Category: Turkiye

Paksoy has advised Fedrigoni on its acquisition of Unifol from Birol Cakir and Erkut Cilvez. Moroglu Arseven advised the sellers on the deal.

The Fedrigoni Group produces specialty papers for packaging and other applications and also operates in the premium labels and self-adhesive materials markets.

Istanbul-based Unifol is a Turkish PVC self-adhesives manufacturer.

Paksoy’s team included Partner Togan Turan, Senior Associate Hazal Korkmaz, and Associate Mert Karakaslar.

Moroglu Arseven’s team included Partners Burcu Tuzcu Ersin and Basak Acar.

Moral & Partners has announced that former Baker McKenzie Turkey affiliate Esin Attorney Partnership Partner Sertac Kokenek has joined its team as Senior Partner and Head of Advisory. With Partners Efe Kinikoglu and Serkan Pamukkale also elevated to Name Partners, the firm rebranded to Moral, Kinikoglu, Pamukkale, Kokenek Attorney Partnership.

Kokenek had been with Esin since 2010. There, he served as Head of the Employment and Compensation practice and made Partner at the firm in 2021 (as reported by CEE Legal Matters on July 14, 2021). Before Esin, he worked for the Bener Law Office between 2007 and 2009. At Moral, Kinikoglu, Pamukkale, Kokenek he will be leading the Advisory practice, and his areas of focus will be M&A / Private Equity, Corporate, Employment, and Compliance.

Kinikoglu has been with the firm since 2015. Prior to that, he was a Partner with the GSI Law Firm between 2014 and 2015. Earlier still, he worked as a Senior Lawyer with the Cerrahoglu Law Firm, between 2012 and 2014, as a Lawyer with Ozak Global Holding, between 2011 and 2012, as a Senior Lawyer with Avea, between 2010 and 2011, and as a Lawyer with Birsel Law Offices, between 2005 and 2009.

Pamukkale has also been with the firm since 2015 and was promoted to Partner in 2017 (as reported by CEE Legal Matters on August 11, 2017). Before that, he worked at Birsel Law Offices between 1994 and 2014.

“As Moral, Kinikoglu, Pamukkale, Kokenek, we are excited to step towards a bright future, carrying the 55-year-old legacy forward and we can’t wait to see what 100 will look like!” commented Managing Partner Resat Moral.

With the “Act Amending Banking Law, Some Other Laws and the Decree no. 655” [“Amending Act”], Banking Law no. 6411 [“Banking Law”] and Act no. 6758 on the Approval of a Decree with Amendments [“Act no. 6758”] was amended with respect to the articles regarding the authorities and responsibilities of the Savings Deposit Insurance Fund – the so-called “TMSF” [“SDIF”].

Below are some of the most important amendments included within the Amending Act:

Scope of Savings Insured by the SDIF Were Expanded

Prior to the amendment, the scope of SDIF insurance was limited to “savings and participation funds belonging to real persons stored in credit institutions”. With the Amending Act, this scope has been expanded to include all savings deposit accounts and participation funds except for those belonging to state institutions, credit institutions or financial institutions. The primary objective of this change is to include commercial deposits and commercial participation shares belonging to corporations in SDIF insurance. Moreover, this amendment means that SDIF legislation is now in compliance with International Association of Deposit Insurers standards, which was also adopted by the European Union.

On the other hand, several types of deposit accounts and participation funds were also added as exceptions to SDIF insurance in order to cover possible gaps that could arise under the Banking Law due to the expansion of insurance. In this context, qualified shareholders, companies controlled by controlling shareholders and qualified shareholders and companies controlled by managers of financial institutions holding the deposit account are not covered by SDIF insurance. Fund Board may also exclude other deposit accounts and participation funds from the insurance scope apart from those listed in the article.

Conditions of Commercial and Economic Integrity Sales Have Changed

Another outcome of the amendments to the Banking Law regarding authorities of the SDIF is the expansion of SDIF’s authority to bundle up assets in a “commercial and economic integrity” in order to sell them as a whole.

After the Amending Act, rights arising from licensing and concession agreements can be sold as a commercial and economic integrity along with assets seized for the collection of SDIF receivables, relevant financial leases and other rights arising from agreements regarding such assets. These sales will be announced by the Fund Board on the Official Gazette along with the order table, which will be subject to objection for 15 [fifteen] days.

With the changes to Act no. 6758, the Fund Board was also authorised to pay off outstanding debts of the commercial and economic integrity or have such debts paid off by the acquiring party as long as the relevant debt arises from a valid commercial transaction with persons that are not in connection or cooperation with the FETÖ/PDY terrorist group, and that the transaction fulfils the requirements set forth in Act no. 5411 Article 134.

SDIF Authority Over Trusteeship Operations Were Expanded

Another important amendment to Act no. 6758 came in the form of the expansion of SDIF authorities upon companies in which the institution acts as a trustee. In accordance with this amendment, SDIF is now authorised to sell off the assets of the company fully or partially, and may even decide on its liquidation. The Fund Board may decide to form new companies with the same shareholding structure as the original company, and these new companies will be registered by the relevant registry without the shareholders’ consent, or the fulfilment of the usual requirements set out in Turkish Commercial Code [“TCC”].

SDIF will also be able to exercise the authorities of the general assemblies of shareholders in its trusteeship operations without being subject to the relevant TCC legislation. Therefore, the SDIF can decide on a demerger or sale of the company without the need for a general assembly resolution, while also being able to elect board of directors members and other officials regardless of TCC or the articles of association. SDIF can also decide to distribute dividends to “shareholders that are not convicted of connection or cooperation to terrorist organisations or organisations and groups determined to pose a threat to national security”.

SDIF Control Over Banks in Liquidation Tightened

Along with the changes described above, a new article added to the Banking Law provides for the exclusion of the liquidated bank’s controlling shareholders and managers, qualified shareholders, legal persons connected to such persons, persons responsible for the liquidation and persons that are criminally convicted of or subjected to confiscation due to connection or cooperation to terrorist organisations or organisations and groups determined to pose a threat to national security from the distribution of the remaining assets after the finalisation of liquidation. The assets will instead be transferred to the Treasury.

Changes in SDIF Administrative Organisation

While the authority of SDIF were expanded with all these changes, some changes were also made to streamline the administration of SDIF. In this context, number of vice-presidents were increased and a maximum of twelve departments and a maximum of six directorates were decided to be formed.

Conclusion

Some provisions of the Amending Law expand the scope of SDIF insurance and ensure the compliance of Turkish banking practice with international standards.

However, the other changes brought with the Amending Law grant SDIF full control over its trusteeship operations and banks in liquidation by enabling it to decide on the demerger, sale, or liquidation of corporations. Therefore, such a wide range of authorities may cause concerns about predictability for existing shareholders, and even cause discussion and possible litigation on property rights in the near future.

