New Era in Turkey’s E-Commerce Market: New Obligations for Electronic Commerce Platforms
New Era in Turkey’s E-Commerce Market: New Obligations for Electronic Commerce Platforms
The Law Amending the Law on the Regulation of Electronic Commerce [“Amending Law”] was adopted on July 1, 2022 by the General Assembly of the Grand National Assembly of Turkey and subsequently published on the Official Gazette on 07 July 2022 as Law no. 7416. The Law no. 6563 on the Regulation of Electronic Commerce [the "Law"] published on the Official Gazette no. 29166 dated November 5, 2014 has undergone many changes with the Amending Law. Accordingly, new obligations and restrictions have been introduced onto intermediary service providers, including obtaining and renewal of an e-commerce license, restrictions on advertisement and promotions, and a ban on the sale of platform-owned brands; and new definitions have been to the Law.
The most striking aspects of the Amending Law will be outlined in this article.
The Amending Law establishes the definitions of "electronic commerce intermediary service provider" and "electronic commerce service provider" while "intermediary service provider" and "service provider" were already defined in the Law.
Among the new definitions, an “electronic commerce intermediary service provider” is defined as "the intermediary service provider that enables placing orders or executing agreements pertaining to provision of electronic commerce service providers' goods or services in the electronic commerce marketplace" ["Intermediary"], while an “electronic commerce service provider” refers to "the service provider that executes agreements or receives orders on its goods and services in the electronic commerce marketplace or in its own electronic commerce medium."
Although the definitions recently added to the Law appear to be a more specific version of the already existing definition of intermediary service provider and service provider definitions, it seems unlikely for a platform that is an intermediary service provider not to be an electronic commerce intermediary service provider or a platform that is a service provider not to be an electronic commerce service provider under the current regulations, except for some companies that the Amending Law clearly exempts from the definition of Intermediary, such as insurance brokers, travel agencies, banks and electronic money institutions.
The obligation to obtain and renew a license is among the most important new obligations regulated by the Amending Law. As per the new rule, Intermediaries and electronic commerce service providers with a net transaction volume of ten billion Turkish lira and a number of transactions over one hundred thousand excluding cancellations and refunds in a calendar year, must obtain a license and renew such when the time comes from the Ministry of Commerce in order to continue their activities.
The cost of obtaining and renewing a license is established gradually in accordance with the number of transactions made by the person concerned and it ranges from three in ten thousandths of the transaction volume in the lowest segment to twenty-five percent of the transaction volume in the highest segment. This means that a platform with a transaction volume exceeding 65 billion Turkish liras must pay a license fee of 25% of the transaction volume exceeding 65 billion Turkish liras and a decreasing license fee for the remainder of the transaction volume.
Obligations and Restrictions for All Intermediaries
One of the most significant restrictions on Intermediaries imposed by the Amending Law is the restriction of the sale of goods bearing their own brands. In this respect, Intermediaries cannot sell or act as an intermediary in the sale of goods bearing the brand of themselves or the persons with whom they are considered to be within an economic integrity or have the right to use the brand in e-commerce marketplaces where such Intermediary provides intermediary services. As such, if these goods are offered for sale in different electronic mediums, providing access between such is not permitted. However, this regulation will not apply if the brand owner's revenue from e-commerce is less than half of its total sales revenue, or if the platform in question solely offers items carrying the Intermediary’s brand in the form of agency contracts or franchising. Moreover, periodic publications, books and e-readers are also exempt from this regulation.
Other obligations applicable to all Intermediaries are removing illegal content and advertisements, verifying the information of electronic commerce service providers, not using the brands of electronic commerce service providers for promotional purposes without their consent, and not engaging in unfair commercial practices against electronic commerce service providers.
Like the Intermediaries' obligation of not using the brands of electronic commerce service providers for promotional purposes without their consent, electronic commerce service providers will not be able to advertise using brands and domain names that do not belong to them.
Along with the regulations mentioned above that apply to all Intermediaries, the Amending Law also imposes special obligations based on the volume of net transactions.
Intermediaries With a Net Transaction Volume of Over TRY 10 Billion
Intermediaries whose net transaction volume exceeds 10 billion Turkish liras will only be able to use the data obtained from electronic commerce service providers and buyers for the purpose of providing intermediary services and will not be able to use them to compete with other platforms. It will also be required to provide technical means for the electronic commerce service provider to carry the data obtained free of charge resulting from its sales, and to provide free and effective access to such data and the processed data obtained from them.
