Category: Turkiye

The rise in the popularity of NFTs also raises some questions regarding copyright law. Earlier last year, an independent NFT dealer calling itself the “Global Art Museum” tokenized digitized versions of the famous artworks from many collections such as Rembrandt’s “Night Watch” that has been on display at the Rijksmuseum in the Netherlands for years and other art from the Art Institute of Chicago, the Birmingham Museum and the Cleveland Museum of Art.

Although the seller, calling itself the “Global Art Museum” tokenized these digitized artworks and sold them online as NFTs on the OpenSea platform, the Rijksmuseum announced on Twitter that there was no arrangement between them and the Global Art Museum for the tokenization of the Night Watch. The situation led to a series of allegations accusing Global Art Museum of committing fraud, as the Global Art Museum did not own the artworks and did not own the copyrights attached to them.

However, there is not enough supporting argument for these claims to be valid, as the Rijksmuseum’s copyrights on physical artworks have largely expired and these digital artworks of the Rijksmuseum are also on public display.

Well, let’s assume for a moment that the NFTized artworks are copyrighted, and the Rijksmuseum is the legal owner of these copyrights to the artworks. This will raise an interesting question; Even though the Global Art Museum is not the legal owner of the copyrights, does it have the authority to turn copyrighted artworks into an NFT and transfer this as a crypto asset?

It is not possible to give a uniform answer to the general question of whether producing an NFT and transferring it to a third party would constitute a copyright infringement. Essentially, an NFT is a certificate containing information about the underlying “object”. Therefore, owning an NFT means certificate ownership of that represented object. That means you own the NFT of that object, but not the object itself.

Let’s clarify this a bit; Pursuant to the Turkish Law of Intellectual Property Rights, the “artist” is defined as the person who has created the work. An NFT buyer may assume that they have purchased the underlying object associated with the NFT, for instance, a digital artwork; however, in reality, the artist who created this digital artwork is the primary owner, who retains the exclusive right to copy, distribute, modify, publicly perform and publicly display (unless specifically given to someone else) the art. In other words, according to the legal world, the person who created that work is the “creator”. Therefore, the copyright on the work will belong to the creator. The art-enthusiast buyer who purchases the NFT will own the NFT, but will not automatically own the copyrights unless there is an exclusive agreement them and the creator of the digital art.

What About the Rights of the NFT Buyer?

At this point, the transfer of the rights to be determined by the contract to be concluded during the NFT trading is very important. For one thing, the value of NFT depends on the content of the smart contract that manages it. In this respect, it is essential before the planned purchase to check whether the NFT to be purchased is connected to a smart contract.

The smart contract will be shaped entirely according to the provisions to be determined between the parties. While the buyer and seller are free to create their agreements as they see fit, most NFT sales appear to grant the buyer a non-exclusive license to use the digital copy of the artwork on a non-commercial basis. For example, Kings of Leon made history as the first music group to sell their albums as an NFT. While doing this, they regulated in their smart contracts in such a way that their albums, album art and some special products related to the album (such as concert tickets) will be sold for personal use only and on a non-commercial basis, with a non-exclusive, non-transferable and royalty-free license belonging to the buyer.

Conclusion

In an industry as technical as NFTs, it is important for a buyer to analyze the digital contract well and understand exactly what they are buying as a result of that NFT sale. A buyer who believes the rights associated with the underlying artwork have been misrepresented and is faced with a loss of value may have to pursue a contentious lawsuit. As a result, the growing popularity of NFTs could potentially escalate conflict in 2022, from copyright infringement to smart contract disputes.

By Melodi Ozer, Associate, KP Law

Nuclear Regulation Law No. 7381 [the “Law”] was published in the Official Gazette on March 8, 2022 and entered into force on the same day. The Law mainly regulates nuclear energy and ionizing radiation activities, as well as operators, facilities, devices, and other matters associated with these activities in detail.

While building the framework of the authority and responsibilities of the Nuclear Regulation Authority, the Law also introduces strict liability for operators for nuclear damages that may arise during nuclear energy and ionizing radiation activities. These key legal concerns governed under the Law are briefly addressed in this article.

Strict Liability and Liability Limitations for Nuclear Facility Operators

According to the Law, the person operating the nuclear facility will be liable for the damages, and hence be responsible for compensation, regardless of whether the operator, personnel and the technology, goods and service providers related to the facility have had any fault in the occurrence of the nuclear incident. Therefore, the person operating a nuclear facility has a strict liability; in other words, it can be held liable for damages even if it has no fault in the nuclear incident’s happening. However, there are several exceptions to the operator’s strict liability. In this respect, the operator will not be liable for any damage caused by a nuclear disaster that occurs as a result of an armed conflict, hostile acts, civil war, or an insurrection.

The law also sets limitations on how much the operator can be held liable for. Accordingly, the responsibility of the operator will be limited to following amounts:

• 700 million Euros for nuclear reactors with a thermal power of more than 10 megawatts and other nuclear facilities, as determined by the assessment to be conducted prior to the Authority issuing a license to operate a nuclear facility,
• 70 million Euros for nuclear facilities not included in the above scope,
• 80 million Euros for the transport of nuclear materials, and
• 700 million Euros for the transit of nuclear materials within the borders of the Republic of Turkey.

The Law obliges nuclear facility operators to get insurance or provide collateral in the above-mentioned amounts. Accordingly, affected persons will be able to claim their damages directly from the operator, insurer, nuclear insurance pool, and other guarantee providers.

If damages exceed the above-mentioned amounts, the Nuclear Damage Detection Commission [the “Commission“] will be established for the compensation of nuclear damages. Affected persons will need to make an application for compensation, which will then be evaluated by the Commission prior to compensation. Thereafter, the Commission will be able to collect the paid compensation within the above-mentioned liability limits, from the operator, its insurer, or the guarantee provided.

In circumstances where there is no provision regarding liability, the Paris Convention, to which Turkey is a party, will be applied.