By Tarik Gueryuz, Partner, and Aziz Can Cengiz, Junior Attorney, Guleryuz & Partners

On June 3, 2022, the Turkish Competition Board (“Board”) published its reasoned decision dated September 9, 2021 and numbered 21-42/611-298, rejecting Solgar Vitamin ve Saglik Urunleri Sanayi ve Ticaret A.S.’s (“Solgar”) exemption application for its dealership agreements (“Board’s Decision”).

The dealership agreements concerning the distribution of food supplements were planned to be signed between (i) Solgar and Navita İlaç ve Sağlık Ürünleri Sanayi ve Ticaret A.Ş. (“Navita”), an undertaking controlled by Solgar and (ii) twelve pharmaceutical warehouses and approximately 25.000 pharmacies for the duration of 5 years (“Dealership Agreements”). The Dealership Agreements contemplated that each pharmaceutical warehouse signed the relevant agreements will be designated as a Solgar dealer whereas each pharmacy agreed to comply with the principles set out in the relevant agreements will be designated as Solgar sub-dealers. Accordingly, the pharmaceutical warehouses would act as an intermediary for the signing of the relevant agreements between Solgar and pharmacies and monitor whether these pharmacies follow the principles set out by Solgar.

Solgar requested the Board to grant a negative clearance for its Dealership Agreements or grant an individual exemption to them.

The Board in its decision deemed that the Dealership Agreements (i) are within the scope of Article 4 of the Law No. 4054 on the Protection of Competition (“Law No. 4054”) which prohibits inter alia all agreements between companies that have as their object or effect the prevention, restriction or distortion of competition, and (ii) do not benefit from the protective cloak of the Block Exemption Communique No. 2002/2 on Vertical Agreements (“Communique No. 2002/2“). With respect to the individual exemption evaluation, the Board decided that the Dealership Agreements may not be granted with an individual exemption as they do not satisfy the criteria set out by the sub-paragraphs (a), (b) and (d) of Article 5 of Law No. 4054.

The Board’s Decision is noteworthy as it delves deep into the competition restricting effect of prohibiting the sales of food supplements through the e-commerce platforms. In terms of the recognition of the eminent position of the e-commerce platforms in the retail sales, it should also be noted that on April 14, 2022, the Turkish Competition Authority (“Authority”) published its Final Report on the E-Marketplace Sector Inquiry (“Final Report”) upon its Preliminary Report on the E-Marketplace Sector Inquiry (“Preliminary Report”) dated May 7, 2021, noting the swift development of the e-commerce channel and stating that e-commerce is becoming an essential channel for retail commerce.

The Board’s Evaluation of the Dealership Agreements Within the Scope of the Communiqué No. 2002/2

The Board first found that the Dealership Agreements include restrictions that fall within the scope of Article 4 of the Law No. 4054 since they (i) prohibit the pharmaceutical warehouses from making sales to any reseller other than the pharmacies designated as Solgar sub-dealers, (ii) prohibit the sales/exchange of products among the pharmacies designated as Solgar sub-dealers and (iii) prohibit the sales of pharmacies to anyone other than the final consumer.

Therefore, the Board decided that the Dealership Agreements may not be granted a negative clearance and proceeded with its evaluation of the contemplated dealership system, within the scope of the Communiqué No. 2002/2.

Pursuant to the Communiqué No. 2002/2, vertical agreements may benefit from the protective cloak of block exemptions, thus avoiding the prohibition of Article 4 provided that (i) the supplier’s market share in the market where it provides the products and services subject to the agreement does not exceed a certain threshold[1] and (ii) they do not contain restrictions provided in Article 4 of the Communiqué No. 2002/2.

In its assessment of the market share, the Board noted that if the market is defined as the market for the food supplements, Solgar’s market share is below the relevant threshold, whereas if the market is defined based on the ATC-3 categories, there would be 35 relevant product markets and in only 4 of these markets, Solgar has a market share that is above 40%.

Nevertheless, the Board noted that vertical agreements that contain “restrictions in relation to regions or customers where or to whom the goods or services which are the subject of the contract shall be sold by the purchaser” may not benefit from the safe harbour of Communiqué No. 2002/2 if the exceptions laid out in sub-paragraph (b) of Article 4 of Communiqué No. 2002/2 are not applicable. Accordingly, the Board ruled that the Dealership Agreements could not benefit from the block exemption as they prohibited the pharmacies from (i) making wholesales to third parties, (ii) making sales to third parties other than final consumers (especially other pharmacies) as well as exchanging products with these persons and (iii) making sales to e-commerce customers and they do not fall within the scope of the exceptions laid out in the Communiqué No. 2002/2.  

The Board’s Individual Exemption Evaluation

Following its finding that the Distributorship Agreements do not benefit from the block exemption, the Board carried on with its individual exemption evaluation for the contemplated system. To be eligible for an individual exemption, a restrictive agreement must (a) ensure new developments and improvements, or economic or technical development in the production or distribution of goods and in the provision of services, (b) allow the consumers a fair share of the resulting benefit, (c) not eliminate competition in a significant part of the relevant market and (d) not limiting competition more than what is compulsory for achieving the goals set out in sub-paragraphs (a) and (b). An agreement should satisfy all four conditions in order to obtain an individual exemption.

For its individual exemption evaluation, the Board obtained the opinions of various e-commerce platforms’ as well as vitamin/food supplements producers’ opinion regarding the market and the online sales of the said products.

First, the Board evaluated whether the contemplated system ensures any new development and improvements or, economic or technical development in the production or distribution of goods and in the provision of services. The Board noted that Solgar would not change its distribution network as it would sign the relevant agreements with the pharmaceutical warehouses and pharmacies that it currently works with and stated that the contemplated system mainly concerns prohibiting the online sales of the relevant products. Relatedly, the Board remarked that, with the contemplated system, consumers would be able to buy the Solgar products only through the channel of pharmacies while other channels would be eliminated. According to the Board, elimination of different channels cannot be considered to increase the efficiency of the distribution. The Board also stated that although Solgar indicated with its application that its main purpose is to prevent sales of counterfeit products and products brought to Turkey illegally, the Dealership Agreements in fact restrain the pharmacies’ sales to third parties, hence the restrictions are not relevant with the aim proposed by Solgar. Furthermore, the Board referred to the opinions of other vitamin and food supplements producers and the e-commerce platforms and indicated that the prices offered in alternative sales channels were considerably lower and thanks to these channels, the consumers are able to purchase products outside the working hours of the pharmacies. In light of these, the Board deemed that the contemplated dealership system of Solgar did not satisfy the first criterion for granting an individual exemption.

