Category: Turkiye

Data protection legislations generally aim to protect the fundamental privacy rights of natural persons, to have more control over their personal data and to grant more rights over this data belonging to them. In blockchain technology, data protection and confidentiality must be taken into account whenever personal data of real persons are processed. In accordance with GDPR and KVKK legislation, a natural or legal person must be responsible for the establishment and management of the data recording system.

The keyword for this article will be “blockchain”. For the reasons that an NFT (non-fungible token) is defined as a set of data stored on a blockchain confirming that a digital asset is unique and therefore non-interchangeable, it is necessary to delve deeper into the blockchain first, in order to understand the relationship between personal data and NFT technology (We recommend you check out our previous articles on the subject).

Data protection legislations generally aim to protect the fundamental privacy rights of natural persons, to have more control over their personal data and to grant more rights over this data belonging to them. In terms of data controllers, these legislations always expect more sensitivity in terms of data protection and are demanding for data controllers to continuously comply with the legislation. Data protection legislation such as the European Data Protection Legislation (“GDPR”) and the Turkish Personal Data Protection Law (“PDP Law”) are neutral to technological developments and there are no exceptions for blockchain technologies so far. In other words, in every case where personal data of real persons are processed in blockchain technology, protection of data and confidentiality must be considered.

Who Will Be the Data Controller?

In accordance with the GDPR and the PDP Law, there must be a determined “data controller”. In other words, a natural or legal person who determines the purposes and means of processing personal data and is responsible for the establishment and management of the data recording system should be determined. In some cases, situations such as joint data controlling may also occur, however the issue in essence is that it is very difficult to identify the main data controller in decentralized systems built on consensus structures such as blockchain. This situation makes it unclear where the persons who share their personal data will apply when they want to make a request in relation to their data. The data controller may be the software developer who develops the protocol or the publisher (project owner) of the smart contract. In this case, it should be taken into account that the potential legal obligations of the project owners may arise when starting NFT projects or establishing an NFT marketplace.

Words Fly, Writings Added to the Blockchain Remain

Another important feature of the blockchain is that the data added to the blocks cannot be deleted or changed. At the same time, the records of all transactions carried out on the blockchain are distributed to each participant on the network structure, instead of being kept in a single center, and thus progressing with a consensus structure. Although this situation shows us at first glance that the blockchain is transparent and secure and is proof against any change, it can directly create a conflict with data protection regulations. The reason is because data protection legislations may require that personal data be processed to the extent necessary, stored for certain periods, and deleted when it is no longer necessary to keep that data. In this case, it should be taken into account that the data, public keys, account names and transaction details stored in the NFT infrastructure cannot be deleted or changed.

GDPR and the PDP law request the deletion, destruction, or anonymization of personal data if the reasons for the processing of this data no longer remain. Considering the infrastructure of blockchain technology, it can be said that the reasons that require data processing for the sustainability of this system due to its nature and logic do not disappear. However, in any case, in the situation where the data owner requests to delete and destroy their personal data, it is obvious that this is not possible in today’s blockchain technology and that it creates conflict with the law.

Staying Pseudonymous Not Anonymous

When an NFT transaction takes place in today’s blockchain environment, public key infrastructure and transaction details are permanently and publicly recorded. For instance, Ethereum records all transactions on a publicly accessible record and makes the public keys of any transaction associated with the wallet visible. Although the pseudonyms used do not explicitly associate the transactions with the identities of the natural person, sufficient information is also made public that it may reasonably be possible to identify the person behind a series of actions carried out on the network. If a user links an NFT to any part of their online or IRL identity – for example using an NFT as their profile picture on Twitter or using a profile on an NFT marketplace – it becomes very easy to find out what else they are doing with their wallet. In short, the data added to the blockchain is not fully “anonymous”, it is possible to reach real people through their pseudonyms and a single wallet or a network of wallets that are not well-hidden has the potential to become a huge personal data storage that cannot be deleted from the blockchain.

Privacy by Design Could Be the Solution

With respect to the GDPR, a data controller’s obligation is to ensure “privacy by design”. Privacy by Design; requires the project owner to consider the privacy issue while it is still in development, not later in the project. At this stage, blockchain R&D studies on the subject continue. For now, NFT project owners and NFT marketplaces have limited room for action. Data controllers should be as transparent and open as possible to real person users about the limitations imposed by the blockchain. For example, it should be mentioned in advance that data published on the blockchain may not be deleted despite the request of a data subject. It is important that they inform the data subjects thoroughly, especially from the data they will collect to their privacy policies, and that they make a point to keep the data collected as much as possible to a minimum.

By Onur Kucuk, Managing Partner, and Melodi Ozer, Associate, KP Law

Aydemir Consultancy Legal has advised Fillo Lojistik on its collective labor agreement negotiations with Turkey’s Nakliyat-Is trade union and their subsequent agreement.

Fillo Lojistik, a cargo industry operator, is a subsidiary of Dubai-based Aras Holding.

According to the union’s press release, “the agreement, which was accepted by almost all of the union members, was signed on May 23, 2022, at Fillo Logistics’ headquarters.” Nakliyat-Is represents almost 500 workers employed by Fillo.

The Aydemir Consultancy Legal team included Managing Partner Ilber Aydemir and Senior Associate Erdem Sural.

On March 14, 2022, the Turkish Competition Authority (“Authority”) published its much anticipated E-Commerce Platforms Sector Inquiry Final Report (“Report”). The Report is extensive in scope and it aims to present a snapshot of the market and provide policy recommendations to address the market failures detected by the Authority. In this article, however, the section on the most favored nation (“MFN”) clauses will be focused on and more particularly it will be discussed whether MFN clauses can be employed by digital platforms in the light of findings of the Report. Decisional practice of the Turkish Competition Board (“Board”) will also be under the spotlight to provide further colour.