Statute of Limitations and Competent Court

According to the Law, different statute of limitations applies to loss of life and personal injury, and other damages. In this respect, for compensation claims regarding loss of life and personal injury the statute of limitations is 30 [thirty] years from the date of the nuclear incident, while for other damages the statute of limitations is 10 [ten] years. In addition, Turkish courts are authorized in nuclear incidents that took place within the borders of the Republic of Turkey, and Ankara courts have been given final jurisdiction in these proceedings.

Nuclear Regulation Authority and License Requirement

Activities governed by the Law can only be exercised after the notification of or authorization by Nuclear Regulatory Authority [“The Authority”]. It is required to obtain a license from the Authority in order to operate a nuclear facility, a radiation facility, a radioactive waste facility, or to carry out radiation applications.

On the other hand, the NUTED Nuclear Technical Support Joint Stock Company was established as a private legal entity to provide technical support services such as consultancy, surveillance, inspection, research, inspection, testing, control, training, and certification to the Authority as needed.

Other Regulations

The Law additionally regulates punitive and administrative sanctions, indicating that individuals who commit the acts enumerated in the relevant provisions will be punished with imprisonment or a fine.

By Baris Ulker, Senior Associate, and Beliz Boyalikli, Legal Trainee, Guleryuz & Partners

The Turkish Competition Authority (the “Authority“) published its Obilet/Biletal decision where it conditionally approved the acquisition of Biletal İç ve Dış Ticaret A.Ş.’s (“Biletal”) sole control by Obilet Bilişim Sistemleri A.Ş. (“Obilet”) and decided that the proposed transaction would not result in significant impediment of effective competition under Article 7 of Law No. 4054 on the Protection of Competition (“Law No. 4054“)[1] subject to commitments proposed by the parties.

By way of some background information, Obilet is primarily active in the field of comparison and sale of online bus and flight tickets through its own web site and mobile applications, providing excursion search, comparison, live support and ticket purchase services under a single platform. Biletal primarily supplies online excursion tickets, acting as a marketplace by way of electronically listing the services of local and foreign airlines and more than 150 local bus companies. Moreover, Biletal provides infrastructure services in relation to online price comparison and sales platforms.

The decision of the Board plays an important role in the realm of online ticket services as it concerns a horizontal transaction between an acquirer, which had the highest market share in the relevant market as of 2008, and a target, which was considered the fourth undertaking holding the highest market share in relevant the market for online comparative ticket sales services whereby the first five entities are regarded to constitute majority of the market. Accordingly, the decision provides insights on assessment of the relevant market as well as foresights on consideration of behavioral commitments under significant impediment to effective competition test.

Consideration of Online Activities of the Parties and Market Definition

As noted, the parties primarily provide bus and flight ticket related services. Having said that, the parties have/had negligible sales in relation to other transportation means (i.e. railway and seaway passenger transportation) and indeed, their sales are evaluated to be considerably insignificant when compared to bus and flight ticket related activities of the parties. Accordingly, in the decision, the Board placed emphasis on consideration of the parties’ bus and flight tickets services.

In assessment of the relevant services, the Board primarily considered the demand-side and supply-side substitutability of online bus tickets and online flight tickets.

The parties submitted, inter alia, that considering the convergence of prices between bus tickets and flight tickets in recent years, availability of both means of transportation especially in busy destinations, similar overall transportation periods between two means of transportation (i.e. taking into consideration transportation time to/from the stops, waiting durations and time spent on checks, traffic etc.), bus and air travels must be considered substitutable to one and another, and taking into consideration seasonal effects, capacity restrictions, timings, ticket flexibilities, passengers often compare these two transportation means and can freely decide between these two services.

In addition to the foregoing, the Board, inter alia, also considered other factors such as the ease and low cost of transferability between suppliers’ provision of goods and services by taking account the fact that due to the low investment costs and transformation needs, the substitutability of parties activities’ in terms of supply-side is relatively high. The Board also assessed that the competitors provide the same bus and flight ticket services in the same market in which parties have activities, therefore the market for online flight and bus ticket sales should be defined under a single relevant product market.

Moreover, Obilet argued, inter alia, that transportation operators (i.e. THY, PEGASUS, KAMİL KOÇ) have competitive advantage and significant market share in the relevant market, besides brick and mortar ticketing services they provide online ticketing services via their web-sites, mobile applications and even by means of advertising its services in search engines such as Google which is considered to have a considerably high traffic in the relevant industry, thereby they have better positioning in search engines and they can indeed offer cheaper prices to their customers. Therefore such transportation companies should be also considered when defining the market. Indeed, based on the diversity of product/brand approach in the relevant market, Obilet argued that although the operator firms provide services related only to their own brands, online platforms are also limited to three to four different options and since there is no significant diversity on the products between the two service providers they should be deemed as competitors in the relevant market. However few operator firms raised their objection to this assessment. For example, Turkish Airlines and Pegasus stressed that airline operators provide services subject to special regulations and require different organizational and capital needs as opposed to travel agencies. The operator firms also indicated that both Biletal and Obilet offered reservation services and ticket sales via their own web-sites as a result of the protocol between the operator companies and the transaction parties, that conferred them the ability to provide such services, therefore no competitor relationship exists among the operators and respected undertakings.

All in all the Board took into consideration the above-mentioned explanations and concluded, inter alia, that since both Obilet and Biletal lists many transportation operators and provides online price comparison and sales services in return of a commission, and thus offer various services within varying fees, their sale channel should be distinguished from the sales channels of operator firms which indeed only provide tickets for their own brands. In its consideration, the Board also drew attention to change in consumer habits and increased use of price comparison platforms by consumers in recent years and by way of an example highlighted that top five hits for “bus ticket” related search on Google search engine (organic results based on hit numbers) concerned online comparative ticket sales providers.

The decision of the Board is significant in terms of the definition of relevant product markets under the scope of online sale platforms which has been under the radar of the Competition Board in recent years. In fact, following a detailed examination, the Board defined the upstream market as travel ticket sale services and segmented it into downstream markets such as “ticket sale services provided through traditional channels” and “online ticket sale platform services”. The Board further sub-divided the market into “online comparative bus and flight ticket sale”. Having said that, the Board left the exact definition of the market open as per paragraph 20 of the Guidelines on the Definition of Relevant Market, yet indicated that parties’ activities horizontally overlap in the market for online comparative bus and flight ticket sale.

