Sector (the “Preliminary Report”) on February 5, 2021. This time on March 30, 2023, the TCA has published the Final Sector Study Report on the Fast-Moving Consumer Goods Retail Sector in Turkey (the “Final Report”).

At the preparation stage of the Final Report, the TCA requested information and documents from many undertakings including organised FMCG retailers, suppliers, research companies, undertakings offering online marketplace services, internet-based commercial platforms, etc. as well as associations of undertakings and public institutions. The TCA also issued an Economic

Analysis Report in order to determine the buyer power in the FMCG retail sector.

– In the examinations made within the scope of the Final Report, the general structure and functioning of the sector is first explained. In this context, the development of the sector by years is analysed, and it is stated that the share of the organised channel within the FMCG retail market in Turkey has gone beyond the traditional channel, and the organised channel maintains its development.

– The Final Report analyses how concentration in the sector has increased, and evaluates whether there is any need to introduce separate thresholds for merger and acquisition filing for the retail sector. It is stated that, throughout the relevant 10-year period, 15 acquisitions in total (i.e. the acquisition by Gimsa of an undertaking which was not engaged in the retail sector, two acquisitions by ŞOK in the retail sector, and 12 acquisitions by Migros again in the retail sector) were not notified to the TCA. Those acquisitions were not notified to the TCA due to remaining below the turnover thresholds, and it is considered that the number of such transactions remains small. Following detailed discussions on the introduction of sector-specific turnover thresholds and after giving examples from the European Union, it is stated that lower turnover thresholds to be introduced for the sector in general would reduce the efficiency of mergers and acquisitions to be conducted between retailers of relatively smaller scales, prevent their growth, and cause the transaction processes to take longer. Within this framework, it is concluded that there is no need at this stage to put such suggestion, which was brought forward in the Preliminary Report, into practice and decrease the merger and acquisition filing thresholds specifically for the retail sector.

– The Final Report also covers the impacts on the sector of the buyer power which the undertakings engaged in the retail market have in the supply market, considering that the increase in concentration in the FMCG retail market throughout years has also affected the markets in which the products are manufactured, packaged and supplied. Finally, it is concluded that the interests of the suppliers and the consumers are affected by the buyer power in connection with each other, and that the use of the advantages of the buyer power solely in the favour of supermarkets is unfavourable for the suppliers and the consumers.

– The Final Report particularly focuses on the impacts of the abuse of buyer power on the competition, and suggests solutions for the elimination of the risk of abuse of buyer power.

– The Final Report further analyses the trend and ratio of digitalisation in the sector, and discusses the inclusion of the impacts of digitalisation on markets in the competition law analyses relating to the relevant sector. As a matter of fact, digitalisation in the FMCG retail market has gain much more momentum throughout the Covid-19 pandemic. It is considered that such change in the FMCG retail sector will affect both the volume and the form of competition in the sector. From this perspective, it is emphasized that the impacts of digitalisation on the competitive dynamics and the scales of competition must be taken into consideration in the determination of relevant product markets and relevant geographic markets and in the competition analyses. It is, on the other hand, stated that making such evaluations on a case-by-case basis according to the conditions specific to each concrete case will yield more accurate results.

– The Final Report also analyses a number of factors which may make adverse effects on the competitive nature of the FMGC retail sector, and includes evaluations on unfair commercial practices, behaviours of companies misleading the consumers, production of products of special weight, and introduction of population criteria for opening new stores.

By Duygu Bozkurt Kadirhan, Senior Associate Moral, Kinikoglu, Pamukkale, Kokenek

Egemenoglu has advised Anel Elektrik Proje Taahhut ve Ticaret on its loan restructuring agreement with the Is Bank, Denizbank, Akbank, and Vakif Katilim Bank.

Founded in 1986, the Anel Group is an Istanbul-headquartered contracting company specializing in mechanical, electrical, and plumbing engineering projects. The company has ongoing contracting projects in Qatar, Azerbaijan, the UK, the Netherlands, the UAE, and Turkey.

The Egemenoglu team included Managing Partner Yunus Egemenoglu, Partner Dilek Gursan, Senior Associates Derya Elcin and Sinem Akan, and Associate Baris Dede.