These Intermediaries must notify the Ministry of Commerce in case of share transfers, other than those registered in stock exchange, corresponding to 5% or more of their share capital, company acquisitions, and new company establishments within one month after the date of relevant transaction. Parallel to this, they are also obliged to send to the Ministry of Commerce audit reports prepared by an independent auditor which includes the activities, management and organizational structure, current shareholders and their share ratios, shareholders’ shareholding ratios in its subsidiaries and affiliates, information of the persons with whom they are considered to be within an economic integrity, its financial status including financial statements, and its compliance with certain obligations of the law.
Obligations regarding the restriction of the use of data and sending the compliance report to the Ministry of Commerce applied to Intermediaries with a net transaction volume over 10 billion Turkish liras will also apply mutatis mutandis to electronic commerce service providers.
Intermediaries With a Net Transaction Volume of Over TRY 30 Billion
According to the regulation, the advertising and promotion budgets for Intermediaries with a net transaction volume over 30 billion Turkish liras and a number of transactions over one hundred thousand excluding cancellations and refunds in a calendar year will be calculated pro rata to the net transaction volume.
The total advertisement budget limit is calculated as 2% of the net transaction volume below the limit to be determined as 30 billion Turkish liras in the first year -subject to readjustment with the CPI rate every year- and three per thousand of the portion above this limit. The promotion budget will also be separately calculated but will be equal to the advertising budget. All kinds of promotions, rewards, points, coupons, gift certificates and similar opportunities offered to customers will be included in the promotion budget. Intermediaries may also not prevent electronic commerce service providers from selling or advertising through alternative channels.
Obligations regarding the restriction on advertisement and promotion expenditure determined for Intermediaries with a net transaction volume over 30 billion Turkish liras will also apply mutatis mutandis to electronic commerce service providers.
Intermediaries With a Net Transaction Volume of Over TRY 60 Billion
Intermediaries with a net transaction volume of over 60 billion Turkish liras and a number of transactions over one hundred thousand, excluding cancellations and refunds in a calendar year will not be able to engage in any activity to facilitate the provision of the services of banks and companies or to accept for payment of electronic money issued by electronic money institutions with whom they are considered to be within the same economic integrity in addition to the above-mentioned obligations and restrictions.
Intermediaries falling into this category will also not be able to carry out transportation, delivery and postal services for electronic sales, except for the sales they acted in as an intermediary.
If an electronic medium is provided for advertisements of goods or services by these Intermediaries, execution of agreements or placing orders for the supply of goods or services in the same medium will not be facilitated.
Finally, obligations regarding the restriction on banking and electronic money operations, the prohibition of publication of goods or service announcements and conclusion of agreements for the supply of goods or services in the same environment for Intermediaries with a net transaction volume over 60 billion Turkish liras will also apply mutatis mutandis to electronic commerce service providers.
Effective Date and Fines
On January 1, 2023, the Amending Law's provisions limiting advertising and promotion expenditures will be effective after being calculated based on the balance sheets of 2022. The provisions regulating the use and transport of data and the obligations regarding notifying the Ministry of Commerce will enter into force on January 1, 2024.
All other provisions such as verification of electronic commerce service providers’ information and ban on unfair business practices will enter into force as of January 1, 2023. However, companies must be in compliance with the provisions regulating the restriction on intermediaries selling goods bearing their own brands, the prohibition on banking and electronic money operations, and the limitation on delivery activities before January 1, 2024, due to the compliance period stipulated in the Amending Law. Obligations to get and renew e-commerce licenses will likewise be enforced as of January 1, 2025.
Depending on the violation, administrative fines ranging from ten thousand Turkish liras to 20 million Turkish liras and blocking access to the website will be applied following these dates if it is determined that a provider does not comply with the provisions of the Law added with the Amending Law. In case of repeated violation of the Law, such fines will be gradually increased.
The Amending Law aiming to maintain the competitive environment in e-commerce and to enable new actors to enter the market, regulates the e-commerce sector, where there is an increased tendency of monopolization with defined obligations and severe fines for all actors.
While the Amending Law will likely prevent legal abuses, concerns have already been raised that it might also have a restrictive effect on the market due to provisions such as the obligation of an annual license fee equal to or up to 25% of the net transaction volume and the restriction on the sale of platform-owned brands.
Regardless of the new rules’ financial consequences, all companies that will be affected should take legal steps as soon as possible to comply with the provisions and eliminate the risk of a possible fine prior to the effective date of the Amending Law.