The bill to Amend the Law on the Regulation of Electronic Commerce ("Law"), regarding the long-anticipated amendments to Law No 6563 on the Regulation of Electronic Commerce, became law upon being adopted by the Grand National Assembly of Turkey on July 1, 2022 and published in the Official Gazette numbered 31889, dated July 7, 2022. A significant portion of the provisions of Law are expected to enter into force on January 1, 2023. The underlying purpose of the amendments is to facilitate the entrance of new actors into the market by preventing unfair competition and monopolization in e-commerce, and to ensure the balanced and healthy growth of the market by taking into account the technological developments and the increase in the volume of digital marketplaces. 1. New Definitions With the amendment made to the "Definitions" section of the Law, new concepts such as net transaction volume and economic unity have been defined, in addition to the concepts of electronic commerce intermediary service provider, electronic commerce service provider, electronic commerce environment, electronic commerce marketplace. In this context, intermediary service providers that enable the execution of contracts or placing orders for the supply of goods or services of other electronic commerce service providers are defined as electronic commerce intermediary service providers regardless of whether they themselves sell in the electronic commerce marketplace; service providers that conclude contracts or receive orders for the supply of their own goods or services either in the electronic commerce marketplace or their own electronic commerce environment are defined as electronic commerce service providers.1 Furthermore, in order to provide electronic commerce intermediary service providers with a more determinable definition regarding the commercial environment in which intermediary services are provided, platforms such as websites, mobile sites or mobile applications where electronic commerce activities are carried out are defined as electronic commerce environments, and the electronic commerce environment in which the electronic commerce intermediary service provider provides its services is defined as an electronic commerce marketplace.
Considering its use as a benchmark in determining the obligations that actors will be subject to, the net transaction volume under the Law is defined for electronic commerce intermediary service providers as the sum of the final invoice values or the values of the documents substituting the invoice (excluding cancellations and returns), which are required to be issued by all service providers for contracts or sales made in a certain period through electronic commerce marketplaces; and for electronic commerce service providers, through electronic commerce environment that does not qualify as electronic commerce marketplace. Moreover, economic unity is used as another criterion in certain obligations imposed on electronic commerce intermediary service providers pursuant to the Law, and such concept corresponds to the situations of directly or indirectly holding at least 25% of the shares; having majority of the voting rights of a commercial company or holding shares granting the ability to pass resolutions to manage the commercial company; having the rights to elect the majority of the members in the management team that can obtain resolutions per the articles of association; constituting the majority of the voting rights alone or along with other shareholders apart from its own voting rights as part of an agreement or holding the commercial company under its control within the scope an agreement or, depending on these circumstances, the relationship between all commercial companies and businesses belonging to this person, or the management of more than one commercial company by the same person or persons, regardless of whether they are shareholders or not. As evident from its broad definition, economic unity is regulated in a manner to cover horizontal and vertical control relationships, and commercial companies and enterprises related to natural and legal persons. 2. Obligations and Restrictions on Electronic Commerce Intermediary Service Providers and Electronic Commerce Service Providers While the obligations and restrictions in the Law are mostly structured to regulate electronic commerce intermediary service providers, certain obligations and restrictions may also apply to electronic commerce service providers which conduct commercial activities other than electronic commerce and generate more than half of their sales revenue from electronic commerce. As mentioned above, although the main criterion for determining the obligations of electronic commerce intermediary service providers and electronic commerce service providers is net transaction volume, certain obligations are set forth for all electronic commerce intermediary service providers regardless of net transaction volume: - Illegal Content: Although the regulation under the Law on the Regulation of Electronic Commerce stipulating that intermediary service providers are not responsible for content provided by service providers and the illegal issues related to the goods or services subject to the content still remains in place, with the recent amendment, the intermediary service provider has become obliged to immediately remove the illegal content and notify the relevant public institutions and organizations of the illegality once it becomes aware of such content.
