Category: Turkiye

Former Allen & Overy Senior Associate Utku Unver has joined the Projects and Energy practice of Norton Rose Fulbright’s Istanbul-based associated firm, which has rebranded as a result as the Inal Unver Attorney Partnership.

Unver, who joins Norton Rose Fulbright as a partner after seven years at Allen & Overy, specializes in project finance and public-private partnership transactions across the energy, transportation, technology, and healthcare sectors. According to Norton Rose Fulbright, “his experience also includes project restructurings, the preparation and review of EPC contracts, finance documents, operation and maintenance agreements, and concession contracts in Turkey and the Middle East.”

Unver holds a Master’s degree from the Bucerius Law School in Hamburg and an LL.B. from the University of Ankara. Before joining Allen & Overy in 2013, Unver spent three years with Yamaner & Yamaner, a year with Baker McKenzie, and almost three years with Herguner Bilgen Ozeke.

“Turkey continues to offer promising opportunities for businesses and investors even during these unprecedented times,” stated Unver. “Norton Rose Fulbright’s regional and global experience in the energy and infrastructure sectors will allow me to provide the highest level of client service.” 

“Currently, there is a tremendous need for lawyers in Turkey who have a strong background working on project restructurings,” commented Norton Rose Fulbright’s Global Head of Energy, Anna Lapierre. “Utku has this coveted experience, and his timely addition to Norton Rose Fulbright will benefit clients throughout the region.”  

“Utku is a natural fit for our Istanbul office, as he possesses experience from global law firms across many sectors on which we are focused,” added Norton Rose Fulbright’s Head of Cross-Border Practices and Istanbul Partner-in-Charge, Ayse Yuksel Mahfoud. “He understands our clients’ interests, and our clients will certainly appreciate him from a business standpoint.”

The Turkish Competition Authority (“TCA”) recently published its Guidelines on Examination of Digital Data during On-site Inspections (“Guidelines”), which set forth the general principles with respect to the examination, processing and storage of data and documents held in the electronic media and information systems, during the on-site inspections to be conducted by the TCA. According to the recitals of the Guidelines, the TCA deemed that it was necessary to determine and set out these relevant principles, in light of the recent amendment to Article 15 (“On-Site Inspections”) of the Law No. 4054 on the Protection of Competition (“Law No. 4054”).

The Guidelines essentially (i) clarify the procedures to be abided by when the data on the electronic media or information systems are required to be examined by the case handlers during on-site inspections, in a way that relatively echoes the recent enforcement practices of the TCA, and (ii) introduce a new method for the examination of digital data, which is akin to the methodology and principles set forth within the European Commission’s (“Commission”) Explanatory note on Commission inspections pursuant to Article 20(4) of Council Regulation No 1/2003 (“Commission’s Explanatory Note”).   

What do the Guidelines bring: An unchartered territory or statutory safeguard with new formalistic principles?

In terms of the legislative justification of the Guidelines, it should be noted that the Board’s decisional practice had, in effect, already been emphasizing that the previous wording of Article 15(a) of the Law No. 4054 did not preclude the TCA from exercising its investigative powers on the data and documents held in electronic media and information systems, during its on-site inspections. That being said, the TCA’s approach was merely shaped with the case law of the Board and thus, a guidance based on secondary legislation was most welcomed on this front. In this respect, the Guidelines essentially concretise the Board’s decisional approach and explicitly set forth the scope of investigative powers of the Authority during the on-site inspections, while also pinpointing which acts of undertakings might be deemed as non-compliant with the relevant principles. 

Following from the above, the Guidelines underline that during an on-site inspection, the TCA case handlers are entitled to conduct their examination on the relevant undertaking`s IT systems such as servers, desktop or laptop computers and portable devices, as well as all data storage apparatus and mechanisms, such as CDs, DVDs, USB sticks, external hard disks, backup records and cloud services. In a similar vein, the Guidelines note that the case handlers may utilize digital forensics software or hardware during their on-site inspection, to search, retrieve and duplicate the digital documents or data, as well as recover any deletions.

The Guidelines also emphasize the principles governing the examination of portable devices (e.g., mobile phones, tablets etc.), where the case handlers shall decide whether the relevant device should be subject to the review within the scope of the on-site inspection, after a quick browse to determine whether the subject portable device contains any digital data pertaining to the relevant undertaking. The Guidelines specify that those portable devices which are allocated entirely for personal use, cannot be brought under the scope of an on-site inspection. That being said, personal portable devices which also include digital data pertaining to the relevant undertaking, would still be subject to the review of the case handlers through the use of digital forensic tools. It should be noted that the Guidelines do not introduce a completely brand new approach to the examination of personal devices or accounts, as there are recent decisions wherein the Board decided that personal devices or e-mail accounts can also be examined within the scope of on-site inspections, if they contain information pertaining to the relevant undertaking. 