Decisional Practice of the Board

Under this section we review the decisional practice of the Board pertaining to MFN clauses. But first, we think that a noteworthy development must be mentioned from the outset. With the recent amendments to the Block Exemption Communiqué on Vertical Agreements No 2002/2 (“Communiqué No 2002/2”), the safe harbor envisaged by the Communiqué is decreased to 30% from 40%. Thus, for MFN agreements to benefit from the amended Communiqué, the market share of the undertaking that benefits from the MFN clause must not exceed 30%.

When the Board’s case law is examined, we see that wide and narrow MFN clauses are safe to employ when the market share of the undertaking benefiting from such clause falls below 30% (then 40%). For example in the Board’s Kitap Yurdu and Pankobirlik decisions, the Board granted the safe harbor of the Communiqué without making a distinction between wide and narrow MFN clauses.

The Board found in its Kitap Yurdu decision that Kitap Yurdu was demanding to be provided with the same or better discounts from which its competitors benefitted, and stated that Kitap Yurdu’s market shares were within the safe harbor provided by the Communiqué No 2002/2 and concluded its analysis there. Similiarly, in Pankobirlik, the supply contracts of Pankobirlik stipulated that the suppliers cannot offer a lower price than the price offered to Pankobirlik. The Board granted the safe harbor of the Communiqué due to Pankobirlik’s market shares falling under the 40% threshold, subject to removal of the provisions which stipulated that the price lists applied to distributors and dealers shall be sent to Pankobirlik.

The Board’s Hepsiburada decision is another important decision but the assessment of the Board is interesting to say to least. The Board started its assessment by first considering whether Hepsiburada is dominant. Upon its assessment, the Board stated that Hepsiburada is not dominant, even under the most narrow market definition. The Board then proceeded to analyze Hepsiburada’s agreements and stated that the agreement envisaged a wide MFN clause. The Board stated that this clause was not enforced in light of the answers submitted by several undertakings and that the clause did not create any effect. However, the Board then stated that since the MFN clause may foreclose the market to other online platforms that operate with lower commission, it may create barriers to entry to market and price stringency, thus the clause created effects that are restrictive of competition. Therefore, interestingly, the Board considered the wide MFN clause restrictive of competition after accepting that it did not create any effects. More interestingly, a few paragraphs before, the Board also stated that MFN clauses are not “per se” violations. Consequently, the Board concluded its assessment by stating that the MFN clause benefitted from the Communiqué No 2002/2.

The Board’s Yemeksepeti decision is another noteworthy decision, in which the Board fined the dominant Turkish online food delivery platform for its use of wide MFN clauses but did not consider narrow MFN clause as a violation. The Board determined that wide MFN clauses resulted in termination of promotions provided on competing platforms. The Board then stated that when a significant portion of the sellers/providers’ sales are subject to MFN clauses, potential sellers lose the motivation to decrease their prices. This in turn, hinders new entries, innovative products and business methods. Consequently, the Board has stated that since no platform is able to differentiate its products/services and the determination that a significant portion of these platforms either exit the market or exist as marginal players, means that MFN clause created exclusionary effects in the market.

A similar analysis is made in the Board’s Booking.com decision, in light of the dynamics of the digital markets. According to Booking.com’s agreements at the time, accommodation facilities were unable to offer better prices for hotel rooms on the internet than on Booking.com. The Board stated that the wide MFN condition lessened competition in terms of commission because competing platforms were unable to get better prices from the accommodation facilities in exchange for better commissions. The Board also stated that the relevant clause hindered competing platforms entry to the market. In a market where indirect network externalities also exit, accommodation facilities were unable to offer better prices in exchange of lower commissions. This in turn hinders the ability of new platforms to offer competitive offerings and reach the necessary scale. In other words, the Board stated that wide MFN clauses hindered the ability of new platforms to differentiate themselves and ignite their platform. On this basis, the Board rendered a violation decision.

The Board also analyzed the narrow MFN clause in its Booking.com decision and stated that, within the framework of commitments offered, amended contracts benefitted from an individual exemption for 5 years. The Board’s reasoning in restricting the individual exemption with 5 years was that the sales made through the accommodation facilities own website may be more important in the future.

Lastly, in its Yemeksepeti Commitment decision the Board stated that chain restaurants, individual restaurants and restaurants with branches have the motivation to offer better prices at their own websites. Furthermore, it is stated that Yemeksepeti asked for broachers and equated the conditions offered on Yemeksepeti with conditions on broachers. As a result of the fact that the broachers offered by some restaurants and the in-restaurant menus are the same, the narrow MFN clause also effected prices at the restaurant. In continuation, the Board stated that restaurants were in an effort to develop their own channels in order to avoid Yemeksepeti’s high commissions. As a result of the narrow MFN condition, this effort may go to waste. The Board also stated that Yemeksepeti being a “gate-keeper” due to the number of restaurants on its platform and user network and the facts that there is no effective competitor of Yemeksepeti and majority of the deliveries are made on Yemeksepeti, made platforms dependent to Yemeksepeti. Lastly the Board stated that narrow MFN clause may hinder the entrance of competitors because, new competitors may not have market power to dictate restaurant to offer the same discount on their platform.

Assessments of the Report

Before delving into the assessments of the Report, we note that even though the term “gate-keeper” is used numerous times, the meaning of this term is quite vague at the time of writing. The definition will carry importance since it will directly impact an undertakings ability to employ MFN clauses (particularly wide MFN clauses) if designated as a “gate-keeper”. The decisions of the Board also do not provide a meaningful definition to shed light on the term. Indeed, the Board used the term “gate-keeper” in a recent decision, albeit without a concrete definition and merely stated that Yemeksepeti is a gate-keeper due to its user network and the number of restaurants on its platform.

The Report states that the Authority is currently working on a legislation pertaining digital markets and “gate-keepers” are considered to be defined as undertakings with “significant market power”. However, the term “with significant market power” is also vague and it does not allow us to discern exactly which undertakings will be considered to have “significant market power”. As far as we are concerned there is no degree of dominance under the Law No 4054 on the Protection of Competition (“Law No 4054”). In other words, there is no meaningful distinction between an undertaking which is dominant with 60% market share or 90% market share.