Further, the Board analyzed the Dealership Agreements against the second criterion of individual exemption and evaluated whether the contemplated system allows the consumers a fair share of the resulting benefit. In its analysis, referring to its Preliminary Report, the Board mentioned that the transaction volume for the products in the category of health, medical products and food supplements increased by 150% in 2020 in e-commerce. Therefore, the Board remarked that elimination of the online channels would have a significant impact on the consumers. The Board reiterated that the online sales channels enable consumers to purchase the products even outside the working hours and without going to the pharmacies. The Board also mentioned that the consumers are able to reach more alternatives in the online channels when compared to physical channels that are subject to shelf space or storage area limitations.

The Board also noted that although the consumers may be informed about the product in pharmacies before their purchases, such information may only be helpful for consumers who are unsure about the product that they intend to buy and underlined that the information provided by the pharmacies may be affected by the commercial interest of the pharmacy employee given that food supplements are not treated as drugs. On that front, the Board also highlighted that the reviews of other consumers and the Q&A mechanism established between the consumer and the seller in the e-commerce channels could also serve for informing the consumers, seeking advice on a given product. Therefore, the Board found that it cannot be said that the physical channels are more advantageous in terms of informing the consumers.

Moreover, the Board provided a list comparing the recommended resale price and the prices offered in the e-commerce channels for the top 10 best-selling products of Solgar. The Board remarked that, for all products compared, the online sales prices were considerably lower than the recommended resale price of Solgar. The Board thus concluded that if the sales on online channels were prohibited, the consumers would be deprived from the chance of purchasing products for a lower price.

Lastly, the Board mentioned that Solgar products are sold online in Europe as well as the United States of America.

As to the Solgar’s claim that the contemplated system would be helpful in preventing the sales of counterfeit products as, with the contemplated system, Solgar would establish a secure traceability for its products, the Board stated that although the supplier may take necessary precautions in order to handle this problem, prohibiting the sales of products in every channel other than pharmacies would not be a proportionate measure and would not benefit the end consumer. The Board also highlighted that the relevant government bodies apply necessary mechanisms to combat this problem. Moreover, the Board referred to the information provided by the e-commerce platforms on the mechanisms they have adopted to prevent the sales of counterfeit products. Accordingly, the Board noted that the relevant platforms have some control and monitoring mechanisms, for example, in case there is a complaint that a seller supplies counterfeit products, they require invoices and other relevant documents from the seller in order to verify the supply sources and authenticity of the product. Further, the Board also noted that the e-commerce channels reported that the complaints received by the consumers about the counterfeit products are very rare.

In light of the given evaluation, the Board indicated that the contemplated system did not allow the consumers a fair share of the resulting benefit, hence failed to satisfy the second criterion of individual exemption.

With respect to the third criterion, the Board agreed that the contemplated dealership system would not eliminate competition in a significant part of the relevant market given the low market share of Solgar for the products subject to the Dealership Agreements and the lack of entry barriers in the market.

As for the final criterion, i.e. not limiting competition more than what is compulsory for achieving the goals set out in sub-paragraphs (a) and (b), the Board deemed that the last criterion is not satisfied stating that the Dealership Agreements would eliminate any sales channels other than pharmacies and such a restriction limits competition more than what is compulsory for preventing the sales of counterfeit problems.

Therefore, the Board decided that the contemplated dealership system of Solgar cannot be granted with an individual exemption.

Conclusion

The Board’s Decision focused on the role of e-commerce channels in the sale of food supplements and analyzed in detail how prohibition of sales in the e-commerce channel may have an impact on competition and consumers in the relevant market. In light of the Board’s Decision and considering that the significant role of the e-commerce channels in the retail sales was also recognized by the Authority in its Preliminary Report and Final Report, it can be stated that vertical agreements that include restrictions of sales in e-commerce channels will be under the spotlight and evaluated thoroughly by the Board.

By Gonenc Gurkaynak, Partner, Zeynep Ayata Aydogan, Associate, and Can Baran Beder, Associate, ELIG Gürkaynak Attorneys-at-Law

Esin Attorney Partnership and Baker McKenzie have advised the board, principal shareholders, and equity investor Invus on the sale of Airties to Providence Equity Partners. Gedik & Eraksoy and Allen & Overy advised the buyer. YC Law and DLA Piper reportedly also advised the seller.

Airties is a managed Wi-Fi solutions provider. Airties’ customers include AT&T, Deutsche Telekom, Singtel, Sky, Telia, Telstra, and Vodafone.

Founded in 1985, Invus specializes in equity investments and is active in various industries including consumer and retail, technology, and healthcare. The company has offices in New York, Paris, and Hong Kong.

Providence is a private equity firm primarily focusing on the media, communications, education, and technology industries. Providence has offices in Providence, New York, and London.

“We have been impressed by the strength and quality of Airties’ cloud-based managed Wi-Fi solutions and strongly believe its leading software offering, together with its deep expertise in integrating across hardware technologies and operator platforms, positions Airties as a preferred partner for broadband service providers,” Providence Managing Director Michael Vervisch commented. “We see tremendous potential to continue Airties’ growth trajectory by extending its global reach and expanding its offering. Additionally, we believe its culture of innovation and success make it a perfect fit for us.”

The Esin Attorney Partnership team was led by Partner Duygu Turgut and included Partner Orcun Solak and Associates Erman Ertan and Ulku Sarikaya.

The Gedik & Eraksoy team was led by Partner Hakki Gedik and Senior Associate Cinar Sipahioglu and included Associates Ipek Ince and Gulbabil Kokver.

The Law Amending the Law on the Regulation of Electronic Commerce [“Amending Law”] was adopted on July 1, 2022 by the General Assembly of the Grand National Assembly of Turkey and subsequently published on the Official Gazette on 07 July 2022 as Law no. 7416. The Law no. 6563 on the Regulation of Electronic Commerce [the “Law“] published on the Official Gazette no. 29166 dated November 5, 2014 has undergone many changes with the Amending Law. Accordingly, new obligations and restrictions have been introduced onto intermediary service providers, including obtaining and renewal of an e-commerce license, restrictions on advertisement and promotions, and a ban on the sale of platform-owned brands; and new definitions have been to the Law.

The most striking aspects of the Amending Law will be outlined in this article.

Definitions

The Amending Law establishes the definitions of “electronic commerce intermediary service provider” and “electronic commerce service provider” while “intermediary service provider” and “service provider” were already defined in the Law.

Among the new definitions, an “electronic commerce intermediary service provider” is defined as “the intermediary service provider that enables placing orders or executing agreements pertaining to provision of electronic commerce service providers’ goods or services in the electronic commerce marketplace” [“Intermediary“], while an “electronic commerce service provider” refers to “the service provider that executes agreements or receives orders on its goods and services in the electronic commerce marketplace or in its own electronic commerce medium.“

Although the definitions recently added to the Law appear to be a more specific version of the already existing definition of intermediary service provider and service provider definitions, it seems unlikely for a platform that is an intermediary service provider not to be an electronic commerce intermediary service provider or a platform that is a service provider not to be an electronic commerce service provider under the current regulations, except for some companies that the Amending Law clearly exempts from the definition of Intermediary, such as insurance brokers, travel agencies, banks and electronic money institutions.