Competitive Assessment and Consideration of Behavioural Commitments under SIEC Test

The Board examined the relevant market by stating that although the market has a multiplayer structure, the majority of the market shares are concentrated to five undertakings, restricting the competitive pressure in the market. Against this background, the Board highlighted that with the proposed transaction, Obilet, which is considered to be the market leader would be acquiring sole control of Biletal, which is considered to be the fourth undertaking holding the highest market share in the market.

Accordingly, within scope of the proposed transaction, the Board assessed concerns related to potential foreclosure of the relevant market to the competitors and negative impact of the proposed transaction on the number of the players in the markets. In its assessment, the Board took into consideration concerns of other sector players such as concerns raised in relation to transfer of great portion of sales in the market to the merged entity, decreased competitors and competitive pressure in the market, potential increase in commissions in the market, advantageous position of parties vis a vis other players in the market in relation to infrastructure services.

In consideration of the relevant concerns, the parties offered behavioural commitments to remedy relevant concerns. The commitments involved the following:

• Biletal will continue its provision of infrastructure services for online price comparison and sales platforms in a way that is akin to its current services, for three years following the consummation of the transaction,
• Parties will not engage any in practice, as is now, which will result with exclusivity by way of entering into contracts with undertakings which provide passenger transportation with airlines and busses or de facto practices which will prevent the excursions of such undertakings to be listed on competitors’ online platforms.

Overall, the Board had noted that the proposed transaction, as is, can potentially cause significant impediment to effective competition. However, subject to the behavioral commitments proposed by the parties, the Board conditionally approved the merger indicating that the concerns about the significant impediment to effective competition as regards to the market for online comparative flight and bus ticket sales where the parties’ activities horizontally overlap would be eliminated as a result of parties’ commitments.

[1] The decision of the Board dated 01.07.2021 and numbered 21-33/449-224.

By Gonenc Gurkaynak, Partner, Dilara Yesilyaprak, Senior Associate, and Nil Zeren Ozdemir, Junior Associate, ELIG Gürkaynak Attorneys-at-Law

Turunc has advised Bogazici Ventures on its investment in Producter.

According to Turunc, hiVC, a regulated venture capital fund, participated in the investment round as well.

Producter develops an all-in-one product management tool to collect feedback, manage tasks, track roadmap, and share product updates. Bogazici Ventures invests in start-up and seed-stage technology companies.

Turunc’s team included Managing Partner Kerem Turunc and Attorneys Gozde Kiran, Beste Yildizili Ergul, and Selay Turgut.

Paksoy, working with Mayer Brown, has advised Gexpro Services on the acquisition of Resolux. Bech-Bruun Law firm reportedly advised Gexpro Services. DLA Piper reportedly advised Resolux.

Gexpro Services is a US-headquartered global supply chain solutions services provider with operations in Canada, Mexico, China, and Hungary.

Resolux is a Denmark-headquartered global supplier for the wind turbine industry.

The Paksoy team was led by Partner Elvan Aziz and included Associates Asli Eryilmaz and Beritan Zorkun Arik.

The board of directors [“Board”] stands out as a body that undertakes the management and representation duties of a joint stock corporation and is endowed with the power that can affect the interests of the corporation as well as its related parties. Such broad authority brings with it the same degree of responsibility. Although such responsibility mostly results in legal liability, the legislator did not remain silent on the fact that the activities of the Board are directly related to the market economy, and thus, imposed criminal sanctions in connection with the actions of the members. In this respect, the use of management and representation powers by the Board members or their personal actions may lead to criminal liability.

Criminal liability of the Board members often arises during the exercise of their management and representation duties, however, such liability may also incur as a result of their personal actions. Although the provisions regarding the criminal liability are regulated in detail under Turkish law, they are quite dispersed. Penal sanctions for the Board members are regulated in more than one legislation, the Turkish Commercial Code No. 6102 [“TCC”] being the primary one.

I. Criminal Liability Under the Turkish Commercial Code

Criminal liability provisions regulated in the TCC are not specific to the Board members but are binding on all merchants. However, considering the authorities and responsibilities of the Board in the corporation’s management, the members are often the perpetrators of the relevant crime. Sanctions regulated in the TCC are mostly punitive or administrative fines, yet, in some cases it is also possible for the Board members to face imprisonment.

A. Cases of Imprisonment

The legislator did not consider fines sufficient for certain crimes regulated in the TCC and imposes imprisonment sentence instead. For example, if the documents and statements related to the incorporation, capital increase or decrease, merger, spin-off, change of company type, as regulated in Article 549 of the TCC, are false, the Board members may face imprisonment from 1 [one] to 3 [three] years. Another wrongful act for which prison sentence is imposed happen when the share capital is shown as committed or paid even if it has not been fully committed and paid in. In such case, those responsible would be punished with imprisonment from 3 [three] months to 1 [one] year.

Moreover, without prejudice to the provisions of the Capital Market Law No. 6362, in case of collecting money from public to establish a company or increase the share capital, the perpetrators would be sentenced to imprisonment from 6 [six] months to 2 [two] years.

Another important case for which prison sentence is regulated relates to unfair competition. In addition to legal liability for indemnification, imprisonment of up to 2 [two] years or a corresponding judicial fine is stated for those who deliberately commit acts constituting unfair competition.

B. Cases For Which Punitive Fine is Imposed

Directors of a corporation must comply with the principles of public disclosure and transparency while performing their managerial and representative duties. Criminal liability of the directors may come to the fore due to their behaviors contrary to these obligations. For example, the Board members who do not fulfill their obligation to prepare corporate report relating to controlling or affiliated companies would face the risk of judicial fines of not less than 200 [two hundred] days.