- Intellectual & Industrial Property Rights Violations: Upon a substantiated complaint by a right holder that its intellectual and industrial property rights have been violated, service providers will be obliged to remove the product concerned from publication and notify both the service provider and the right holder. However, if the service provider submits to the electronic commerce intermediary service provider a substantiated objection that contradicts the complaint, the electronic commerce intermediary service provider will be obliged to re-publish the product subject to the complaint. - Prohibition of Unfair Commercial Practice: Practices of intermediary service providers that significantly disrupt the commercial activities of service providers to whom they provide intermediary services, reduce their decision-making ability and cause them to become a party to commercial relations by forcing them to make a certain decision are considered as "unfair commercial practices," and such practices are prohibited. The Law enumerates the situations that will be considered unfair commercial practices in all cases. For instance, downgrading a beneficiary party in the ranking or recommendation system even though there is no objective criterion in the intermediary services agreement, or making unilateral changes to the intermediary services agreement, are now interpreted as unfair commercial practices under the Law. - Offering Trademarked Goods for Sale & Use for Promotional Purposes: Within the scope of the Law, it is prohibited for intermediary service providers to offer for sale or to intermediate in the sale of products that bear the trademarks or have the right to use trademarks of themselves or persons with whom they have an economic unity relationship in the electronic commerce marketplaces where they carry out intermediary services, to provide access between these environments and to promote each other in case these products are offered for sale in different electronic commerce environments. On the other hand, this provision will not apply to goods bearing the trademark of persons who generate more than half of the total revenue from sales other than electronic commerce, or to goods for which they have right to use the brand. In addition, intermediary service providers or service providers are prohibited from engaging in promotional activities on online search engines by using their registered trademarks without their consent. The same prohibition applies to all service providers, regardless of net transaction volume. - Verification of Information Regarding Service Providers: Intermediary service providers are now obliged to ensure that information in documents required to be issued by the service provider under the Tax Procedure Law can be included in the electronic commerce marketplace where the sale is made and to verify the service provider's introductory information through documents obtained from the service provider or from the electronic systems of the relevant institutions open to access. In addition to these obligations and restrictions imposed on all intermediary service providers, the following regulations have been introduced for intermediary service providers whose net transaction volume exceeds TRY 10 billion in a calendar year:
- Use of Data: The intermediary service provider or persons with whom it is in economic unity are prohibited from using the data obtained from its intermediary activities when competing with e-commerce service providers. In addition, intermediary service providers are obliged to provide technical means for service providers to transfer and access the data obtained through their sales free of charge. These obligations will apply by analogy to service providers whose net transaction volume exceeds TRY 10 billion and the number of transactions, excluding cancellations and returns, exceeds TRY 10 million in a calendar year. - Providing Access Between Environments: It is prohibited for intermediary service providers to provide access between their own electronic commerce environments and to promote each other in these environments, also for other persons with whom they are in economic unity. However, electronic commerce environments included in the net transaction volume are exempted from this regulation. - Corporate Changes: Intermediary service providers are obliged to notify the Ministry of Trade (the “Ministry”) regarding their corporate changes such as the establishment of a company, the acquisition of shares of an established company or the transfer thereof within one month following the registration of the establishment in the trade registry in case of establishment and the date of the transfer in the share ledger in case of transfer. In addition, apart from the listed shares in the stock exchange, the transfer or acquisition of shares reaching 5% or more of the shareholders of the company must be notified to the Ministry within one month from the date of the transfer or acquisition that led to the achievement of these percentages. - Reports to be submitted to the Ministry: Another obligation imposed on intermediary service providers is the submission to the Ministry of an audit report prepared by an independent audit firm and indicating the activities of the electronic commerce intermediary service provider, its management and organizational structure, its current shareholders and their share percentage, its share percentage in its subsidiaries and affiliates, information about persons with whom it has economic unity, its financial status including its financial statements, its compliance with the obligations specified in the Law, and other issues determined by the regulation. In addition to the aforementioned report, the service provider must also submit to the Ministry a report that includes the procedures for the detection of matters contrary to the legislation regarding the content provided by the service provider and the contraventions detected as a result. These obligations will also apply to service providers whose net transaction volume in a calendar year exceeds 10 billion Turkish liras and the number of transactions, excluding cancellations and returns, exceeds 10 million. - Obtaining an Electronic Commerce License: For electronic commerce intermediary service providers whose net transaction volume in a calendar year is over 10 billion Turkish Liras and the number of transactions excluding cancellations and returns is over one hundred thousand, there is an obligation to obtain and renew a license from the Ministry in order to continue their activities. In terms of the calculation of the license fee, varying rates depending on the net transaction volume are determined. In addition, while calculating this fee, sales made abroad through the intermediary service provider and the e-commerce marketplaces in which it has economic unity will not be taken into account.