The Guidelines also draw a framework for the undertakings’ obligation to cooperate with the TCA case handlers during the on-site inspections. Accordingly, the undertaking under scrutiny is obliged to prevent any interferences to the data itself or the medium wherein it is stored, as well as to fully and actively assist the case handlers where needed with regard to the IT systems, such as by (i) providing the case handlers with information regarding the IT software and hardware, (ii) authorizing the case handlers as system admins, (iii) providing remote access, (iv) isolating the computers and servers from the network, (v) limiting user access to corporate accounts and (vi) restoring backed-up/stored business data. In this respect, the undertakings’ obligation to cooperate, as stipulated within the Guidelines, also closely reflects the Board’s current decisional practice, wherein the relevant undertaking’s failure to provide the case handlers access to its IT infrastructure (e.g. Office365 and eDiscovery) due to reasons of technical impossibility or concerns about potential breach of the relevant undertakings’ data protection policy, was deemed to be non-compliant with the cooperation obligation.

As another significant point, the Guidelines emphasize that the attorney-client privilege shall be respected when an on-site inspection is conducted. To that end, the Guidelines indicate that, in order to benefit from the attorney-client privilege, two cumulative conditions shall need to be met, which is again, in line with the recent decisional practice of the Board. Accordingly, for digital data or documents to fall under the protective cloak of the attorney-client privilege, the Guideline criteria are: (i) the correspondence shall be between the undertaking and an independent/outside legal counsel, who has no employment relationship with the relevant undertaking and (ii) the correspondence shall be made with the purpose of exercising the undertaking’s right to defence. The Guidelines explicitly set forth that communications that are not directly related to the use of undertaking’s right to defence and particularly communications that are made with the purpose of facilitating any conduct that violates competition rules or for concealing an on-going or future violation of the competition rules are out of the scope of attorney-client privilege.

In addition to bringing the recent enforcement trends of the TCA under a statutory safeguard, the Guidelines also introduce a brand-new procedure, which grants the TCA the discretion to continue its inspection of the digital documents or data, in the computer forensics laboratory of the TCA, if deemed necessary. The relevant paragraph of the Guidelines echoes paragraph 14 of the Commission’s Explanatory Note, which sets forth that if the selection of documents relevant for the inspection is not yet finished at the end of the envisaged on-site inspection at the undertaking’s premises, the copy of the data can be collected to continue the inspection process at the Commission’s premises. Similar to the principles set forth within the Commission’s Explanatory Note, the Guideline also states that the Authority will invite the investigated undertaking, in writing, to have a representative present during the opening of the sealed envelope and the examination to be carried out at the Authority. To that end, the Guidelines also suggest that if the Board deems it necessary, it may decide to return the sealed envelope containing the digital data to the relevant undertaking, without being opened. This new procedure might be the harbinger of continued inspections by the TCA in the future and it also bolsters the necessity of robust on-site inspection compliance procedures by the undertakings in light of the increasing complexity of the processes within the scope of on-site inspections.

Conclusion

In conclusion, taking into account the recent decisions of the Board concerning on-site inspections, it can be stated that the Guidelines actually reflect the previously established practices and current approaches of the TCA, along with further clarifications and a newly introduced formalistic methodology similar to the Commission’s Explanatory Note. That being said, since the Guidelines also take a snapshot of the Board’s recent approach, this could result in a formalization that allows relatively less room to manoeuvre going forward, from a case-law stand point. All things considered, the Board’s case-by-case assessments will still shed further light on the actual implementation of the Guidelines and be most welcomed. 

By Gonenc Gurkaynak, Partner, O. Onur Ozgumus, Counsel, Firat Egrilmez, Associate, and Melih Yagci, Associate, ELIG Gürkaynak Attorneys-at-Law

On October 1, 2020, the Agreement between the Government of the Republic of Turkey and the Government of the People’s Republic of China Concerning the Reciprocal Promotion and Protection of Investments (the “Agreement”) was published in the Turkish Official Gazette to ratify an amendment protocol signed by the contracting parties.

The Agreement covers the promotion and protection of all types of investments coming from each country, except those constituting under 10% of the shares or voting rights of a company acquired through shares listed on a stock exchange which do not establish any lasting economic relationship. 

According to the Agreement, both countries shall:

• Promote investors from each country as far as possible;
• Treat investments from each country fairly and equitably to prevent any sort of discrimination; and
• Provide a certain level of protection and security to ensure the sustainability of investments.