License Obligation

The obligation to obtain and renew a license is among the most important new obligations regulated by the Amending Law. As per the new rule, Intermediaries and electronic commerce service providers with a net transaction volume of ten billion Turkish lira and a number of transactions over one hundred thousand excluding cancellations and refunds in a calendar year, must obtain a license and renew such when the time comes from the Ministry of Commerce in order to continue their activities.

The cost of obtaining and renewing a license is established gradually in accordance with the number of transactions made by the person concerned and it ranges from three in ten thousandths of the transaction volume in the lowest segment to twenty-five percent of the transaction volume in the highest segment. This means that a platform with a transaction volume exceeding 65 billion Turkish liras must pay a license fee of 25% of the transaction volume exceeding 65 billion Turkish liras and a decreasing license fee for the remainder of the transaction volume.

Obligations and Restrictions for All Intermediaries

One of the most significant restrictions on Intermediaries imposed by the Amending Law is the restriction of the sale of goods bearing their own brands. In this respect, Intermediaries cannot sell or act as an intermediary in the sale of goods bearing the brand of themselves or the persons with whom they are considered to be within an economic integrity or have the right to use the brand in e-commerce marketplaces where such Intermediary provides intermediary services. As such, if these goods are offered for sale in different electronic mediums, providing access between such is not permitted. However, this regulation will not apply if the brand owner’s revenue from e-commerce is less than half of its total sales revenue, or if the platform in question solely offers items carrying the Intermediary’s brand in the form of agency contracts or franchising. Moreover, periodic publications, books and e-readers are also exempt from this regulation.

Other obligations applicable to all Intermediaries are removing illegal content and advertisements, verifying the information of electronic commerce service providers, not using the brands of electronic commerce service providers for promotional purposes without their consent, and not engaging in unfair commercial practices against electronic commerce service providers.

Like the Intermediaries’ obligation of not using the brands of electronic commerce service providers for promotional purposes without their consent, electronic commerce service providers will not be able to advertise using brands and domain names that do not belong to them.

Along with the regulations mentioned above that apply to all Intermediaries, the Amending Law also imposes special obligations based on the volume of net transactions.

Intermediaries With a Net Transaction Volume of Over TRY 10 Billion

Intermediaries whose net transaction volume exceeds 10 billion Turkish liras will only be able to use the data obtained from electronic commerce service providers and buyers for the purpose of providing intermediary services and will not be able to use them to compete with other platforms. It will also be required to provide technical means for the electronic commerce service provider to carry the data obtained free of charge resulting from its sales, and to provide free and effective access to such data and the processed data obtained from them.

These Intermediaries must notify the Ministry of Commerce in case of share transfers, other than those registered in stock exchange, corresponding to 5% or more of their share capital, company acquisitions, and new company establishments within one month after the date of relevant transaction. Parallel to this, they are also obliged to send to the Ministry of Commerce audit reports prepared by an independent auditor which includes the activities, management and organizational structure, current shareholders and their share ratios, shareholders’ shareholding ratios in its subsidiaries and affiliates, information of the persons with whom they are considered to be within an economic integrity, its financial status including financial statements, and its compliance with certain obligations of the law.

Obligations regarding the restriction of the use of data and sending the compliance report to the Ministry of Commerce applied to Intermediaries with a net transaction volume over 10 billion Turkish liras will also apply mutatis mutandis to electronic commerce service providers.

Intermediaries With a Net Transaction Volume of Over TRY 30 Billion

According to the regulation, the advertising and promotion budgets for Intermediaries with a net transaction volume over 30 billion Turkish liras and a number of transactions over one hundred thousand excluding cancellations and refunds in a calendar year will be calculated pro rata to the net transaction volume.

The total advertisement budget limit is calculated as 2% of the net transaction volume below the limit to be determined as 30 billion Turkish liras in the first year -subject to readjustment with the CPI rate every year- and three per thousand of the portion above this limit. The promotion budget will also be separately calculated but will be equal to the advertising budget. All kinds of promotions, rewards, points, coupons, gift certificates and similar opportunities offered to customers will be included in the promotion budget. Intermediaries may also not prevent electronic commerce service providers from selling or advertising through alternative channels.

Obligations regarding the restriction on advertisement and promotion expenditure determined for Intermediaries with a net transaction volume over 30 billion Turkish liras will also apply mutatis mutandis to electronic commerce service providers.

Intermediaries With a Net Transaction Volume of Over TRY 60 Billion

Intermediaries with a net transaction volume of over 60 billion Turkish liras and a number of transactions over one hundred thousand, excluding cancellations and refunds in a calendar year will not be able to engage in any activity to facilitate the provision of the services of banks and companies or to accept for payment of electronic money issued by electronic money institutions with whom they are considered to be within the same economic integrity in addition to the above-mentioned obligations and restrictions.

Intermediaries falling into this category will also not be able to carry out transportation, delivery and postal services for electronic sales, except for the sales they acted in as an intermediary.

If an electronic medium is provided for advertisements of goods or services by these Intermediaries, execution of agreements or placing orders for the supply of goods or services in the same medium will not be facilitated.

Finally, obligations regarding the restriction on banking and electronic money operations, the prohibition of publication of goods or service announcements and conclusion of agreements for the supply of goods or services in the same environment for Intermediaries with a net transaction volume over 60 billion Turkish liras will also apply mutatis mutandis to electronic commerce service providers.

Effective Date and Fines

On January 1, 2023, the Amending Law’s provisions limiting advertising and promotion expenditures will be effective after being calculated based on the balance sheets of 2022. The provisions regulating the use and transport of data and the obligations regarding notifying the Ministry of Commerce will enter into force on January 1, 2024.

All other provisions such as verification of electronic commerce service providers’ information and ban on unfair business practices will enter into force as of January 1, 2023. However, companies must be in compliance with the provisions regulating the restriction on intermediaries selling goods bearing their own brands, the prohibition on banking and electronic money operations, and the limitation on delivery activities before January 1, 2024, due to the compliance period stipulated in the Amending Law. Obligations to get and renew e-commerce licenses will likewise be enforced as of January 1, 2025.

Depending on the violation, administrative fines ranging from ten thousand Turkish liras to 20 million Turkish liras and blocking access to the website will be applied following these dates if it is determined that a provider does not comply with the provisions of the Law added with the Amending Law. In case of repeated violation of the Law, such fines will be gradually increased.

Conclusion

The Amending Law aiming to maintain the competitive environment in e-commerce and to enable new actors to enter the market, regulates the e-commerce sector, where there is an increased tendency of monopolization with defined obligations and severe fines for all actors.