Reports assessment on wide MFN clauses:

According to the Report, wide MFN clauses entail three competitive concerns.

Lessening the competition based on commission in the market and increase of retail prices as a result of the latter:

The Report states that since the force behind the growth of e-commerce platforms are provided by the user base, it is vital for platforms that want to get a foothold in the market to provide the products and services to consumers under the most favorable conditions. In the absence of MFN clauses, the main determinant of sales prices and conditions at e-commerce platforms in a competitive market are commissions. The lower the commission, the lower the price will be. This fact drives platforms to compete on commission rates.

In continuation, the Report states that wide MFN clauses eliminates the motive to provide better prices because, when the seller provides a better price to the platform that offers it a lower commission, the seller must also provide the same price to the platform which benefits from the MFN clause. This then creates a significant cost the seller must bear on its own. However, the platform which benefits from the MFN clause will benefit from better prices without incurring any costs. It is further stated that this holds true when the platform increases the commission rates. Since the seller will be bound by the MFN clause, if it increases the prices on the platform, it must also raise its prices on other platforms, effectively rendering it unable to price more favorably on platforms that offers it better conditions.

Price stringency and facilitation of anti-competitive coordination

The Report states that even if a new comer offers very low commissions, even a zero commission, the seller will have a very low motivation to offer low prices for consumers. On this front the Report states that the new platform will have a lower demand and prices offered for this low demand must also be provided to the beneficiary of the MFN clause. In other words, the seller will not have the motivation to provide low prices for the new comer, knowing that it must also provide these benefits to the MFN beneficiary. Furthermore, the Report states that, a platform which knows that its competitors employ MFN clauses, may refrain from providing better conditions because the MFN beneficiary will also benefit from these conditions. In this sense, the Report states that wide MFN clauses will eliminate platforms drive to compete with each other and that it may create price stringency.

Decrease in market entry, facilitation of exit from the market and/or hindrance of growth in the market

The Report states that in the absence of MFN clauses, a new competitor which seeks to enter the market can do so by offering better and more attractive offerings than the incumbent undertakings and facilitate its growth. On this front, the Report references its consumer survey and state that “convenient prices” comes at the forefront of the reasons for consumers to shop online. According to the Report, the presence of wide MFN clauses will prohibit the platform with a lower commission to gain market share and on the contrary, will make incumbent platforms more attractive. This in turn may result in tipping.

Reports assessment on narrow MFN clauses:

As per the Report, wide MFN and narrow MFN clauses may create the same effects when the marketplace is indispensable for the seller and when the seller’s direct sales channel (e.g., its website) is substitutable with the platforms website in the eyes of the consumers. Under this scenario, if a competing platform cannot offer a commission equal or less than the costs incurred via the seller’s own website and if sales volume the seller may acquire from this platform is not sufficient enough to leave the “indispensable platform”, it would not be logical for the seller to offer lower prices on that competing platform than its own website. When looked from another angle, if the indispensable platform increases commissions, the seller will also increase its sales prices due to increase in costs and will be forced to increase the prices on its direct sales channel. The seller, knowing that consumers are indifferent to its sales channel and the platform will have the motivation to increase its prices on other platforms to preserve its direct sales channels’ appeal.

Based on the foregoing, the Report is concerned with narrow MFN clauses when the conditions are met, the platform which benefits from the MFN clause must be indispensable and that consumers must view the direct sales channel of the seller, as a substitute to the platform. On this basis, the Report then proceeds to analyze whether the direct sales channels of the sellers are direct substitutes of platforms. According to the consumer surveys, 76.6% of the consumers that shop online do so through market places and 14.6% shops through the seller’s website. Therefore, the Report states that consumer’s preferences concentrate on market places. In continuation, the Report states that a significant number of sellers do not have their own websites and concludes that seller’s websites are not substitutes of market places. Since narrow MFN clauses do not involve other platforms, the Report states that sellers would still maintain the motivation to sell with lower prices on platforms that offer low commissions. Consequently, according to the Report, even if narrow MFN clauses are employed by gate-keepers, it would not be possible to concretely foresee the competitive effects and a case-by-case analysis must be conducted.

Conclusion

It is almost safe to say that, wide MFN clauses cannot be employed by “gate-keeper” undertakings. Indeed, according to the Report, when wide MFN clauses are employed by “gate-keepers”, the efficiencies will not be big enough to counteract the negative effects. Although a comparison can be made with the definition provided by the Digital Markets Act of the European Commission, the term “gate-keeper” is not yet defined and the Board decisions do not provide a meaningful guidance. Until such time the term is defined, it would be prudent for dominant undertakings to refrain from employing wide MFN clauses. The recent Yemeksepeti and Booking.com decisions show that, wide MFN clauses are considered to hinder the abilities of new competitors to differentiate themselves. That said, safe harbor provided (i.e., 30% market share threshold) by the Communiqué No 2002/2 still applies and undertakings that satisfy the threshold can safely employ wide MFN clauses. However, the Report calls for strengthening of the secondary legislation due to the fact that MFN clauses, exclusivity clauses and exploitative practices carry the risk of lessening and disrupting competition on the merits and thus, this may be subject to change in the future. For non-dominant undertakings (whose market shares fall outside the safe harbor), employing wide MFN clauses may not be perilous. Even though the findings in the Report do not paint a grim picture and it is obvious that the market did not yet tip in favor of any market player, the Authority signals that it may jealously guard the structure of the market. Indeed, the recent Hepsiburada decision may be giving signals in this direction. Thus, the Authority may block the application of wide MFN clauses even when employed by non-dominant players.