Under the Agreement, each of Turkey and China agree to certain undertakings to ease the investment climate and secure the investment environment for investments from each country into the other. These undertakings provide:

• Security for investments (equitable treatment, adequate law enforcement, compensation of losses, no sanctions, non-nationalization, exceptional expropriation with fair compensation in case of public benefit etc.)
• Ease of investment processes (providing required working visas for expats, amicable settlement of disputes, agreement on seeking resolution before various fora such as competent national courts, ICSID or UNCITRAL arbitration tribunals)
• Efficient circulation for investment related money transfers such as returns, compensation, interest payments, money coming from liquidations (freely and without delay after the fulfilment of fiscal obligations).

In addition to the above, an amendment has been adopted by the amending protocol, repeating the annotation of Turkey to dispute settlement Article 64 of the ICSID Convention, indicating that Turkey shall not accept any referral to the International Court of Justice of disputes concerning the interpretation or application of the Convention on the Settlement of Investment Disputes between Turkey or China and Turkish or Chinese nationals, which are not settled by negotiation.

By Tamsyn Mileham, Partner, and Ian McGrath, Partner, Dentons

Former Emaar Turkey Director of Legal Affairs Huseyin Topuzoglu has joined Alliance Healthcare as its Legal Director in Istanbul.

Topuzoglu was at Emaar Turkey for two years. Before that, he spent six years as the Legal Director of Tesco and two years as the Legal & Human Resources Director at Best Buy. Earlier still, he spent four years in private practice with Herguner Bilgen Ozeke and a year in-house with Garanti Bank.

He is a graduate of Istanbul University and holds LL.M.s from Bahcesehir University and St John’s University Law School.

Originally reported by CEE In-House Matters.

The Turkish Competition Board’s (“Board”) Yozgat Ready Mixed Cement decision (“Decision”) was published on September 7, 2020. The Board concluded that certain ready mixed concrete producers operating in Yozgat province of Turkey entered into a cartel agreement by way of forming two legal entities (namely, Güven Beton and Sorgun Emek Beton) for the purposes of coordinating the sales they make to customers via collectively determining prices and allocating customers. The Board decided that this amounted to a violation of Article 4 of the Law No. 4054 on the Protection of Competition (“Law No. 4054”) and imposed administrative fines amounting to 1.2% of the turnovers of the investigated parties.

A Text-Book Cartel Arrangement

One of the most interesting aspects of the Decision relates to the obvious nature of the so-called cartel arrangement, which is rather unusual for such violations, given their secretive nature. As a matter of fact, the investigated parties did not choose to coordinate their competitive strategies through informal discussions that took place in “smoke filled rooms”. Instead they formed two separate companies (which were officially registered to the trade registry, and the shares of which were held by persons directly associated with the ready mixed cement producers in Yozgat) and used these two companies as a means to make direct sales to their customers. These were mere joint sales companies that did not engage in any direct production. Their core function was to enter into formal agreements with the customers for the supply of ready mixed concrete, which would later be delivered by one (or some) of the actual producers that were parties to the agreement.

The regions which would be served by these companies were clearly determined along with the prices and the quantities of the goods to be sold (regardless of which producer would deliver the relevant goods). The profits were later shared between the producers and there was even a detection mechanism for identifying and punishing the cheaters. All of the foregoing was proven, beyond doubt, in light of the ample evidence collected by the Turkish Competition Authority (“Authority”) during the course of its investigation.

Subsequently, the Board held that there was a single anti-competitive cartel agreement between the ready mixed cement producers in Yozgat, within the scope of which the competing firms collectively determined prices, allocated the customers between themselves and exchanged competitively sensitive information.

To recap, this seemed like a text-book cartel arrangement that, despite being quite rare in novel times, would not deserve much attention. Yet, there was an interesting twist in parties’ defenses and the way in which these defenses were taken into consideration by the Board in determining the amount of fines to be imposed.

For the Purposes of Increasing Efficiency?

Although Turkish practice is quite accustomed to efficiency defenses in the context of merger control proceedings, abuse of dominance cases and assessments concerning vertical agreements, these are somewhat rare in the cartel investigations.

Yet, when the defenses of the investigated parties are examined, it is observed that almost all parties argued that their intent was not to restrict competition. Rather, it was claimed that establishing these “central sales points” was needed for meeting the demands of the large-scale customers efficiently and with lower costs (the largest customer at that time was the Ankara-Sivas High-Speed Train Project). The parties emphasized that the price of ready mixed concrete sold by these central sales points in Yozgat were lower when compared to neighboring provinces that allegedly have competitive markets and that they were able to serve all the customers. In other words, it was set forth that the relevant arrangement actually led to lower prices and higher availability for the consumers, by dint of the efficiencies it brought out.