Again, those who commit the crime of preventing the audit of the corporation in violation of the principle of transparency would be punished with a judicial fine of not less than 300 [three hundred] days. In addition, judicial fine is imposed on those who failed the obligation to establish a company website or duly upload the necessary content on the site. One of the principal duties of the directors is related to the protection of the company’s share capital. This duty contains the prohibition to become indebted to the company. Some penal sanctions are stipulated in the TCC to prevent this situation. For example, if the corporation lends to the shareholders in case the profits, together with the reserves, are not enough to cover the previous years’ losses, the responsible Board members would be punished with a judicial fine of not less than 300 [three hundred] days. Further, in case of lending to non-shareholder members of the Board or their relatives who are not shareholders, a judicial fine of not less than 300 [three hundred] days would be imposed.

C. Cases For Which Administrative Fine is Imposed

The TCC stipulates cases where administrative fines are regulated in addition to imprisonment and judicial fines. For example, an administrative fine of 10.242-Turkish Liras is imposed on persons who do not fulfill their bookkeeping-related obligations.

Furthermore, it is now a legal obligation to have registered bearer share certificates issued by closed companies before the Central Securities Depository [“CSD”]. Accordingly, in closed companies, both the shareholders and the company’s Board are obliged to notify the CSD about the bearer share certificates issued by the corporation. Administrative fine of 5.000- Turkish Liras may be imposed if the Board members do not comply with such notification obligation.

II. Criminal Liability in Other Laws

A. Offenses Regulated Under Turkish Penal Code

The Turkish Penal Code No. 5237 [“TPC”] sets forth various white-collar crimes which may also be committed by a Board member. The most common one the offense of abuse of trust regulated in Article 155 of the TPC. Accordingly, if a Board member harms the company by abusing the powers given to him/her in order to obtain personal benefit, s/he would commit the qualified form of abuse of trust in accordance with Article155/2 of the TPC and may be sentenced to up to 7 [seven] years imprisonment.

B. Criminal Liability Arising from Workplace Safety-Related Duties and Duty of Care

It is possible for the Board members to be subject to accusations due to their negligent behavior. Those who do not take the relevant precautions stipulated in the laws regarding the field of activity of the corporation may find themselves in the position of perpetrator as a result of such negligence. Since the company executives are deemed as the employer, they have some responsibilities arising from this qualification. Accordingly, in case safety measures to prevent work accidents have been neglected, criminal liability of the executives may come to the fore. For example, in a fatal work accident, it is possible for executives to be held liable for reckless murder –and even in some cases, murder with probable intent.

Responsibility of the executives may not only be towards the employees, but also to the third parties and even the customers of the corporation. For instance, an executive of a corporation operating in the food industry would be held responsible for reckless murder or injury if any of the customers dies or gets injured by poisoning due to failure of taking the safety precautions set out in the relevant regulations pertaining to corporation’s field of activity.

C. Offences Regulated in the Execution and Bankruptcy Law

Criminal liability of the Board members may also incur pursuant to Article 345 of the Execution and Bankruptcy Law No. 2004 [“EBL”]. Accordingly, if the offences regulated in the EBL occur during the management of a legal entity, the Board members would be held responsible. For example, those who act in violation of verdicts about doing or not doing something would be punished with a detention of up to 3 [three] months. If this act is committed by a legal entity, the sanction would be directed to the Board members.

Another example of the offences regulated in the EBL is the obligation to declare bankruptcy. Accordingly, responsible Board members who fail to declare bankruptcy when the company’s assets are not sufficient to pay its debts will be sentenced to imprisonment from 10 [ten] days to 3 [three] months upon the complaint of one of the corporation’s creditors.

D. Offences and Administrative Sanctions Regulated in the Capital Market Law

Some penal sanctions regulated in the Capital Markets Law No. 6362 [“CML”] may lead to the liability of the Board members of the corporations subject to capital markets legislation. Article 103 of the CML greatly expands the area of responsibility, and it is stipulated that those who violate the provisions of the CML, or the decisions taken by the Capital Markets Board would be punished with an administrative fine from 51.236-Turkish Liras to 640.442-Turkish Liras.

The CML does not only regulate administrative sanctions but also offences. For example, the offence of insider trading regulated in Article 106 will happen if any interest is obtained by using information that has been learnt during performance of the duties and could affect the value of a market instrument or investor’s decisions. Those who commit this crime would be sentenced to imprisonment from 3 [three] to 5 [five] years or judicial fine.

III. Criminal Liability of Legal Entities

Under Turkish law, legal entities cannot be subject to criminal sanctions. Only security measures, which are cancellation of the operation license and confiscation can be applied to legal entities. However, Article 43/A of the Misdemeanor Law No. 5326 allows to hold legal entities liable by referring to some offences regulated in the TPC and other laws. Accordingly, in case those crimes are committed to the benefit of a legal entity, an administrative fine from 10.000- Turkish Liras to 50.000.000- Turkish Liras would then be imposed on the corporation provided that the fine corresponds not less than twice of the profit obtained through the criminal act. Crimes of bribery, fraud and bid rigging are examples of the crimes mentioned in the respective provision. These crimes can be committed by the Board members themselves, or by non-directors who are involved in the company operations.

IV. Assessment

Considering the nature of their duties and authorities, the Board members are endowed with broad powers, which naturally bring same level of responsibility. Besides their legal liability, it is possible for the members to face criminal sanctions including imprisonment. An explicit distribution of duties and responsibilities among the Board members pursuant to the relevant regulations would limit their liability to their assigned duties and prevent them from facing criminal sanctions in possible adverse situations.

By Tarik Guleryuz, Partner, Guleryuz & Partners

From promoting a new brand to preserving the market presence of an already established one, User Generated Content (“UGC”) has become an uncanny tool to initiate and preserve consumer engagement. With that, social network providers have transformed from mere conduits of social interaction between individuals, to multifaceted platforms that enable businesses to reach their consumers. As UGC became more and more mainstream, pulled millions of users and created some of the biggest tech companies, many countries try to catch up with regulations such as Turkey.

We aim to explain the two main regulatory obligations a UGC platform may need to know; (i) the internet legislation and (ii) media legislation and not to focus on legislations applicable to companies that are willing to enter Turkish market in general such as corporate law, commercial law, data protection law and competition law.