As for narrow MFN clauses, the Report adopts a more hospitable stance. Indeed, even though it states that narrow MFN clauses’ harmful effects would be higher when employed by gate-keepers, it calls for a case-by-case analysis. Accordingly, it seems so that even the “gate-keepers” can employ narrow MFN clauses if they can establish with concrete data that the direct sales channel of sellers is not substitutable with its platform in the eyes of the consumers. Indeed, the Report takes into account the fact that 76.6% of the shoppers prefer platforms as opposed to the sellers own website, in reaching its conclusion. That being said, the recent Yemeksepeti Commitment decision, still signals caution. The discerning factor, however, may be the fact that Yemeksepeti had no effective competitor. On the contrary, the Report states that the competition is among e-market places. Consequently, where there is sufficient competition between platforms, even a “gate-keeper” may argue that narrow MFN clauses do not restrict competition.

By Gonenc Gurkaynak, Partner, Harun Gunduz, Counsel, Can Yıldırım, Associate and Doga Kucukay, Associate, ELIG Gürkaynak Attorneys-at-Law

Inflation, currency depreciation, and low foreign currency reserves might lead to early elections in Turkey, but Turunc Partner Kerem Turunc chooses to focus on the positives: the buzz around the startup scene in the country. 

That buzz comes down to two reinforcing factors, according to Turunc: “a lot more startup activity than there used to be and significantly more investment than in the past.” The capital is both local and cross-border, he notes, with Turkey home to what is becoming a competitive indigenous startup and VC market. “There are a lot of regulated funds in the market, many more than there used to be. Also, a very large number of startups, with many becoming incredibly successful across different sectors such as fintech, eCommerce, health, and gaming, so it’s not a one-trick pony either,” he adds. 

And he highlights one subsector in particular: “Turkey has created multiple gaming studio unicorns, with a lot of up-and-coming game developers as well. It’s truly something the country can be proud of, especially since successful operations bring in more capital, so more people want to go into gaming. Which in turn creates more opportunities for investment, and so on.” Turunc does note it’s not all fun and games, however. “While the barriers to entry are quite low,” according to him, “there is also very little room for mistakes, as gamers will drop you like a hot potato if you miss the target. It’s a highly competitive market. Still, if you succeed you stand to make a killing, as the economies of scale are there.” He strongly believes that startups should, in such a crowded market, focus on innovating and having a different approach. “Is there a shortage of money in Turkey compared to the size of the market? Sure, you could say that. VC funds go through hundreds of startups before investing in a handful. It all comes down to distinguishing yourself from the competition, whether by building a better mousetrap or in some other way, he says.”

The other big thing when it comes to tech in Turkey, according to Turunc, is crypto, with the country expecting a new law on crypto-assets for some time now. “In light of the current situation,” he notes, “that piece of legislation is expected to be passed in the near future.” And while he doesn’t expect it will solve every problem, “as crypto is a developing industry everywhere in the world,” he says solid legislation is still much better than no legislation at all. Crypto assets were unregulated in Turkey until recently, he adds, “when crypto payments using payment service providers were banned, but trading and holding these assets is fine.” The key, according to him, is how these assets will be defined – whether as securities or another type of regulated asset. “That will, in turn, determine which agencies’ purview they will fall under as well as the specifics of how they will be issued.”

Finally, against the backdrop of regional inflation, Turunc says Turkey still faces currency depreciation, “with its foreign currency reserves probably at an all-time low.” With those issues compounded, Turunc says he is not optimistic about Turkey’s economic outlook in the coming year. “Under the circumstances, with elections normally scheduled for next year, the incumbent might be inclined to hold early elections in 2022.”

Miray Turkmen has joined pharmaceutical company Organon as its Legal & Compliance Lead, Turkey & South Africa.

Turkmen moved from MSD, where she worked between 2018 and 2022. She first joined MSD as a Legal Counsel and was promoted to Legal and Compliance Lead in 2021. Before moving in-house, she worked for Bezen & Partners as a Legal Associate between 2013 and 2016.

Turkmen holds an LLB from Istanbul Bilgi University and an LLM from King’s College London.

Originally reported by CEE In-House Matters.

Moral & Partners has advised Taxim Capital on its investment in Yilpar. Cukur & Partners advised Yilpar and its shareholders.

Taxim Capital is an Istanbul-headquartered private equity firm specializing in capital investments and shareholder and management buyouts.

Established in 1959, Yilpar specializes in the packaging industry in Turkey. The company produces price, code, and computer labels.

The Moral & Partners team included Partner Resat Moral and Associates Dilara Kaymaz, Ozgur Aydin, Nilay Enkur, Yelda Yalcin, and Ilayda Sak.

The Cukur & Partners team was led by Managing Partner Devrim Cukur and Partner Irem Soyman Alevok and included Senior Associate Hilal Simsek.

Considering the environmental, social, political and economic developments, it is considered as a more profitable and efficient way for companies located abroad to employ foreign nationals in Turkey. If certain conditions are met, it is possible to meet the demands of companies in this direction. Persons who will work in Turkey are required to obtain a “work permit” in accordance with the rules and criteria set by the International Labor Law No. 6735.

While 21st century which is also called “information age” or “digital age” puts technological developments, pandemics, political developments, and demographic changes are seriously transforming the rules and needs of business life. Especially with the disruption of the business operations around the world due COVID-19 pandemic and being forced employers to close their doors indefinitely, finding a fast alternative to traditional in-office work has become critical to maintaining a sustainable business model. Many companies have adapted to the “remote working” practice as much as possible and have started to update their business models in accordance with the “remote working” method. Remote working and hybrid working models, which have recently entered our lives, are expected to be a part of working life after the pandemic. Thus; the legislator did not ignore this situation and in this direction the “Remote Working Regulation” entered into force on 10.03.2021.

Considering all of these developments, employing foreign citizens in Turkey by companies located abroad can be considered as a more profitable and efficient way for them. If certain conditions are met, it can be said that it is possible to fulfill the demands of the companies in this direction.

What is Required for Foreign Citizens to Work in Turkey?

People who will work in Turkey are required to obtain a “work permit” in accordance with the rules and criteria set by the International Labor Law No. 6735. The work permit is issued by the Ministry of Family, Labor and Social Services of the Republic of Turkey. Since the work permit gives the foreigner the right to reside within the borders of the Republic of Turkey, there is no need to obtain a residence permit for the foreign national after the permit is granted.