The Board rejected parties’ claims by referring to the relevant provisions of the Guidelines on Horizontal Cooperation Agreements (“Guidelines”) as well as the corresponding EU legislation (i.e. Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements), which lays down the circumstances under which joint sales agreements and information exchanges would be deemed as anti-competitive. In that respect, the Board underlined that in case a joint commercialization agreement solely consists of the formation of a sales unit that does not benefit from any investments, there is a possibility that it may be a cartel in disguise. Taking into account that the parties exchanged a large variety of highly sensitive information and determined competitive parameters collectively, the Board concluded that this arrangement should be characterized as a cartel agreement. The Board further clarified that the parties’ ability to engage with the customers independently and the fact that they were not forced to make all their sales through Güven Beton and Sorgun Emek Beton would not alter the said conclusion.

Do “Good Intentions” Matter at all?

Quite surprisingly (from the viewpoint of the relevant precedents), the Board did not completely disregard the fact that the cartel agreement also served some economically sound purposes. The Board noted that the establishment of Güven Beton and Sorgun Emek Beton allowed the ready mixed cement producers in Yozgat province to meet the considerable demand generated by the Ankara-Sivas High-Speed Train Project, which was considered to be crucial for the economy of Yozgat that have a low income level. This, coupled with the fact that the violation was abruptly brought to an end as soon as the investigation notice was sent to the parties, led the Board to significantly reduce the amount of the administrative fines to be imposed on the relevant undertakings.

To be more precise, according to the provisions of the Regulation on Fines to Apply in Cases of Agreements, Concerted Practices and Decisions Limiting Competition, and Abuse of Dominant Position (“Regulation on Fines”), the base fine to be applied was calculated as 2% of the turnovers of the investigated parties. This was further increased by half as the violation lasted for more than a year. However, the Board held that the abovementioned elements should be deemed as mitigating factors and reduced the total fine by 60% and determined the final fine to be applied as 1.2% of parties’ turnovers.

While the Regulation on Fines contains a list of certain mitigating factors, these are not exhaustive and therefore the precedents of the Board play an important role in clarifying additional elements that would fall under this category. In that vein, the Decision is noteworthy as it shows that positive economic outcomes that result from an anti-competitive conduct may constitute a mitigating factor (and a significant one at that, considering the magnitude of the reduction applied by the Board in the Decision) even in case of cartels. Given the fact that cartels are most severe competition law violations, then, a fortiori, “positive economic outcomes” could constitute a mitigating factor for all violations of the Law No. 4054.

Conclusion

It should be noted that the Board would conduct case-by-case assessments and evaluate the peculiarities of each case on an individual basis before deciding how to apply a principle to a specific case. Still, the Decision indicates that effects of conducts being examined by the Authority could be quite relevant, even when the underlying conduct is deemed to constitute a restriction by object, due to the role it may play in the determination of the amount of the monetary fine to be imposed. This is yet another example which shows that economic analysis constitutes an integral part of all aspects of competition law and that such analyses need not be confined to cases where they have direct impacts on the characterization of the conduct being examined.

By Gonenc Gurkaynak, Partner, and Baris Yuksel, Counsel, ELIG Gürkaynak Attorneys-at-Law

HS Attorney Partnership has advised Poland’s Ster Sp. z.o.o on its acquisition of 51% of the shares of Fource Koltuk Sistemleri from shareholders Koray Ucar, Nedim Guler, and Tuncer Cevik.

Financial details of the transaction were not disclosed. 

Ster Sp. z.o.o. — a member of the Ster Group — is a producer of seats for buses, trains, and other types of vehicles, and Fource Koltuk Sistemleri is a producer of bus seats based in Bursa, Turkey. 

According to HS Attorney Partnership, “after the deal, the shareholders maintained ownership over 49% of shares and the company was renamed Ster Turkey.”  

HS Attorney Partnership’s team was led by Partners Ali Baris Sahin and Iris Erbil and included Associates Pelin Sahin, Oya Tureoglu, and Cemre Cakmak.

The Court of Justice of the European Union (“CJEU”), in its recent decision with regard to the two joint cases (C‑807/18 and C‑39/19) brought before it for preliminary ruling, addressed how incompatibility with net neutrality shall be assessed under the relevant legislation regarding open internet access. In order to analyse this decision, we will first explain what net neutrality is and briefly discuss its possible links with the competition law. We will then move on to the relevant legislation surrounding the net neutrality. Lastly, we will discuss the aforementioned preliminary ruling of the CJEU and conclude.