(i) Need-to-Know Obligations In Terms of Internet Law

The first regulation of the internet was the Law on Regulation of Broadcasts via Internet and Prevention of Crimes Committed through Such Broadcasts (“Law No. 5651”), which was changed significantly over the time. The latest pilot decision with application no. 2018/14884 shows that there is still room for development for the Law No. 5651. Under the Law No. 5651, there are three main actors (i) content providers, (ii) hosting providers and (iii) access providers. In the simplest sense, content providers are the content creators, which are users in UGC platforms, the hosting providers are the actors that host the means for the content creators such as providing platforms, which would be the UGC platforms themselves (except the content they create their own) and access providers are those that provide technical access to UGC platforms such as internet service providers. As the hosting provider itself becoming a content provider is a rare occasion, we will be focusing on hosting provider liabilities under the Law No. 5651. For sure, as the internet environment has no location, different jurisdictional rules may clash and international rogatory and mutual legal assistance procedures may be in question, however as these would depend on the situation and legal rules the headquarters of the hosting provider is in, we are not taking the conflict of law principles into question for this article. 

(i) Hosting providers are obligated to provide information of their residence/headquarters location, electronic communication address and phone number in their website, under communication title accurately, up-to-date and completely.

(ii) Hosting providers are not obligated to check the content it hosts or research whether there is an unlawful activity. However, hosting providers are obligated to remove the content if it is notified in accordance with Article 8 and 9 of the Law No. 5651.

(iii) Hosting providers are obligated to store traffic information for the services they host content for six months.

The Law No. 7253 on the Amendment to the Law on Regulation of Broadcasts via Internet and Prevention of Crimes Committed through Such Broadcasts (“Amendment Law”) introduced changes to the Law No. 5651 through bringing in the definition of a “social network provider” and imposing significant obligations on such.  Social network providers are defined in the Amendment Law as “real or legal persons that enable users to create, view or share content such as text, images, audio, location on the internet medium for social interaction purposes.”, which could also encompass UGC platform providers.

The Amendment Law sets forth a variety of obligations on social network providers, while reserving the obligations of hosting and content providers that have been previously stipulated.  According to the Amendment Law, foreign social network providers with more than one (1) million daily accesses from Turkey (“Large Social Network Providers”) are obliged to appoint at least one (1) person to be its representative in Turkey in order to meet the requests, notifications or notices that will be sent by governmental, judicial, and administrative authorities, and to respond to the applications which will be made by individuals within the scope of the Amendment Law, (ii) and shall include the contact information i.e. address and e-mail address for notification of this person in an easily visible and directly accessible manner on its website.

Social network providers have additional obligations. Large Social Network Providers are obligated to (i) create, publish (on its website) and notify (to the Information and Communication Technologies Authority) statistical and categorical information reports related to implementation of removal of content and/or access ban decisions and individual applications (in accordance with Article 9 and 9/A) it was notified in six months intervals in Turkish and (ii) take necessary measures to store the data of users in Turkey, within Turkey. All social network providers shall respond (positively or negatively) to applications of persons within the scope of Article 9 and 9/A.

Administrative fines for violation of the Law No. 5651 vary depending on the situation and the role and change based on the yearly reevaluation rates. For the year 2022, for hosting providers, the penalties start from around 6,000 (approximately EUR 390) Turkish Liras and may be up to around 1,500,000 Turkish Liras (approximately EUR 97,000). For Large Social Network Providers, the penalties are heavier and may be up to around 14,800,000 Turkish Liras (approximately EUR 954,000). Continuous failure to appoint and notify a representative may be subject to heavy sanctions on Large Social Network Providers, such as advertisement ban and bandwidth throttling. 

(ii) Need-to-Know Obligations In Terms of Media Law

UGC providers providing media and streaming services or platforms may be subject to media legislation, the main of which is the Law No. 6112 on the Establishment and Broadcasting Services of Radio and Television Enterprises (“RT Law”). Article 29/A of the RT Law and the Regulation on Provision of Radio, Television and On-Demand Broadcasts on Internet Medium (“Regulation”) could encompass such UGC providers.

The Regulation and RT Law defines media service provider (“MSP”) as the legal entity that has “editorial responsibility” for choosing the content of radio, television and on-demand broadcast services and determines the manner in which this service is organized and broadcasted. The “editorial responsibility” is the main and probably the most important distinction to determine whether a UGC provider to be subject to the RT Law and Regulation. In the simplest sense, editorial responsibility is correlated with the control over the content. A UGC platform operator that merely provides hosting for content would be outside the scope while a platform that has editorial control such as creating a specific schedule for broadcasting, list of contents, deciding on what to include or not to the platform may be considered within the scope. In that sense, small interventions not aiming an editorial customization such as implementation of policies, removal or restriction of unlawful content, recommendation algorithms or child safety measures should not be deemed sufficient to be considered having editorial control. 

Pursuant to the Regulation, media service providers that are willing to broadcast their radio, television and on-demand broadcast services solely through internet must obtain a broadcast license from Radio and Television Supreme Council (“RTSC”).

The Regulation is applicable to the content or hosting providers in a foreign country, or for media service providers that are under the jurisdiction of another country, or for media service providers which broadcast in Turkish through internet targeting Turkey or in another language but targeting Turkey and including commercial broadcasts to Turkey, if RTSC determines these broadcasts to be in violation of RT Law and international treaties.

Per paragraph (3) of Article 5 of the Regulation following licenses are granted to the following broadcasting types:

 INTERNET-RD – Granted for media service providers that file a request to provide radio broadcasts through Internet

INTERNET-TV – Granted for media service providers that file a request to provide TV broadcasts through Internet

INTERNET-IBYH – Granted for media service providers that file a request to provide on-demand broadcasting service through Internet

Relevant types of service are defined under Article 4 of the Regulation as follows:

• On-demand broadcasting service through Internet: Except for individual communication services, broadcast services which are watched or listened by the users upon their personal request at the time determined by the user and subject to a program catalogue which has been specified by a media service provider, through Internet, by direct or conditional access.
• Radio broadcast through Internet: Except for individual communication services, audio and data broadcast of programs through Internet based on a broadcasting schedule.
• TV broadcast through Internet: Except for individual communication services, broadcasting of an encrypted or unencrypted audio-visual broadcasting service through Internet, provided by a media service provider for the purposes of watching programs based on a broadcasting schedule.