In order to obtain a work permit, first of all, there must be an employment contract between the foreign citizen to be employed and the employer. Afterwards, the employer must apply to the Ministry of Family, Labor and Social Services of the Republic of Turkey to obtain a work permit. This application can also be made electronically.

In order for the company located abroad to have the title of “employer” in Turkey, it must have an active workplace or establish a new workplace within the borders of Turkey, and if it does not exist, this company should establish a new company within the borders of Turkey.

How Difficult is it to Establish a New Company in Turkey?

If the type, capital and field of activity of the company planned to be established are determined, the company establishment procedures can be completed in a very short time and effortlessly.

What are the Criteria for Obtaining a Work Permit?

Applicable law and competent authorities seek a number of criteria for the employer to employ foreign workers. Some of these criteria are briefly mentioned below;

• Five citizens of the Republic of Turkey must be employed for each foreigner in the workplace for which a work permit is requested. In case the foreigner requesting a permit is a company partner, the aforementioned “five-person employment requirement” is sought for the last six months of the one-year work permit to be given by the Ministry.
• The paid-in capital of the workplace must be at least 100,000 TL or its gross sales must be at least 800,000 TL or the last year’s export amount must be at least 250,000 USD.
• The foreign partner of the company requesting permission must have at least 20 percent of the capital, provided that it is not less than 40,000 TL. 
• The monthly wage declared to be paid to the foreigner by the employer must be at least as follows;

     – It must be 6.5 times the minimum wage for senior managers and pilots,

     – It must be 4 times the minimum wage for unit or branch managers, engineers and architects,

     – It must be 3 times the minimum wage for those who will work in jobs that require expertise and mastery and for teachers,

     – It must be the minimum wage for foreigners to be employed in domestic services and also it must be 1.5 times the minimum wage for foreigners to be employed in other professions,

     – The minimum wage must be doubled for foreigners who will work in animation organization companies as acrobats and similar titles, and for foreigners who will work in jobs such as masseurs, masseuses and SPA therapists.

As of the date of this article, the minimum wage, is 5.004 Turkish Liras in gross.

The criteria sought are not limited to the above, other criteria may be sought depending on the nature of the job or there may be certain relevant exceptions.

What is the Sanction of Working Without a Work Permit?

Administrative and penal sanctions may be imposed on foreign employees without a work permit, as well as the risk of deportation of the foreign citizen. Administrative fines for employees who do not have a work permit are as follows;

For employers who employ foreigners who do not have a work permit, for each foreigner they employ: 16,066 TRY

For foreigner working under an employer without a work permit: 6,423 TRY

In addition, the employer or employer’s representative must cover the accommodation expenses, the necessary expenses for their return to their country and when necessary, health expenses of the foreigner who does not have a work permit and, if any, of his/her spouse and children. If these expenses and costs are covered by the budget of the Directorate General of Migration Management, the amounts paid in accordance with this article are collected from the employer or employer’s representative in accordance with the “Law on Collection Procedure of Public Receivables” dated 21/7/1953 and numbered 6183.

If certain conditions are met, it is possible for foreign citizens to work in Turkey. It is possible for companies located abroad to employ foreign nationals by establishing a company within the borders of Turkey and obtaining work permits from the relevant authorities. If the parties agree, the relevant employees can also work remotely in line with the “Remote Working Regulation”. In the light of above information; getting professional consultancy service has a critical importance for pursuance the processes regarding company establishment processes, obtaining a work permit and the execution of other necessary procedures and process follow-up.

By Onur Kucuk, Managing Partner, and Alperen Kocalan, Associate, KP Law

The Joint Chambers of Civil Court of Cassation’s [“Court of Cassation“] decision dated November 12, 2021 and numbered 2020/2 E. 2021/3 K. [“Decision“], put an end to the debate regarding the nature of cooperatives. The Court of Cassation concluded that cooperatives, which include partnerships such as consumption, production, credit, and building cooperatives shall be regarded as commercial entities.

Background of the Debate

The term “venture” used in the definition of cooperatives in the Cooperatives Law dated 1969 and numbered 1163 sparked discussions about cooperatives as merchants, which have been the subject of various legislative action and Court of Cassation decisions since the 1920s. Despite attempts to resolve the disagreements by altering this term to “partnership” in 2004, different chambers of the Court of Cassation had been rendering incompatible judgments until today. This predicament emerged from the unique function of cooperatives rather than the uncertainty of legal regulations. The chambers which maintained that cooperatives did not have the title of merchant, emphasized that the term “partnership” alone did not indicate the existence of a commercial characteristic and that these unique partnerships with a social function could not be merchants by their nature, even if they were listed among commercial entities in the law.

Summary of the Decision

In its Decision, the Court of Cassation reviewed the past and present applicable legislation in order to determine the will of the legislator and made evaluations on whether cooperatives qualified as merchants.

The Decision mainly revolves around the decision dated 1945 and numbered 1944/8 E. 1945/14 K., in which the Court stated that “… cooperatives are one of the commercial companies, regardless of the title and actions of their partners, and the competent courts for the disputes that arise from them are commercial courts…” and the first paragraph of Article 124 of the Turkish Commercial Code No. 6102, where cooperatives are classified as commercial entities, which is an intended classification as suggested by the reasoning of the article.

Furthermore, provisions in the Bankruptcy and Enforcement Code No. 2004 stating that cooperatives are subject to bankruptcy and concordat, as well as provisions in the Cooperatives Law No. 1163 such as the obligation of registry to the local Trade Registry Office or the consideration of lawsuits as commercial cases, reveal the legislator’s intent for cooperatives to have the title of merchant.

Within this framework, the Court of Cassation concluded that cooperatives are commercial entities that qualify as merchants regardless of managing a mercantile business, thus putting an end to the long debate.