What is Net Neutrality?

Currently, there is no universal consent on the definition of net neutrality.Different approaches relating to different cases reveal more than one aspect of the term. In this context, using it as an umbrella term that covers different regulatory obligations could be helpful for the purpose of definition. Net neutrality is a term that encompasses the varying levels of unequal treatment to online traffic, from excessive and unreasonable, to the more moderate forms of discrimination, under the traffic management practices of internet service providers (“ISPs”). Within the framework, net neutrality can be defined as a public policy principle for the ISPs to uphold: the equal treatment to all online content and applications. In brief, net neutrality is a dynamic concept and is shaped by the developments and needs of the technology sector.

Net Neutrality in Scope of Competition Law

A good starting point to assess net neutrality’s relationship with competition law would be the fundamental principles set forth under Articles 101 and 102 of Treaty on the Functioning of the EU (“TFEU”). Article 101 prohibits all agreements and concerted practices between undertakings which may result in the distortion of trade between the Member States and competition within the relevant market. Therefore, this is the relevant provision to be applied, for example, when an agreement or concerted practice between the ISPs and other content providers (i.e., the applications, services, etc.) is assessed. Alternatively, if the assessment is focused on a dominant ISP favouring its vertically integrated application service providers (“ASPs”), the provision to visit is Article 102 of the TFEU on the abuse of dominant position, which prohibits exclusionary and discriminatory unilateral conducts by dominant undertakings in their relevant markets.

That said, it should be noted that competition law is not a suitable medium to address all traffic management practices that may be deemed as contrary to a net neutrality policy. That is to say, a given practice of an ISP could be contrary to a net neutrality policy, whereas it may actually be permissible under the competition law rules. For example, agreements between ISPs and independent ASPs, which would require ISPs to favour the traffic generated by these ASPs would probably not fall within the scope of Article 101 of the TFEU, unless such agreements envisage some form of exclusivity. Similarly, the ISPs` preferential treatment to their own traffic may only be evaluated under Article 102 of the TFEU, in case the said ISPs hold a dominant position in the relevant upstream markets. In the same vein, the ISPs unilateral decisions to offer certain packages that favour the traffic generated by independent ASPs to which their subscribers attach greater value, may only lead to a secondary line discrimination and it is well known that such unilateral conduct would rarely be deemed as anti-competitive, especially if it is designed in accordance with the preferences of end-users and are merely presented as options, without strict impositions.

Moreover, since those practices that have a positive overall impact on efficiency and increase consumer welfare would not infringe articles 101 or 102 of the TFEU, many traffic management practices would still be compatible with competition law, even if they require unequal treatment of certain online traffic. Hence, it would not be unreasonable to argue that the relation between competition law and net neutrality would be reserved to fringe cases where the unequal treatment of online traffic constitutes a manifestation of market power and leads to exclusion of equally efficient competitors. This is why the issue of net neutrality is addressed by specific regulations that do not necessarily take into consideration the efficiency dimension of traffic management practices, and focus primarily on the openness of the internet.

Relevant Regulation

The relevant legislation, on which the Budapest High Court requested interpretation from the CJEU, is Regulation (EU) 2015/2120 of the European Parliament and of the Council of 25 November 2015 (“Regulation”) laying down measures concerning open internet access. Paragraph 1 of the Regulation`s preamble explains its two main objectives as “… to protect end users and simultaneously to guarantee the continued functioning of the internet ecosystem as an engine of innovation.” Article 3(1) entitled “Safeguarding of Open Internet Access” is about end users’ rights to access and distribute content, enjoy applications and services of their own choice, without being subject to certain conditions imposed by ISPs. Article 3(2) prohibits agreements between ISPs, and unilateral commercial practices of the ISPs that would result in the restriction of end users’ rights laid down in Article 3(1). Article 3(3) sets out a general rule regarding net neutrality, stating that ISPs shall treat all traffic equally when providing internet access.

Article 3(3) also allows ISPs to implement reasonable traffic-management measures. Reasonable measures, in this context, mean transparent, proportionate and non-discriminatory measures which are based on objective quality requirements. Such measures shall not be based on commercial considerations, monitor the specific content or be maintained for longer than necessary.

A Summary of the Case

Telenor Magyarország Zrt. (“Telenor”), a major mobile operator in Hungary, offers its customers 1 GB of unrestricted data, with free access to the available applications and services (“Packages”). In addition, the required data for using ten pre-determined online communication applications and six radio services (together “Free Applications and Services”) is not deducted from that 1 GB. If the 1 GB of data runs out, subscribers may continue to use the Free Applications and Services without restriction, whereas other applications and services would be subject to measures that slow down the data traffic.