While the Amending Law will likely prevent legal abuses, concerns have already been raised that it might also have a restrictive effect on the market due to provisions such as the obligation of an annual license fee equal to or up to 25% of the net transaction volume and the restriction on the sale of platform-owned brands.

Regardless of the new rules’ financial consequences, all companies that will be affected should take legal steps as soon as possible to comply with the provisions and eliminate the risk of a possible fine prior to the effective date of the Amending Law.

By Zahide Altunbas Sancak, Partner, and Aziz Can Cengiz, Attorney, Guleryuz & Partners

The Turkish Competition Board (“Board”) published its latest reasoned decision concerning the acquisition of joint control over the industrial sewing machine business (“Target Business”) of Mitsubishi Electric Corporation (“Melco”) by Juki Corporation (“Juki”) and Melco. The Board evaluated that the transaction concerning the acquisition of joint control by Juki over the Target Business, which was under the sole control of Melco pre-transaction, is an “acquisition” within the meaning of Article 7 of Law No. 4054 on the Protection of Competition (“Law No. 4054”) and granted its unconditional approval.

The decision is of significance as it shows the most up-to-date approach adopted by the Board regarding the establishment of a joint venture over an existing undertaking or a part of it to which a turnover can be attributed. In this decision, the Board evaluated whether the requirement of full-functionality is to be taken into consideration or not in case of establishment of a non-greenfield joint venture.

The decision brings a new approach by establishing that as long as a structural change as a result of the transaction is observed in the market, the Board would not seek the full-functionality criterion. With this approach, the reach of full-functionality criterion has been substantially narrowed down to the transactions concerning the establishment of green-field joint ventures.

The Board’s Decision

General Overview of the Transaction 

The transaction concerned the acquisition of joint control over the (i) industrial sewing machine business of Melco and (ii) industrial sewing machine business of Melco’s wholly-owned subsidiary Meiryo Technica Corporation (“Meiryo”) by Juki and Melco. Accordingly, the Target Business was carved out into a newly established company Juki TechnoSolutions Corporation (“Juki Techno”) as a wholly-owned subsidiary of Meiryo. The transaction was planned to be implemented through a share purchase agreement signed between Juki and Meiryo. According to the share purchase agreement, Meiryo undertook to sell a number of shares of Juki Techno to Melco and subsequently sell the remaining shares to Juki. Accordingly, Juki would be the majority shareholder whereas Melco would have certain veto rights at the closing of the Transaction.

Post-transaction,  Melco (and its subsidiary Meiryo), by carving-out its industrial sewing machine into Juki TechnoSolutions, would exit the market and the joint venture (i.e. Juki TechnoSolutions) would start to supply exclusively to Juki.

While analysing the product markets, the Board indicated that in Turkey, Juki operates through its distributors in industrial sewing machines, household sewing machines and the electronic assembly systems whereas Melco is active in lockstitch sewing machines business.

To provide a better view into the relevant sector, the Board proceeded with analysing the market and delivered its further assessments stating that the industrial sewing machines market, which is the market in which both Juki and Melco are active in, can be sub-segmented into lockstitch sewing machines and chainstitch sewing machines. The Board concluded from a demand-side perspective that the lockstitch sewing machines and chainstitch sewing machines constitute two separate markets based on their differentiating appearances, features, functions and stretching abilities. From a supply-side perspective, the Board resolved that the lockstitch sewing machines and chainstitch sewing machines have different sewing structures and therefore comprise of different machine parts. The Board also considered the production lines of both businesses and concluded that lockstitch sewing machines and chainstitch sewing machines should be considered different products and therefore constitute independent product markets.

The Board refrained from delivering an exact product market definition and therefore left such definition open while delivering its examinations considering the business in which Juki Techno is planned to be active in post-transaction (i.e. the lockstitch sewing machines business).

Although the Board assessed that there is a horizontal overlap in parties’ worldwide activities, the Board highlighted that after the transaction Melco will not be active in sewing machine business as it would be carved out and transferred to Juki Techno. The Board also indicated that Juki Techno will not be active in Turkey, post-transaction.

The Board concluded that parties’ activities do not overlap vertically or horizontally and therefore the transaction does not give rise to any affected markets in Turkey as Melco does not generate an income in lockstitch sewing machines. Consequently the Board determined that the established joint venture will not be active in Turkey also considering the fact that Juki Techno will exclusively supply its products to Juki post-transaction.

The Board’s Assessment on Joint Control and Full-Functionality

As per Article 5 of Communiqué Concerning the Mergers and Acquisitions Calling for the Authorization of the Competition Board No. 2010/4 (“Communiqué No. 2010/4”), in order for an establishment of a joint venture to be considered an acquisition within the meaning of the Communiqué No. 2010/4, two conditions should be met together: (i) joint control over an undertaking and (ii) full-functionality of the joint venture. Accordingly the Board has made its analysis regarding these two conditions. 

The Board’s Analysis Concerning Joint Control

The Board assessed that Juki Techno will be jointly controlled by Melco and Juki post-transaction as Juki will hold the majority of votes in the general meeting, as per the shareholders agreement signed between Juki and Melco, whereas Melco will have veto rights over certain strategic decisions, specifically the appointment and dismissal of the senior management, and over the annual business plan, in the general meeting.

By emphasizing the abovementioned points, the Board concluded that the requirement of joint control is fulfilled in terms of the transaction subject to the Decision.

The Board’s Analysis Concerning Full Functionality

As per the Guidelines on Cases Considered as a Merger or an Acquisition and the Concept of Control (“Guidelines on the Concept of Control”), to be fully functional, a joint venture should, (i) have sufficient resources to operate independently on the market, (ii) make activities beyond one specific function for the parents, (iii) be independent from the parent companies in sale and purchase activities and (iv) operate on a lasting basis.

Paragraph 78 of the Guidelines on the Concept of Control sets forth an exception to this rule. Accordingly, even if a joint venture will not be fully functional after the transaction, such transaction may constitute a concentration as per the Law No. 4054 so long as it leads to a structural change in the market. As per the wording of this article, this exception is applicable only in case of a transaction involving “several undertakings acquiring joint control of another undertaking or parts of another undertaking”. Even though this wording is not crystal clear, the general interpretation so far has required all of the previous controlling shareholder(s) of the existing undertaking over which the joint control would be established to exit the picture with the notified acquisition.

On the other hand, in its ISC/TDR Capital/Aggreko decision while referring to the exception set forth in Paragraph 78 of the Guidelines on the Concept of Control, the Board left out the condition of acquiring joint control from third parties and therefore provided an interpretation of Paragraph 78 as this exception would be applicable in every case where a joint venture is established over an already active undertaking pre-transaction, even when the joint control is not acquired by third parties. Based on the foregoing, until the Decision at hand, the above-mentioned interpretation in the ISC/ TDR Capital/Aggreko decision was rather isolated from the Board’s general approach towards full-functionality of joint ventures.