Effect of the Decision

With the decision, which declares cooperatives to be merchants, it is clear that the provisions and consequences of being a merchant will also apply to cooperatives. As a result, it was concluded that all legislation pertaining to the title of merchant, from the obligation to act as a prudent businessman to issuing invoices apply to cooperatives, surmounting the need for specialized regulation.

By Baris Ulker, Senior Associate, and Aziz Can Cengiz, Associate, Guleryuz & Partners

The Turkish Medicines and Medical Devices Agency (“Agency“) published the Guideline on License Application for Homeopathic Medicinal Products (“Guideline on Licensing”) and the Guideline on the Packaging, Homeopathic Medicinal Product Information, Legibility and Tracking of Homeopathic Medicinal Products (“Guideline on Packaging”)  on March 15, 2022. Both Guidelines are based on Homeopathic Medicinal Products Licensing Regulation (“Regulation”). Within the scope of the Guidelines, the Agency has started accepting license applications for homeopathic medicinal products through the website www.ebs.titck.gov.tr, as of April 1, 2022. 

The Guideline on Licensing aims to provide the rules and procedures for the information and documents to be provided in license applications. It provides guidance on the format of chemical, pharmaceutical, biological and safety documentation for the homeopathic stock, starting materials of biological origin and corresponding medicinal products. The Guideline on Licensing classifies the common technical document format in four main modules, which consist of (i) administrative information, (ii) general summaries, (iii) requirements on quality and (iv) requirements on security of homeopathic medical products.

In the first section, the Guideline on Licensing provides information regarding the draft and/or sample packages to be submitted in the license application, upon the Ministry of Health’s request. Accordingly, a “sample” is defined as a sample of the original printed outer and inner packaging material and homeopathic medicinal product information. Thereafter the Guideline on Licensing lays out introductory information on homeopathic medicinal products, information on quality and safety, and chemical, pharmaceutical and biological documentation information for the homeopathic stock and homeopathic medicinal products. At the last section of the Guideline on Licensing, the list of required documents for the license application process is displayed.

The Guideline on Packaging aims to provide the packaging details, product information, and legibility of homeopathic medicinal products and their monitoring. It covers industrially prepared homeopathic medicinal products that are produced with a method that involves a traditional or industrial process, and real persons or legal entities who applied for and/or been granted a license for such.

In the first section, the Guideline on Packaging sets forth the requirement for the phrase “Homeopathic Medicinal Product” to be legible and clear in the packaging of homeopathic medicinal products. It also requires information of pharmaceutical form in terms of weight, volume or number of doses, application units, and auxiliary/carrier products to be indicated. It further states that conditions for storage of homeopathic medicinal products should be compatible with packaging and homeopathic product information, by providing exemplary disclaimers. It stipulates that in order to prevent misuse of homeopathic medicinal products, there should be an optimum number of colors on the packaging, and that the name of the homeopathic products and their potency should be indicated in Braille on the outer package of the product. It also provides details on print and font size, layout and design of the information, choice of titles and syntax, symbols and colors.

Per the Guideline on Packaging, license holders must provide QR code information of their products on the Pharmaceutical Track System (“PTS”), which will reject inappropriate QR codes that do not fulfill the singularity standards and substance illustrated by PTS. License holders, pharmaceutical warehouses, companies authorized for export, pharmacies, medical supply centers and public and private reimbursement institutions that cover product fees are required to deactivate the product and provide necessary notifications in case of purchase, sale, return, cancellation, transfer, expiration, theft or deterioration of the product. Accordingly, all stakeholders are obliged to notify the PTS of all activities and cancellations of activities of the registered product.

In order to ensure the product’s reliability, the license holders must use transport packaging (i.e. packages, parcels, boxes, ties) when shipping multiple homeopathic medicinal products. A packaging identifier or an identifier containing the QR information of the homeopathic medicinal products must be displayed on the transport package.

Finally, both Guidelines refer to one another, wherein the Guideline on Licensing provides information on several aspects of the packaging of the licensing process, such as (i) the administrative information, and (ii) the technical information of the chemical, pharmaceutical, biological and safety documentation.

By Gonenc Gurkaynak, Partner, Ceren Yildiz, Partner, Nazli Gurun, Associate, and Bilgehan Korucuoglu, Associate, ELIG Gürkaynak Attorneys-at-Law

Over the recent years, digitalisation and digital services have been at the core of many innovative advantages for businesses and end users alike. These benefits range from online intermediation services to software application stores. This variety offers better and more efficient choices for users while increasing competition within the digital markets industry.

As digital markets started offering advantages increasingly, they also started to attract the attention of regulatory authorities. They believed regulations should be introduced so that these widely used digital markets and platforms, which have the potential to provide significant benefits to consumers, do not end up being utilised for the detriment of consumers.

Following the increasing regulation trend in many countries in recent years towards digital markets, the most fruitful attempt proved to be the DMA, a regulation proposal presented by the European Commission (“Commission”) in December 2020 and approved by the European Parliament in March 2022.

An Overview of the DMA

Preamble

The Commission’s main concern behind the proposal was based on the trend of relatively large platforms seemingly benefitting from the allegedly strong network effects of the industry, to the detriment of SMEs. These platforms were stated to represent “key structuring elements of today’s digital economy, intermediating the majority of transactions between end users and business users.” This conduct appears to have led the Commission to ascertain certain “gatekeepers” within the industry who retain an allegedly rooted and stable position, often as a result of “the creation of conglomerate ecosystems around their core platform services, which reinforces existing entry barriers.”

This position allegedly held by the gatekeepers was expressed to result in “significant dependencies of many business users on these gatekeepers, which leads, in certain cases, to unfair behaviour vis-à-vis these business users.” This, in turn, was expressed to lead to negative effects on the “contestability of the core platform services concerned.” The Commission therefore considered these facts and stated that regulatory initiatives by Member States may not be sufficient to address these points, and that without action at EU level, “fragmentation of the Internal Market” is highly possible.