For the year 2022, the fee for Internet-TV or Internet-IBYH license type is 182,168 Turkish Liras (approximately EUR 11,700) and the fee for Internet-RD license type is 18,217 Turkish Liras (approximately EUR 1,170).

Additionally, per Article 7 of the Regulation, licenses for broadcasting through Internet are only granted to joint-stock companies established per Turkish Commercial Code clauses for the sole purpose of providing radio, television or on-demand broadcasting services. However, it is essential to note that this does not mean that foreign companies are excluded from this obligation. It is in fact expected for them to establish such companies in Turkey to be able to provide the services in Turkey. In a relatively recent press release published on its official website, RTUK stated that even if the content or hosting provider is located abroad, broadcasting organizations that broadcast and place advertisements in Turkish or another language for Turkey are also within this scope.

While any UGC platform operators entering Turkish market would need to know and comply with the Law No. 5651, UGC platform operators that provide media services should first identify whether they are within the scope of the media legislation and make the necessary preparations before entering the Turkish market.

By Gonenc Gurkaynak, Partner, Ceren Yildiz, Partner, and Batuhan Aytac, Senior Associate, and Gamze Yalcin, Junior Associate, ELIG Gürkaynak Attorneys-at-Law

Significant amendments were introduced to the Communiqué of the Competition Authority on Mergers and Acquisitions Requiring Authorization of the Turkish Competition Board, numbered 2010/4, with the Communiqué published in the Official Gazette on March 4, 2022. In this respect, while the turnover thresholds taken into account in mergers and acquisitions to determine whether Competition Board’s approval is necessary are increased, exceptional rules are adopted in relation to transactions involving technology companies. These amendments will become effective two months after their publication, i.e., as of May 4, 2022.

Increase of Turnover Thresholds

Pursuant to the new provision, in cases where:

• Total turnovers of the transaction parties in Turkey exceed 750 million TL, and turnovers of at least two of the transaction parties in Turkey each exceeds 250 million TL, or
• The asset or activity subject to acquisition in acquisition transactions and at least one of the parties of the transaction in merger transactions have a turnover in Turkey exceeding 250 million TL and the other party of the transactions has a global turnover exceeding 3 billion TL

the Board’s authorization will need to be obtained for the validity of the underlying transaction. If these turnover thresholds are not exceeded, competition clearance will not be required.  

Before the amendment, the 250 million TL threshold was 30 million TL, the 750 million threshold was 100 million TL, and the 3 billion TL threshold was 500 million TL. In this regard, the amendment introduces a significant increase in turnover thresholds.

Exceptional Threshold Rules in Tech M&As  

For mergers and acquisitions involving technology undertakings providing services to users in Turkey, the aforementioned 250 million TL turnover thresholds will not be sought. That means, if the total turnover of the transaction parties in Turkey exceeds 750 million TL or the global turnover of at least one of the transaction parties exceeds 3 billion TL, the Competition Board must be notified before taking over a technological company. The term “technology undertakings” is defined for the first time and includes gaming, software, online television, financial technology, biotechnology, health technology, e-commerce, cryptocurrency, artificial intelligence, and all other technology companies. Accordingly, most tech M&A deals would be subject to the inspection of the Competition Authority.

Other Amendments

In addition, the Notification Form on Mergers and Acquisitions attached to the relevant Communiqué has been updated. From now on, the Board must be notified with the updated form for transactions subject to authorization. Finally, whereas the respective transaction could previously be notified by hand or by mail, it will soon be possible to do so via e-Government system.

By Zahide Altunbas Sancak, Partner, Guleryuz & Partners

As announced last week, the Turkish Competition Authority has recently amended the legislation relating to the Turkish merger control regime through an amendment communiqué. This piece of additional analysis is to explore the scope of sectors that will be exempt from certain local turnover thresholds, and therefore the concentrations in which will be notifiable in Turkey regardless of magnitude of Turkish operations.

Before May 4th, the current regime will apply. If a transaction will be closed (i.e. the concentration will be realized) as of or after May 4, 2022, that transaction will be required to be notified in Turkey if one of the following alternative turnover thresholds is met:

(i) The combined aggregate Turkish turnover of all the transaction parties exceeds TL 750 million (approximately EUR 71.9 million or USD 84.9 million) and the Turkish turnover of each of at least two of the transaction parties exceeds TL 250 million (approximately EUR 23.9 million or USD 28.3 million), OR

(ii) The Turkish turnover of the transferred assets or businesses in acquisitions exceeds TL 250 million (approximately EUR 23.9 million or USD 28.3 million) and the worldwide turnover of at least one of the other parties to the transaction exceeds TL 3 billion (approximately EUR 287.9 million or USD 339.7 million) OR the Turkish turnover of any of the parties in mergers exceeds TL 250 million (approximately EUR 23.9 million or USD 28.3 million) and the worldwide turnover of at least one of the other parties to the transaction exceeds TL 3 billion (approximately EUR 287.9 million or USD 339.7 million)

That said, the Amendment Communiqué also introduced a new merger control regime for undertakings active in certain markets/sectors. Further to the Amendment Communiqué, “the TL 250 million Turkish turnover thresholds” mentioned above will not be sought for the acquired undertakings active in the fields of digital platforms, software or gaming software, financial technologies, biotechnology, pharmacology, agricultural chemicals and health technologies or assets related to these fields, if they (i) operate in the Turkish geographical market or (ii) conduct research and development activities in the Turkish geographical market or (iii) provide services to Turkish users.