After initiating two procedures to ascertain whether the Packages comply with Article 3 of the Regulation, National Media and Communications Office of Hungary (“Office”) adopted two decisions, which were subsequently upheld by the President of the Office. As such, the President of the Office found that the Packages do not comply with the obligation of equal and non-discriminatory treatment laid down in Article 3(3) of the Regulation, and that Telenor has to put an end to those measures. The decision further stated that an effect-based evaluation is not necessary to find out that the concerned measures are incompatible with Article 3 of the Regulation.

Telenor brought proceedings against both decisions of the President of the Office before the Budapest High Court, submitting that the Packages are part of the agreements concluded with its customers and may, as such, be covered only by Article 3(2) of Regulation, to the exclusion of Article 3(3) which is directed solely at traffic-management measures implemented unilaterally by ISPs. Furthermore, in any event, in order to ascertain whether the Packages are compatible with Article 3(3), Telenor argued that it is necessary to assess their effects on the exercise of end users’ rights. Telenor therefore argued that the Packages cannot be considered to be incompatible with Article 3(3) solely because they establish traffic-management measures which do not comply with the obligation of equal and non-discriminatory treatment, laid down in that provision, as the President of the Office found.

Budapest High Court stayed the proceedings and referred several questions to the CJEU for a preliminary ruling. The referring court asked, in essence, whether Article 3 must be interpreted as meaning that packages made available by an ISP through agreements concluded with end users are incompatible with Article 3(2), read in conjunction with Article 3(1) of the Regulation, and, alternatively or cumulatively, with Article 3(3) thereof.

What did the CJEU decide?

As stated in Article 5 of the Regulation, it is for the national regulatory authorities – subject to judicial review– to determine on a case-by-case basis whether the conduct of an ISP, having regard to its characteristics, falls within the scope of Article 3(2) or Article 3(3), or both provisions cumulatively, and in the latter case the authorities commence their examination with either of those provisions. Where a national regulatory authority considers that a particular form of conduct on the part of an ISP is incompatible in its entirety with Article 3(3), it may refrain from determining whether that conduct is also incompatible with Article 3(2).

Whether there is a prohibited limitation of the exercise of end users’ rights, as laid down in Article 3(1), must be assessed by taking into account the effects of the agreements (i.e., any material reduction regarding end users’ choice) or commercial practices of a given ISP. When assessing the agreements and commercial practices of an ISP, it is essential to take into account, among others, the market positions of the ISP and of the providers of content.

In order to make a finding of incompatibility under Article 3(3), no assessment of the effect of those measures on the exercise of end users’ rights is required, since Article 3(3) does not lay down such a requirement for the purpose of assessing whether the general obligation it prescribes has been complied with. In the present case, first, the conduct at issue in the main proceedings includes measures blocking or slowing down traffic for the use of certain applications and services, which fall within the scope of Article 3(3), irrespective of whether those measures stem from an agreement concluded with the ISP, or from the ISP’s commercial practice, or from a technical measure of that provider, unrelated either to an agreement or a commercial practice.

The answer of the CJEU to the questions referred is that, as per Article 3 of the Regulation, packages made available by an ISP through agreements concluded with end users are incompatible with Article 3(2) and it must be read in conjunction with Article 3(1), where those packages, agreements, and measures amount to blocking or slowing down of traffic, thereby limiting the exercise of end users’ rights. It is further laid down that where such measures that amount to blocking or slowing down of traffic are based on commercial considerations, these practices are also incompatible with Article 3(3).

Conclusion

The issues surrounding net neutrality in the case at hand were assessed under the Regulation, which, at least on its face, contains provisions aiming, inter alia, to safeguard the openness of the internet and create a level playing field among the ASPs. It is important to note that there is a critical difference between the aims pursued by the Regulation and those pursued by articles 101 and 102 of the TFEU. The former focuses exclusively on the freedom to compete, disregarding whether certain practices that might reduce this freedom would actually create a more efficient marketplace, and is against any practices that may render the internet less accessible. The latter, on the other hand, seeks to analyse the effects of the relevant conducts on equally efficient competitors, and is ultimately concerned with the preservation of effective competition that would yield best outcomes for consumers, even if that may mean a reduction in the openness of the internet. That said, whether a given practice’s possible effects on fundamental freedoms should be taken into consideration by the competition authorities in assessing such practice’s outcome for consumers, would be another discussion. The more the competition authorities take into consideration the fundamental freedoms in that regard, the more converged the aims of the Regulation and of Articles 101 and 102 become.