With the Decision at hand, the Board reinforced this approach by concluding that if a joint venture is established on a business unit which generates turnover pre-transaction (i.e. joint venture is established over an existing undertaking or a part of it to which a turnover can be attributed, a non-greenfield joint venture), the full-functionality condition will not be sought regardless of the parties acquiring the joint control, by relying on the resulting structural change in the market following the transaction. Respective and the most significant section of the Decision reads as follows; “it is set that the acquisition of joint control will result in a structural change in the market even in the cases where the acquired undertaking is not considered full-functional after the transaction, as planned by the acquirer undertakings.”

Even though Melco, the sole controller of the Target Business before the transaction, remains as a controlling parent post-transaction (i.e. the transaction does not involve an acquisition of joint control from third parties), the Board concluded that the transaction will lead to structural change in the market and is therefore notifiable, considering that after the commencement of the transaction, Melco will exit the lockstitch sewing machines market and Juki Techno will supply products exclusively to Juki. In other words, the Board ruled that in cases where a joint venture is established over the whole or a part of an active undertaking, such transaction will be deemed notifiable regardless of the full functionality of the joint venture and who acquires joint control. With this decision, it is understood that while implementing Paragraph 78 of the Guidelines on the Concept of Control, the Board will focus on whether the transaction will create a structural change in the market rather than detecting whether joint control is acquired by completely new [third] parties. This indicates that the Board will do away with literal interpretation of Paragraph 78 and focus on whether the transaction would lead to a structural change in the market.

As a result, despite the fact that the joint venture is deemed not fully-functional (as it is stated in the Decision that post-transaction the joint venture will exclusively supply its products to Juki), the transaction is considered to be subject to notification within the meaning of the Communiqué No. 2010/4.

Consequently the Decision demonstrates the Board’s current approach towards the full-functionality criterion while non-greenfield joint ventures are being reviewed.

Conclusion

As thoroughly explained above, the Board’s recent Decision is of the utmost importance as it demonstrates the Board’s current approach in the interpretation of Paragraph 78 of the Guidelines on the Concept of Control. The Decision indicates that the Board will focus on structural change when conveying its decision regarding whether the transaction concerning the establishment of a joint venture constitutes an acquisition or not. And thereby, the requirement of full-functionality criterion would be sought as an absolute prerequisite only for the establishment of green field joint ventures. Accordingly, the establishment of a joint venture over an active undertaking or part of would be considered a concentration within the meaning of Law No. 4054, regardless of it being fully functional or not. Therefore, with this decision, it is understood that while implementing Paragraph 78 of the Guidelines on the Concept of Control, the Board will focus on whether the transaction will create a structural change in the market rather than detecting whether joint control is acquired by completely new [third] parties. This indicates that the Board will do away with literal interpretation of Paragraph 78 and focus on whether the transaction would lead to a structural change in the market.

By Gonenc Gurkaynak, Partner, Ebru Ince, Counsel, Cigdem Gizem Okkaoglu, Associate, Cansu Ince, Associate, and Evgeniya Deveci, Legal Intern, ELIG Gürkaynak Attorneys-at-Law

Burcu Dal Gokalp and Alper Arslan have announced the establishment of their new firm in Turkey: the Gokalp Arslan Law Firm.

Gokalp specializes in corporate and M&A, contracts law, and competition law. Previously, she was a Legal Counsel at Eczacibasi Holding, from 2011 to 2021. Gokalp also worked as an Associate with Paksoy, from 2005 to 2011, and with the Yildirim Law Fim, from 2003 to 2004.

Specializing in dispute resolution, Arslan spent over 15 years with Cosar Avukatlik Burosu as an Attorney-at-Law, from 2007 to 2022. Prior to that, he was an Attorney-at-Law, working as a sole practitioner, from 2000 to 2007.

“Gokalp Arslan is founded in Istanbul by myself and Alper Arslan, having more than twenty years of experience as attorneys and legal counsels,” Gokalp commented. “We offer a broad range of legal services in relation to Turkish law matters to our domestic and international clients through our partners focusing on diversified but complementary practice areas, in particular M&A and Dispute Resolution.”

With the Banking Regulatory and Supervisory Authority’s [“BRSA”] decision numbered 10250 and dated June 24, 2022 [“Decision”], Turkish Lira borrowing by companies, other than banks and financial institutions, which are subject to independent audit [“Companies”] has become subject to a foreign currency asset [“FX-Assets”] restriction.

Companies Subject to the Decision

In order for the Decision to be implemented, these two conditions must be found together: (i) the TRL equivalent of the Company’s FX-Assets must exceed 15 million TRL; and (ii) the greater amount of the total assets of the Company or the Company’s net sales revenue for the last year should exceed the 10% of the threshold specified above. In this respect, Companies that meet both of the foregoing conditions will no longer be able to borrow TRL commercial cash loans. Such review will be conducted using the consolidated balance sheets for the Companies required to prepare consolidated financial statements and for the Companies subject to audit required to be evaluated by the most recent annual financial audit.

With the Decision, it is stated that, the amount of FX-Asset comprises of effective foreign currency which also include gold and foreign currency deposits in banks. Additionally, in the press release of the BRSA dated June 26, 2022 [“Press Release”], it is declared that for the Companies headquartered abroad and therefore deemed as foreign resident [“non-residents”], foreign currency denominated securities, and stocks, and other monetary assets such as reverse repo with non-residents are also included within the FX-Assets. On the other hand, other financial assets such as Eurobonds, non-resident securities and debt instruments denominated in foreign currencies are not considered as FX-Assets.

Companies Which are not Subject to the Decision

Companies that are not allowed to borrow foreign currency loans as per the legislation and that have a foreign currency net position deficit within three months following the date of loan application will be able to use commercial cash loans in TRL limited to the amount of the aforementioned position deficit. However, it is required for these Companies to: (i) have their position deficit determined; and (ii) apply to the bank from which they plan to borrow a loan, according to the evaluation to be made on the most up-to-date financial statements prepared by authorized independent audit firms.

In addition, Companies whose TRL equivalent of FX-Assets does not exceed 15 million TRL as of the loan application date, need to determine the Company’s total assets and net sales revenue for the last year, according to their then current FX-Assets and the most up-to-date financial statements prepared by an independent audit firm. Additionally, these Companies are to declare and undertake to the bank that the TRL equivalent of their FX-Assets will not exceed 15 million TRL until the term of the loan, even if it exceeds such amount, the greater amount of the sum of their total assets or their net sales revenue for the previous year shall not exceed 10% of the aforementioned threshold. Banks will be able to determine whether the threshold has been exceeded during the loan period through statements that must be submitted within the first 10 business days of each month based on the Companies’ prior month-end balance sheets.