To clarify the meaning and the scope of these sectors exempted from the use of local turnover thresholds (and therefore have been rendered almost categorically notifiable in Turkey), please find below a non-exhaustive list of activities which correspond to the sectors referred to in the definition of the Amendment Communiqué. Please note that ELIG Gürkaynak drew up the list below merely in an effort to provide insight and guidance in identifying this scope, thus the list is not exhaustive. Identification of the scope of activity of the client should in any case be carried out on a case-by-case basis in accordance with the definitions  of the Amendment Communiqué provided above, and the information to be obtained from the client as to the areas of activity of the transaction parties:

(a) Digital platforms: Digital platforms are systems and interfaces that form a commercial network or market facilitating business-to-business (B2B), business-to-customer (B2C) or even customer-to-customer (C2C) transactions. Digital platforms include but are not limited to social media platforms, knowledge sharing platforms, media sharing platforms, service-oriented platforms, online marketplaces and digital content aggregators.

(b) Software and gaming software: Software relates to a set of instructions, data or programs used to operate computers and execute specific tasks, while gaming software concerns software customised for gaming. Software and gaming software include but are not limited to the activities below.

(i) writing and publishing of software and gaming software (including publishing of computer games) (NACE Rev. 2: 58.2)

(ii) wholesale, retail sale, distribution and marketing of software (both customised and non-customised) and gaming software (NACE Rev. 2: 46.51, 47.41),

(iii) reproduction from master copies of software (NACE Rev. 2: 18.2)

(iv) manufacture of electronic games with fixed (non-replaceable) software (NACE Rev. 2: 32.40)

(v) translation or adaptation of software and gaming software (NACE Rev. 2: 58.29)

(vi) computer programming activities (designing the structure and content of, and/or writing the computer code necessary to create and implement systems software (including updates and patches), software applications (including updates and patches), databases, web pages, customising of software (NACE Rev. 2: 62.01)

(vii) software installation services (NACE Rev. 2: 62.09)

(c) Financial technologies: Financial technologies refer to technology-enabled innovation in financial services. Undertakings which sit at the crossroads of financial services and technology fall into the scope of this definition. In brief, the term “financial technologies” is used to define software and other technology aiming to modify, enhance or automate financial services for businesses or consumers. Financial technologies include but are not limited to technologies and software developed for the following fields:

(i) financial services activities (monetary intermediation, financial leasing, other credit granting) (NACE Rev. 2: 64.1, 64.9)

(ii) insurance, reinsurance, pension funding (NACE Rev. 2: 65)

(iii) activities auxiliary to financial services, insurance and pension funding (administration of financial markets (futures commodity contracts exchanges, securities exchanges, stock exchanges,  stock or commodity options exchanges), security and commodity contracts brokerage (dealing in financial markets on behalf of others (e.g. stock broking) and related activities, securities brokerage, commodity contracts brokerage, activities of bureaux de change etc.), risk and damage evaluation, activities of insurance agents and brokers, fund management activities, financial transaction processing and settlement, investment advisory activities, activities of mortgage advisers and brokers  (NACE Rev. 2: 66)

(iv) accounting, bookkeeping and auditing activities, tax consultancy (recording of commercial transactions from businesses or others, preparation or auditing of financial accounts, examination of accounts and certification of their accuracy, preparation of personal and business income tax returns, advisory activities and representation on behalf of clients before tax authorities) (NACE Rev. 2: 69.2)

(v) digital lending, payments, blockchain and digital wealth management

(d) Biotechnology: Biotechnology refers to the technology that utilizes biological systems, living organisms or parts of this to develop or create different products. The sector includes but is not limited to the activities below:

(i) research and experimental development on biotechnology (NACE Rev. 2: 72.11)

– DNA/RNA (genomics, pharmacogenomics, gene probes, genetic engineering, DNA/RNA sequencing/synthesis/amplification, gene expression profiling, and use of antisense technology)

– proteins and other molecules (sequencing/synthesis/engineering of proteins and peptides (including large molecule hormones); improved delivery methods for large molecule drugs; proteomics, protein isolation and purification, signalling, identification of cell receptors)

– cell and tissue culture and engineering (cell/tissue culture, tissue engineering (including tissue scaffolds and biomedical engineering), cellular fusion, vaccine/immune stimulants, embryo manipulation

– process biotechnology techniques (fermentation using bioreactors, bioprocessing, bioleaching, biopulping, biobleaching, biodesulphurisation, bioremediation, biofiltration and phytoremediation

– gene and RNA vectors: gene therapy, viral vectors)

– bioinformatics (construction of databases on genomes, protein sequences, modelling complex biological processes, including systems biology)

– nanobiotechnology (applies the tools and processes of nano/microfabrication to build devices for studying biosystems and applications in drug delivery, diagnostics etc.)

(ii) manufacture of biotech pharmaceuticals such as plasma derivatives (NACE Rev. 2: 21.20)

(e) Pharmacology: Pharmacology, a biomedical science, deals with the research, discovery, and characterization of chemicals which show biological effects and the elucidation of cellular and organismal function in relation to these chemicals. In other words, pharmacology refers to the science of how drugs act on biological systems and how the body responds to the drug. The study of pharmacology encompasses the sources, chemical properties, biological effects and therapeutic uses of drugs. Pharmacology includes but is not limited to the biomedical studies and R&D activities conducted in the areas below:

(i) Pharmacodynamics (relationship of drug concentration and the biologic effect (physiological or biochemical)

(ii) Pharmacokinetics (interrelationship of the absorption, distribution, binding, biotransformation, and excretion of a drug and its concentration at its locus of action)

(iii) Clinical Pharmacology and Therapeutics (understanding what a drug is doing to the body, what happens to a drug in the body, and how drugs work in terms of treating a particular disease)

(iv) Pharmacotherapy (treatment of a disorder or disease with medication)

(v) Neuropharmacology (understanding how drugs affect cellular function in the nervous system)

(vi) Pyscopharmacology (use of medications in treating mental disorders)

(vii) Cardiovascular pharmacology (understanding how drugs influence the heart and vascular system.)