The Commission, by relying on the aforementioned reasons, provides the objective of the proposal as follows: “to allow platforms to unlock their full potential by addressing at EU level the most salient incidences of unfair practices and weak contestability so as to allow end users and business users alike to reap the full benefits of the platform economy and the digital economy at large, in a contestable and fair environment”.

The need to address these questions in the digital economy was mainly based on the single market logic, additional rules may be needed to ensure contestability, fairness and innovation and the possibility of market entry, as well as public interests that go beyond competition or economic considerations. 

Scope

The scope of the DMA is mostly limited to core platform services and undertakings with gatekeeper status in these digital markets. Core platform services, which according to the Commission is where “the identified problems are most evident and prominent and where the presence of a limited number of large online platforms that serve as gateways for business users and end users has led or is likely to lead to weak contestability of these services and of the markets in which these intervene,” are defined to include a myriad of online services, most notably online search engines, social networking services, video-sharing platform services, and cloud computing services. Undertakings providing these core platform services are presented with certain conditions when their gatekeeper status is scrutinised.

For an undertaking which provides core platform services to be granted gatekeeper status, it must:

• significantly impact the internal market;
• operate a core platform service which serves as an important gateway for business users to reach end users; and
• enjoy an entrenched and durable position in its operations or that such an entrenched and durable position is foreseeable in the near future.

The DMA states that such gatekeeper status can be determined “either with reference to clearly circumscribed and appropriate quantitative metrics, which can serve as rebuttable presumptions to determine the status of specific providers as a gatekeeper, or based on a case-by-case qualitative assessment by means of a market investigation.”

While these conditions are drafted comprehensively, they may be revised by the Commission and that some undertakings may be designated as gatekeepers based on results of market investigations, even if they do not necessarily meet these conditions. The Commission further stated that it should be authorized to adopt delegated acts in accordance with the proposed regulations “to specify the methodology for determining whether the quantitative thresholds, and to regularly adjust it to market and technological developments where necessary.” 

Obligations for gatekeepers

Chapter III of the DMA lists practices that gatekeepers often implement when offering their services, and presents extensive obligations for gatekeepers to be cautious of in order to avoid unfairness in the markets and towards consumers.

Gatekeepers are obliged to (i) refrain from combining personal data sourced from core platform services with personal data from any other services offered by the gatekeeper or with personal data from third-party services; (ii) allow business users to offer the same products or services to end users through third party online intermediation services at prices or conditions that are different from those offered through the online intermediation services of the gatekeeper; (iii) refrain from preventing or restricting business users from raising issues with any relevant public authority relating to any practice of gatekeepers; (iv) allow business users to promote offers to end users acquired via the core platform service, and to conclude contracts with these end users regardless of whether for that purpose they use the core platform services of the gatekeeper or not, and allow end users to access and use, through the core platform services of the gatekeeper, content, subscriptions, features or other items by using the software application of a business user, where these items have been acquired by the end users from the relevant business user without using the core platform services of the gatekeeper.

Gatekeepers must also enforce caution and must refrain from using, in competition with business users, any data not publicly available; from treating more favourably in ranking services and products offered by the gatekeeper itself or by any third party belonging to the same undertaking compared to similar services or products of third party; provide advertisers and publishers, upon their request and free of charge, with access to the performance measuring tools of the gatekeeper and the information necessary for advertisers and publishers to carry out their own independent verification of the ad inventory provide business users, or third parties authorised by a business user, free of charge, with effective, high-quality, continuous and real-time access and use of aggregated or non-aggregated data, that is provided for or generated in the context of the use of the relevant core platform services by those business users and the end users engaging with the products or services provided by those business users.

A gatekeeper should inform the Commission of any intended concentration within the meaning of Article 3 of Regulation (EC) No 139/2004 involving another provider of core platform services or of any other services provided in the digital sector irrespective of whether it is notifiable to a Union competition authority under Regulation (EC) No 139/2004 or to a competent national competition authority under national merger rules.

A gatekeeper should inform the Commission of such a concentration prior to its implementation and following the conclusion of the agreement, the announcement of the public bid, or the acquisition of a controlling interest.

DMA’s Sanctions for Non-Compliance

The DMA offers a number of sanctions and penalties for non-complying undertakings, mainly to ensure fair and equal treatment within the markets and for users, rectify any wrongdoing by the undertakings, and to safeguard future compliance with the Commission’s regulations, decisions and requests.

Non-complying gatekeepers may be ordered by the Commission to cease and desist with the non-compliance within certain deadlines and to provide explanations on how it plans to comply with the decision.

In the cease and desist decisions sent to gatekeepers who purposely or negligently fail to comply with the DMA’s abovementioned obligations, the Commission may impose fines “not exceeding 10% of the non-complying undertaking’s total turnover in the previous financial year.”

Article 27 further imposes periodic penalty payments. The Commission may decide to impose periodic penalty payments “not exceeding 5% of the average daily turnover in the preceding financial year per day, calculated from the date set by that decision,” in order to compel them to comply with said obligations, or to supply correct and complete information to rectify the wrongdoing.

In light of these, the proposed regulation differs from the traditional approaches to market regulations in terms of its scope and nature, and it is complementary to the existing competition law rules that it envisages ex-ante obligations. Due to this, it must be noted that specific and separate expertise is highly essential when assessing whether gatekeepers fulfill their obligations.

Recent Developments on Digital Markets in Turkey

The Turkish Competition Authority (“TCA”) first considered legislative actions concerning digital markets in January 2021. However, its sector inquiries that focus on online marketplaces begun earlier in June 2020 and that focus on online advertising begun in March 2021, in order to determine behavioural and structural issues surrounding these sectors and to offer solutions accordingly. Each of these sector inquiries served as preparatory components facilitating the TCA’s legislative actions.