Information and Documents to be Procured by Banks

Scope of information and documentation required from banks to identify whether Companies comply with this restriction is drawn with a broad framework. According to the Press Release, it is the responsibility of the banks to obtain an undertaking by the Company stating that “it will provide all kinds of information and documents to the bank, if requested, for the determination and follow-up of the use of the loan in accordance with its purpose” and/or to update the agreement within this scope and adapt the business transactions accordingly. On the other hand, it is explicitly stated that no standard form would be issued regarding the information and/or documents that the bank customers must provide.

Current Status of Present Commercial Cash Loans and Outstanding Loans

It has been clarified through the Press Release what will happen to commercial cash loans and outstanding loans that fall under the scope of the Decision. Accordingly, specific provisions were introduced for the type of loan within the framework of the lending limits allocated to customers or loans extended before the Decision date. In a nutshell, the increase of a residual risk of the Companies or, in some cases, the sole presence of risk excludes a Company from the scope of the loans that can be made available pursuant to this Decision.

Conclusion

The BRSA stated that although some companies do not have foreign currency debt or liabilities, they borrow TRL commercial cash loans to purchase foreign currency. Thus, creating speculation in the foreign currency exchange rate where cash loans were to originally be used for production, employment, and investment purposes. With the new restriction, it is without a doubt that supervision over whether the loans are used in line with the allocated purpose will increase. As a result, commercial operations that companies planned for the upcoming periods need to be reviewed, similar to the factors that banks consider while allocating loans.

By Yasemin Keskin, Senior Associate, and Beliz Boyalikli, Legal Intern, Guleryuz & Partners

The Turkish Competition Authority (“Authority”) published its Final Report on the E-Marketplace Sector Inquiry (“Final Report”) on April 14, 2022, after a period of almost a year after publishing its Preliminary Report on the E-Marketplace Sector Inquiry (“Preliminary Report”) on May 7, 2021.

The sector inquiry on e-marketplace platforms (“Sector Inquiry”) was initiated as per the Turkish Competition Board’s (“Board”) decision dated June 11, 2020 and numbered 20-28/353-M with the aim of analysing both the competitive and anti-competitive effects of e-marketplace platforms and introduce a policy proposal accordingly.

The Final Report is constructed upon the findings and analysis of the Preliminary Report. It preserves (i) the evaluations in the Preliminary Report regarding the characteristics and structure of the e-marketplaces, (ii) the assessments regarding the competition law related concerns in e-marketplaces, and slightly changes its policy recommendations.

The last topic addressed in the Final Report focuses on the post Preliminary Report developments that were occurred in the market and incorporates conclusive policy proposals in the light of the findings obtained through the both reports.

This article aims to provide the reader with an overview of the key points of the Final Report.

A. Final Report Updates the Statistics and Reiterates the Assessments Provided in the Preliminary Report

The Final Report preserved its evaluations regarding the general framework provided in the Preliminary Report with regards to the market structure and functioning along with the resulting structural market failures and potential competition concerns. Within this scope, it was remarked that network externalities, multi-homing, economies of scope and scale, multi-sidedness, data-driven business models contribute to the market power of the e-marketplace platforms. As a result of these market characteristics, e-marketplaces are associated with high barriers of entry and expansion and tendency to evolve into a single platform (tipping). Competition concerns are discussed theoretically with the conceptual scopes of (i) inter-platform competition, (ii) intra-platform competition, (iii) consumer related competition concerns and examination findings, and these mentioned issues are evaluated for Turkey.

In the Final Report, the statistics pertaining to the market outlook which were provided in the Preliminary Report have been updated with the data pertaining to 2021 and first two months of 2022. According to the 2021 data presented in the Final Report, the ratio of households with internet access, the rate of individuals using the internet, the frequency of internet usage of the consumers, internet shopping and the internet access rate of the businesses increased in 2021, compared to the values in 2020.

In the Final Report, values pertaining to the e-commerce volume figures in Turkey were also presented, particularly referring the data of E-Commerce Information Platform of the Ministry of Trade and TUBİSAD. Based on the most up-to-date statistics in hand, the Final Report emphasized the accelerating significance of the e-marketplaces for the businesses and consumers.

Following its explanations regarding e-commerce, e-marketplaces and the structure of e-marketplaces, the Authority then laid out the main competition concerns in the market under the following three categories; (i) inter-platform competition, (ii) intra-platform competition and (iii) consumer related concerns, as they were categorized in the Preliminary Report.

Inter-platform Competition: The Authority is of the opinion that wide most favoured nation (“MFN”) clauses lead to the following competition concerns; (i) decrease in price competition and increase in the retail price, (ii) price rigidity and anti-competitive collaborations, and (iii) entry barriers and expansion barriers. The Authority’s approach is therefore more favourable towards “narrow MFNs” where the seller’s obligation not to determine a lower price than its price on the platform is limited to its own website.

The Authority considers exclusivity and non-compete obligations imposed on sellers by platforms to be another competition concern in the market as they would decrease sellers’ multi-homing abilities and would thereby hamper the inter-platform competition. The Authority believes that ensuring multi-homing is critical in this market due to first-mover advantage stemming from network effects and economies of scale.

Restrictions on data access and data portability of consumers and sellers adopted by gatekeepers are further deemed anti-competitive by the Authority.

Intra-platform Competition: The Authority believes that the platforms which are also active at the retail level (“hybrid platforms”) may practice self-favouring or discrimination between sellers and therefore restrict intra-platform competition.

It is also argued by the Authority that the platforms may restrict competition through the asymmetric bargaining power they have against the sellers. According to the Authority, this generally occurs due to; (i) the platforms’ excessive pricing strategies vis-a-vis their sellers, and (ii) the platforms’ unfair trading conditions applied on the sellers. The Authority also mentions that the structure of the market has the potential to lead to hub-and-spoke type cartels. In such a case, the e-marketplace platform would be the hub that organizes and enforces the cartel whereas the sellers of such platform would be the spokes that are parties to the cartel.

Consumer Related Competition Concerns: In the Final Report, consumer related potential competition concerns are categorised as (i) price-based concerns, where the competition issues stem from the platforms’ excessive and selective pricing strategies; (ii) consumer dependency / loyalty programs, where the competition issues arise when such practices restrict the consumers’ multi-homing abilities; (iii) data-based concerns, relating to “zero-price services”, quality competition, excessive data collection and confidentiality, targeted advertising, information asymmetry, consumer vulnerability and transparency, product reviews; (iv)decrease in innovation, where the concerns stem from the possibility of higher prices and fewer choices for consumers.

B.  Final Report Takes into Account the New Developments Regarding E-Marketplaces

The Final Report discusses the developments that occurred following the publication of the Preliminary Report. The fact that these developments were taken into consideration differentiated the Final Report from the Preliminary Report and also caused it to become more comprehensive. Close and the precise examination of the developments that occurred further to the publication of the Preliminary Report almost effectuated a three year long display of the market. The general scope of these developments as presented in the Final Report is provided below.