(viii) Molecular pharmacology (investigates the molecular mode of action of drugs, among others using genetic and molecular biology methods,)

(ix) Radiopharmacology (study and preparation of  radioactive pharmaceuticals)

(x) Manufacture and R&D of pharmaceuticals (antisera and other blood fractions, vaccines, diverse medicaments, including homeopathic preparations), pharmaceutical preparations and medicinal chemicals (manufacture of medicinal active substances to be used for their pharmacological properties in the manufacture of medicaments: antibiotics, basic vitamins, salicylic and O-acetylsalicylic acids etc.); wholesale, retail sale, distribution and marketing of pharmaceuticals, pharmaceutical preparations and medicinal chemicals; growing of drug and narcotic crops (NACE Rev. 2: 21.1 and 21.2)

(f) Agricultural chemicals: Agricultural chemicals refer to chemicals used in agriculture to control pests and disease or control and promote growth; such as pesticides, herbicides, fungicides, insecticides, and fertilizers. The sector includes but is not limited to the activities below:

(i) mining of chemical and fertiliser minerals (NACE Rev. 2: 08.91)

(ii) support activities for other mining and quarrying (where it relates to agricultural chemicals and fertilizers) (NACE Rev. 2: 09.90)

(iii) manufacture of fertilisers (straight or complex nitrogenous, phosphatic or potassic fertilisers; urea, crude natural phosphates and crude natural potassium salts), nitrogen compounds (nitric and sulphonitric acids, ammonia, ammonium chloride, ammonium carbonate, nitrites and nitrates of potassium) (NACE Rev. 2: 20.15)

(iv) manufacture of organic and inorganic basic chemicals (where it relates to agricultural chemicals and fertilizers) (NACE Rev. 2: 20.13, 20.14)

(v) manufacture of pesticides and other agrochemical products (manufacture of insecticides, rodenticides, fungicides, herbicides, acaricides, molluscicides, biocides, manufacture of anti-sprouting products, plant growth regulators, manufacture of disinfectants (for agricultural and other use) (NACE Rev. 2: 20.2) 

(vi) wholesale, retail sale, distribution and marketing of fertilisers and agrochemical products (NACE Rev. 2: 46.75) 

(g) Health technologies: Health technologies are the application of organized knowledge and skills in the form of medicines, medical devices, vaccines, procedures and systems developed to solve a health problem and improve quality of life. They refer to any technology, including medical devices, IT systems, algorithms, artificial intelligence (AI), cloud and blockchain, designed to support healthcare organizations and patients. Health technologies include but are not limited to technologies and software developed or being developed for the following fields:

(i) human health activities (hospital activities, medical (medical consultation and treatment) and dental practice activities (dentistry, endodontic and pediatric dentistry; oral pathology, orthodontic activities) (NACE Rev. 2: 86) 

(ii) residential healthcare activities (residential nursing care activities, residential care activities for mental retardation, mental health and substance abuse, residential care activities for the elderly and disabled) (NACE Rev. 2: 87) 

(iii) manufacture of medical and dental instruments (e.g. operating tables, examination tables, hospital beds with mechanical fittings, dentists’ chairs, surgical appliances) (NACE Rev. 2: 32.5)

By Gonenc Gurkaynak, Partner, Kagan Ucar, Counsel, and Hakan Demirkan, Associate, ELIG Gürkaynak Attorneys-at-Law

In November 2021, the Green Debt Instrument and the Green Lease Certificate Guidelines Draft [the “Draft Guide”] was submitted to the public opinion. The draft was approved and published with the Principal Decision of the Turkey’s Capital Markets Board [“CMB”] dated February 24, 2022 and numbered 10/296, with some revisions made as per the comments by the market actors.

The Scope Has Been Expanded

First of all, the regulation took sustainable debt instruments and sustainable lease certificates into its scope, and the Draft Guide has been introduced with the title of “Green Debt Instrument, Sustainable Debt Instrument, Green Lease Certificate, Sustainable Lease Certificate Guideline” [“Guide”].

Debt instruments issuance revenue of which are used exclusively for financing or refinancing green projects are defined as “green debt instruments”, whereas “sustainable debt instruments” are defined as debt instruments revenues of which are used exclusively for financing or refinancing projects that have positive social and environmental impacts.

The Guide includes both advisory and obligatory regulations in terms of the issuers. Within this framework, instead of making separate regulations for sustainable debt instruments and lease certificates, it is stated that the general concepts, principles, and obligations in the Guide apply to sustainable debt instruments and lease certificates. It is also recommended to consider the sustainable bond principles of the International Capital Markets Association [“ICMA”] in sustainable debt instrument issuances.

Use of Funds Obtained from the Issue

The obligation of documentation regarding the use of the funds obtained from the issuance is detailed and concretized in the Guide. In this context, the obligation to use the funds obtained from the issuance “as soon as possible” in green projects and the obligation to indicate the period foreseen for the use of these in the framework document has been regulated. Again, “Indication of environmental benefits in a quantifiable way” was no longer optional in the framework document and became a requirement.

External Review, Second Party Opinion and Verification

External review is regulated much more thoroughly than the Draft Guide, with reference to the ICMA Guidelines, and the general principles regarding the organizations that will provide this service, as well as the minimum elements that should be included in the reports prepared by these organizations are detailed in the Guide.

As per the Guide, institutions providing external review services can only provide one of the external evaluation services [second party opinion, verification, certification, green debt instrument scoring/rating] in issuances made within the scope of the same framework document by an issuer. Also, it has been added that external review services cannot be acquired from the same institution that provided services in the preparation of the framework document, and exceptions to this rule have been removed from the text.

International Issues

The Guide emphasizes that, unlike the Draft Guide, a separate issue ceiling for international issuances should be sought from the CMB.

After the issuance, the period for preparing and submitting fund use reports in accordance with foreign standards, which was one month in the Draft Guide, has been extended to three months. Besides, Turkish translations of these reports -if the issuer is a member of the Public Disclosure Platform [the so called “KAP“]- are obliged to be disclosed on the KAP and/or on the issuer’s website.

By Zahide Altunbas Sancak, Partner, and I. Selin Nacar Ozturk, Associate, Guleryuz & Partners