These actions proceeded with the TCA publishing its Preliminary Report on E-Marketplace Platforms (“Preliminary Report”) in May 2021. The Preliminary Report was based upon findings and facts obtained through the sector inquiry, and it offered policy recommendations for the identified potential competition concerns within the e-marketplace platform market. The Preliminary Report’s conclusions and policy recommendations suggest that the attempted legislative work is directed towards gatekeeper arrangements, which corresponds with topics addressed by the DMA. The final category concerning gatekeeper regulations is quite parallel to the Commission’s proposal, especially considering that both regulations suggest imposing ex-ante obligations on undertakings designated as “gatekeepers”.

During the legislation preparations, the TCA sent information requests (“RFI”) to undertakings active in the same core platform services markets covered by the DMA, although the RFIs were quite comprehensive in nature and were mostly specific to the Turkish market.

The TCA published its Final Report on E-Marketplace Platforms on April 14, 2022 (“Final Report”) as the last step in incorporating sector inquiries, findings and considerations indicated in the Preliminary Report. Even though the Final Report abstained from defining gatekeepers and left it for the legislative regulations to be defined, it incorporated some instructions and suggestions regarding the obligations of gatekeepers.

The competition advocacy advices and views of the TCA are not binding. Taking into account that the DMA is considered to be the main reference point of the Preliminary and the Final Reports, it is likely that these sector reports will be followed by legislative changes. It is especially expected that regulations focusing on gatekeepers mentioned both in the Preliminary and the Final Reports will be incorporated as an addition to Article 6 of  the Law No. 4054 on the Protection of Competition (“Law No. 4054”), which regulates abuse of dominant position, or even as a separate article while also being reflected in the secondary legislation.

As stated by the Chairman of the TCA, Birol Küle, the TCA is currently working on digital market regulations that are expected to be enacted by mid-2022. Regulations for digital markets, namely the DMA in the EU, industry research conducted by foreign competition authorities as well as the TCA, and the experience and know-how gained from investigations concerning digital markets are likely to form the basis of digital market regulations in Turkey.

It is of utmost importance for the effective functioning of digital markets that these ex ante regulations are not too intrusive in order not to hinder competition and innovation. Any legislative study should also weigh up the costs and benefits of additional intervention. Accordingly, the contemplated new regulatory regime should require the TCA to test in advance whether interventions are likely to enhance competition. In any event, regulatory reform of any kind should aim to be flexible, forward-looking and future-proof to adapt to technological change and accommodate the diverse tech ecosystem. Indeed, imposing strict restrictions to a sector which is purely driven by innovation may pose risks to decrease market players’ appetite to innovate and invest.

Regulations on digital markets also bear the risk of being obsolete very quickly. In ever-changing markets, regulations have to keep pace with the market changes, otherwise inefficiencies can arise. In an era (and a sector) of rapid change, one-size-fits-all solutions are unlikely to work out well. Instead, it is important to start with a focus on a specific problem and seek well-tailored and well-informed solutions, thinking through the benefits, the second-order impacts, and the potential for unintended side-effects.

Regulation Initiatives by Other Competition Authorities

Various international competition authorities have been scrutinising the developments in the digital sector as the urge to introduce amendments in the face of challenges posed by digital markets rise to a significant level.

Considering the rapid growth of digital markets, the CMA published its initial Digital Markets Strategy Report in 2019, along with some significant developments intended for digital markets. Prior to the CMA’s decision to establish the Digital Markets Unit (“DMU”), the CMA directed its research towards digital markets by publishing the final report on its online platforms and digital advertising market study and assembling a Digital Markets Taskforce, and consulted on revised Merger Assessment Guidelines (“MAGs”).

More recently, in 2022, the UK Digital Regulation Cooperation Forum (“DRCF”), comprised of the CMA, the UK’s Office of Communications, the Information Commissioner’s Office (“ICO”) and the Financial Conduct Authority (“FCA”), introduced a “technology horizon- scanning program” to provide insight on the rising digital markets and technologies and how they should be regulated.

In 2019, the US Stigler Center for the Study of the Economy and the State (“Stigler Center”) published its Stigler Report, which consists of various studies and in-depth analyses on digital platforms and presents the concerns addressed by these studies, offered various policy solutions that can be implemented towards digital platforms. Subsequently, in 2020, a report concerning the Investigation of Competition in Digital Markets was published with the purpose to document concerns surrounding digital markets, detect anticompetitive conduct in the sector and evaluate whether existing regulations are sufficient enough to resolve these issues. However, the US regulation initiatives for digital markets and platforms are not yet as comprehensive and precise as the Commission’s proposal.

The German Competition Authority, Bundeskartellamt, also contributed to this latest wave by amending its competition act to facilitate the provisions concerning conduct of the large digital firms along with the Digitalization Act published in the beginning of the 2020.

In 2021, the OECD published its report focusing on digital sectors which include detailed analysis of proposed regulations of various competition authorities. The Report aimed to compare various approaches and arguments surrounding the proposed regulations in digital sector. The Report draws attention to accelerating concentration in digital markets and concerns arising from it while discussing whether competition law, by itself, constitutes a sufficient vehicle to remove the raised concerns. Furthermore the Report highlights that proposed regulations put forward attributes such as transparency, innovation, fairness and contestability.

There have also been some regulatory and legislative developments in Australia and Japan.

Conclusion

As the digital sector starts to play a bigger role in the markets, competition authorities showcase efforts to bring innovative solutions to the challenges arising as a result of the sector’s recent growth. With the recent developments and various legislative or regulatory works conducted by the different competition authorities, it appears that recent competition developments tend to focus on policy in the digital era.

Considering the works and actions taken so far, the European Commission and the CMA seem to be taking the lead in regulations concerning digital sector, whilst it is anticipated that the Fair Trade Commission (“FTC”) will also participate in the recent rush and introduce some concrete developments concerning the digital sector soon.

TCA’s legislative efforts in this regard are also remarkable and it is highly anticipated that TCA will also introduce an ex-ante gatekeeper regulation soon. The Final Report published by TCA includes detailed assessments in line with evaluations displayed in the Report published by OECD and the policy recommendations in the Final Report bear significant similarities to the proposals presented by DMA.

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