1. Investigation and Interim Measure Decisions Regarding Trendyol

The Authority initiated an investigation against Trendyol upon the allegation that Trendyol violated Law No. 4054 with its practices in multi-category online e-marketplaces. The Preliminary Report drew attention to the increasing market power of Trendyol which was incorporated into Alibaba Group. These determinations were further objectified during the preliminary investigation before the fully-fledged investigation. In addition, during the on-site inspections conducted during the preliminary investigation, the Authority discovered documents indicating that Trendyol: (i) interfered with listing algorithm to the unfair advantage of its own products, (ii) utilized data belonging to the third party suppliers in terms of establishment of its own brands’ marketing strategy, (iii) conducted discriminatory practices with regard to the sellers in its platforms by interfering with the algorithm. Within the scope of gathered evidences and considering that Trendyol gained significant market share in the multi-category online marketplace platforms market, especially in fashion category along with other categories particularly in the last years, the Authority evaluated that, mentioned practices are likely to cause significant and irreversible damages until the final decision and therefore, decided to impose interim measures on Trendyol.

2. The Acquisition of N11 by Getir Perakende Lojistik AŞ (Getir)

Getir Perakende Lojistik AŞ (“GETİR”) acquired the sole control over N11, which was one of the e-marketplaces in the focus of the Sector Inquiry and was under the joint control of the Doğuş Holding AŞ and SK Planet Co., Ltd., via acquiring a certain amount of N11’s shares through capital increase. GETİR, entering into the market in July of 2015, procured a certain amount of growth in the market in a short period of time with the various and multiple services that it provided, such as: Getir10, Getir Büyük, Getir Su, Getir Yemek, Getir Çarşı ve Getirbitaksi. In this context, the Authority considered that the concerned acquisition may contribute (i) to the market share growth of N11 which is active in the e-marketplace and is losing market share as found by the Preliminary Report, and (ii) therefore to increase the competition in the market and (iii) the maintenance of competition in a more equitable environment.

3. The Outcome of Public Consulting Process

The policy suggestions in the Preliminary Report were shared with the public and the sector stakeholders. It is indicated in the Final Report that the Authority examined the opinions of both sector stakeholders and the public and these opinions brought huge benefits in finalization of the policy proposals of the Final Report.

• Opinions on the Market: In this regards, it was argued that physical retail sale activities and e-commerce activities were in competition and the multi-category e-marketplaces do not constitute a standalone market separate from the other retail channels. In the Final Report the above mentioned view was not taken into consideration as the Final Report provided the following assessment “the Authority considers that the empirically grounded findings of the Preliminary Report are more solid and stronger compared to the opinions mainly based on market observation.”
• Opinions on the Surveys Conducted within the Scope of the Sector Inquiry: Opinions provided to the Authority with respect to the surveys taken as basis in the Preliminary Report argued that: (i) no information provided with regards to the scales and competence of the participated sellers, (ii) there is a doubt whether the survey is comprehensive. Based on this, the Authority remarked that 1.860 consumers that were e-marketplace users and 5.196 sellers participated in the relevant surveys. Within the scope of the consumer survey, it was also added that the demographic data (consumer’s gender, age, household population, monthly household income, marital status, status of having a child, socioeconomic status, education and employment status etc.) were also collected and analyzed.
• Opinions on the Policy Recommendations Presented in the Preliminary Report: The opinions on Gatekeeper Regulation, Platform Code of Conduct and Recommendation of Strengthening the Secondary Legislation were provided within the scope of the Preliminary Report. With regards to the gatekeeper regulations, it was remarked that (i) it should be taken into consideration that Turkish market is more competitive compared to the EU, (ii) the qualitative data should also be taken into consideration along with the market share in determination of the gatekeepers, (iii) it could harm the innovation and (iv) cause over-regulation. With regards to the Preliminary Report’s Code of Conduct recommendation, the following opinions stating that (i) this regulation is not necessary, (ii) it cannot be implemented in a fair manner and (iii) it may harm the principle of legal certainty, were provided. With regards to the Recommendations on Strengthening the Secondary Legislation, affirmative opinions were received and it was remarked that the idiosyncratic attributes of the e-marketplaces should be considered during the preparation process of this regulation.

C.  Final Reports Concludes the Policy Recommendations of the Authority Regarding the E-Marketplaces

The Final Report ends up with two main policy proposals concerning competition law legislation in order to address the above mentioned competition concerns in the market: (i) Ex-ante Gatekeeper Regulation; (ii) Strengthening of the Secondary Legislation

1. Ex-Ante Gatekeeper Regulation

Within the scope of its first policy recommendation, the Authority refers to the on-going legislation preparations with respect to gatekeepers and suggests imposing the following ex-ante obligations on the e-marketplace platforms with gatekeeper status:

• not to employ exclusivity or wide MFN clauses;
• not to use data obtained through sellers’ operations within the platform, with respect to the gatekeeper e-marketplace platform’s products that compete with sellers’ products;
• not to favour their own products or the products belonging to their group companies in their platform rankings;
• to provide their sellers with free, efficient, high-quality, and real-time access to the performance tools so that the sellers are able to monitor the profitability of their sales on the platform;
• not to create any technical or behavioural barriers for consumers and sellers of the platform to transfer their data to other platforms;
• to provide sellers or third parties authorized by sellers with free, efficient, high-quality, and real-time access to their own data or data derived from such data;
• to ensure interoperability between their main platform services and ancillary services;
• to warrant platform transparency by providing their sellers with sufficient information regarding the scope, quality, performance, and pricing of their main and ancillary platform services.

2. Strengthening of the Secondary Legislation

Within the scope of its second policy recommendation, the Authority suggests strengthening the secondary legislation accordingly, in particular by way of:

• revising market share thresholds and theories of harm in terms of exclusivity and MFN clauses;
• defining and clarifying platforms’ exploitative behaviours;
• introducing a secondary legislation that completes the changes in the main legislation.

As it is seen, the Authority closely monitors online marketplaces which gained a steady ground as a substantial tool of e-commerce. The Final Report represents a comprehensive analysis on the digital markets and digitalization in Turkey by way of following the developments especially in the EU. Considering previous decisional practice of the Board, together with the on-going investigations involving the major players active in the digital markets, it could be said that the Final Report combines the practical experience of the Authority with its theoretical knowledge. Therefore, it is considered an important preparatory step to facilitate the regulative studies as it necessitates strengthening the legislation and paves the way for the legislative regulations on e-marketplaces.

By Gonenc Gurkaynak, Partner, Ebru Ince, Counsel, Cigdem Gizem Okkaoglu, Associate, Cansu Ince, Associate, and Evgeniya Deveci, Legal Intern, ELIG Gürkaynak Attorneys-at-Law