In this regard, the effects of the measures in question imposed by Telenor on the customers were not taken into consideration by the President of the Office, and this approach was approved by the CJEU. Indeed, if the aims of the Regulation were completely aligned with those of competition law, the concerned authority would have analysed the effects of the measures in question on consumer welfare thoroughly, before ruling as to whether such measures should be prohibited. As such, the case at hand demonstrates that a practice of a mobile operator that touches the issue of net neutrality, may be prohibited by sector-specific regulations concerning the net neutrality, although it might be perfectly compatible with Articles 101 and 102 of the TFEU.

By providing the aforesaid answers regarding a rather novel concept, the CJEU shed light on how compliance with net neutrality shall be assessed, under the Regulation. 

By Gonenc Gurkaynak, Partner, and Baris Yuksel, Counsel, ELIG Gürkaynak Attorneys-at-Law

Erdem & Erdem has advised the Sisecam Group on its acquisition of five Turkish companies: Anadolu Cam, Denizli Cam, Pasabahce, Soda Sanayii, and Trakya Cam.

Completion of the deal requires the approval from Turkish authorities, and financial details were not disclosed.

The Sisecam Group is a glassware producer that was founded in 1935.

Editor’s Note: After this article was published, Erdem & Erdem informed CEE Legal Matters that its team was led by Founding and Senior Partner Ercument Erdem and Partner Ozgur Kocabasoglu and included Partner Mert Karamustafaoglu, Managing Associate Nezihe Boran, and Tax Counsel Canan Doksat.

ICTA’s Procedures and Principles on Social Network Provider (“Procedures”) were published on the Official Gazette on October 2, 2020. The Procedures provide the detailed framework for the obligations of “social network providers”, a new concept that was introduced at the end of July by the Amendment Law on the Law No. 5651 on Regulation of Broadcasts via Internet and Prevention of Crimes Committed Through Such Broadcasts (“Amendment Law”).

The Procedures entered into force as of October 2, 2020.

Main Issues Regulated under the Procedures

Scope

The Procedures exclude (i) real and legal persons that display content that is suitable for social interaction on only a certain part of the broadcast and (ii) platforms where the function for content for social interaction is provided as a secondary and ancillary service, such as personal websites, news websites and e-commerce sites. These platforms will not be subject to the requirements imposed upon social network providers.

The Procedures further provide a clearance mechanism: In cases where the social network provider’s number of daily access is “continuously” less than 1 million, the social network provider may file a request to the Information and Communication Technologies Authority (“ICTA”) asking to be considered out of the scope. If this request is deemed appropriate as a result of the technical evaluation, ICTA will notify the social network provider that it is outside the scope. However, if ICTA determines that the daily access from Turkey increases to more than 1 million, ICTA will notify the social network provider that it is within the scope.

Representative

The Procedures clearly indicate that the representative can be a real or legal person. Legal person representative(s) must be established in Turkey and gain corporate identity in Turkey. Real person representative(s) must be a Turkish citizen. 

Duties of the representative as set through these Procedures are to ensure the following:

(i) Compliance with formally served documents, notifications, or requests sent by ICTA, Access Providers Union (“APU”) as well as judicial and administrative authorities. 

(ii) Responding to submissions made by individuals within the scope of Law No. 5651.

(iii) Compliance with the reporting obligation.

(iv) Compliance with social network provider’s duties and obligations as the content or hosting provider.

(v) Compliance with other obligations within the scope of the Law No. 5651.

Social network provider is obliged to provide the ICTA with the information regarding the representative, and report any changes regarding the representative’s information to the ICTA. The changes regarding the representative’s identity, title and contact information must be reported immediately and within twenty four (24) hours at the latest.  

As governed under the amendments to the Law No. 5651, there is a 5-tiered sanction mechanism that would apply respectively in case the social network provider continues to violate this obligation within the periods: (i) administrative monetary fine of 10 Million Turkish Liras (in case the obligation is not fulfilled within 30 days as of notification of the ICTA), (ii) additional administrative monetary fine of 30 Million Turkish Liras (in case the obligation is not fulfilled within 30 days as of first administrative fine), (iii) prohibition for the resident tax payers to place advertisements on the social network provider (in case the obligation is not fulfilled within 30 days as of the second monetary fine), (iv) bandwidth throttling of 50% (in case the obligation is not fulfilled within 3 months as of the advertisement ban decision), (v) bandwidth throttling up to 90% (in case the obligation is not fulfilled within 30 days as of the first bandwidth throttling). In the latter throttling decision, the judge may determine a throttling ratio (not less than 50% by also considering the nature of the services.

As per the Procedures, the advertisement ban explained under (iii) will be published in the Official Gazette and relevant public entities and authorities will monitor the implementation of advertisement prohibition.

III. Individual requests

As per the Procedures, social network provider must ensure that this submission can be made easily along with an option to make a submission in Turkish language. Submissions made in Turkish must be responded in Turkish.

Non-compliance with this obligation will trigger an administrative monetary fine of 5 million Turkish Liras. The Procedures governs that ICTA will evaluate whether the social network has fulfilled its obligation upon the compliant of the applicant and will assess the complaints filed due to non-compliance with this obligation on individual requests on a collective basis during the reporting periods (semi-annually). ICTA will take the following into consideration during its assessment: 

– Whether the social network has the necessary systems to comply with this obligation in an effective manner,

– Whether the social network is consistently giving negative responses to certain persons or entities,

– Whether the social network is systemically violating the required turn around times and,

– Whether the negative responses have reasoning.

Semi-Annual Reports

As per the Procedures, matters pertaining to the preparation and publishing of these reports and its notification to the ICTA can be determined by and communicated to the social network by ICTA.

Data Localization

Measures regarding keeping fundamental user information along with data relating to matters that might be notified by the ICTA in Turkey should be prioritized. The measures taken by the social network must be notified to ICTA during each reporting periods.

Considering that the Procedures are introduced in a short time following the regulation of social network providers’ status and obligations under the Amendment Law, ICTA seems to be keen on monitoring the enforceability of the Amendment Law, and keeping an eye on the social network providers. The Procedures might require local and foreign social network providers to take strategic decisions in Turkey following the enactment of both the Amendment Law and Procedures.

By Gonenc Gurkaynak, Partner, Ceren Yildiz, Partner, Noyan Utkan, Associate, and Devlet Cagla Nizam, Associate, ELIG Gürkaynak Attorneys-at-Law

White & Case is mourning the loss of Turkish Managing Partner Asli Basgoz, who has recently passed away.

According to White & Case, “over the past 30 years, [Basgoz] gained extensive experience in mergers and acquisitions, joint ventures and privatizations, as well as capital markets, private equity and financing deals.” According to the firm, “her ease with the complexities of intricately structured cross-border transactions was based on her international legal background, working in and across multiple jurisdictions. Before relocating to Turkey, Asli — who was fluent in English, Turkish, and French — practiced for a number of years in the United States, and represented both domestic and multinational clients in an array of major global deals. Adept at coordinating legal counsel across multiple territories, she also had significant experience of leading international teams of lawyers from the Firm’s offices around the world.”

In addition, White & Case reports, “the international scope of Asli’s practice was matched by her wide-ranging sector knowledge, having worked with clients in banking and financial services, healthcare, manufacturing services and tourism, energy, telecommunications and media. Her familiarity with the particular challenges associated with each of these industries, combined with her creative deal-making skills, made her an essential resource for clients seeking to execute the most challenging and technically complex of transactions.”

Finally, the firm reports, “Asli’s formidable reputation led to her leading role in a number of pioneering and groundbreaking deals, including Banco Bilbao Vizcaya Argentina’s EUR 4.2 billion purchase of 24.9 percent of Turkey’s leading bank, Turkiye Garanti Bankasi AS, at the time the largest-ever Turkish private sector M&A transaction. Asli also jointly led the team that advised Yuksel Insaat A.S. on its USD 200 million high yield bond offering, which is thought to be the first by a Turkish issuer in 15 years.”

In addition, Basgoz played a key role in Sisal S.p.A.’s successful bid for a ten-year contract to operate Turkey’s Milli Piyango lottery that was tendered by Turkey’s Wealth Fund (as reported by CEE Legal Matters on October 24 2019), which won CEE Legal Matters’ Turkish Deal of the Year for 2019 (and about which Basgoz was interviewed in the CEE Legal Matters magazine earlier this summer), and just recently, Zynga Inc.’s USD 1.8 billion acquisition of Istanbul-based Peak Oyun Yazilim ve Pazarlama, making Peak Turkey’s first unicorn (as reported on June 3, 2020), about which she was interviewed in the September 2020 issue.

Basgoz was one of the four members of White & Case’s most senior decision-making body, the Executive Committee.

Basgoz got her B.A. from the University of Indiana and her J.D. from the University of Michigan Law School. She spent one year as a Litigation Associate with Shearman & Sterling in New York before moving to White & Case, and Turkey, where she founded the firm’s Istanbul and Ankara offices, in 1985.