These obligations will also apply to service providers whose net transaction volume exceeds TRY 10 billion and the number of transactions, excluding cancellations and returns, exceeds 10 million within a calendar year. The obligations and restrictions stipulated under the Law for intermediary service providers whose net trading volume exceeds TRY 30 billion TL and the number of transactions exceeds 100,000 excluding cancellations and refunds in a calendar year are as follows: - Advertisement & Campaign Expenditures: In order to prevent intermediary service providers from engaging in exclusionary conduct against competitors in the market by way of campaign activities such as advertisements and promotions, rewards, points, coupons, gift vouchers, etc. in their own marketplaces and those of persons with whom they have economic unity, certain proportional limitations have been set out for these expenditures. The advertisement and campaign budget to be set by taking these ratios into account must be allocated separately among the intermediary service providers and service providers according to their contribution to the net transaction volume and must be used temporally by a maximum of one-fourth in each quarter of a calendar year. These obligations and restrictions will also apply by analogy to service providers whose net transaction volume exceeds TRY 30 billion and the number of transactions, excluding cancellations and refunds, exceeds 10 million in a calendar year. - Service Provider Activities: It is prohibited to restrict the commercial relations of electronic commerce service providers, offer goods or services at the same or different prices through alternative channels or advertising, and to force supply of goods or services from certain persons, including services such as procurement or shipping offered by the electronic commerce intermediary service provider. It is also regulated that provisions against such limitations may not be included in intermediary services agreements. The obligations and restrictions stipulated under the Law for intermediary service providers whose net trading volume exceeds TRY 60 billion and the number of transactions exceeds 100,000 excluding cancellations and refunds in a calendar year are as follows: - Electronic Money & Banking Operations: In electronic commerce marketplaces where intermediary service providers provide intermediary services, except for credit payment transactions made with credit cards and other payment transactions, they will not be able to enable the banks with which they have economic unity or financial leasing, factoring and financing companies to carry out activities related to all kinds of services offered by them. The aim of this regulation is to prevent intermediary service providers from creating a distorting effect on competition in this sector by transferring their power arising from concentration to financial services and to reduce the dependence of buyers of these services on electronic commerce marketplaces. These restrictions will also apply to service providers whose net transaction volume exceeds 60 billion TL and the number of transactions, excluding cancellations and refunds, exceeds 10 million in a calendar year, by analogy
- Logistics Services: Intermediary service providers are prohibited from engaging in transportation activities for goods, organizing transportation business and postal service provider activities, apart from its sales in their own marketplace and sales outside of e-commerce. Therefore, it is aimed to prevent the dominant position in cargo and logistics services, which are complementary to e-commerce, from casting a shadow on the competitiveness of other businesses. - Cross-Medium Access: For intermediary service providers that provide electronic media for the publication of advertisements for goods or services, it is prohibited to provide the opportunity to conclude contracts or place orders for the supply of goods or services in the same environment. In the event that these services are provided in different electronic media by itself or by persons with whom it has economic unity, it will not be possible to provide access between these media and cannot be promoted. These restrictions will also apply by analogy to service providers whose net transaction volume exceeds 60 billion Turkish liras and the number of transactions, excluding cancellations and returns, exceeds 10 million within a calendar year. 3. Increase in Administrative Fines In case of a breach of the above-mentioned obligations and restrictions, administrative fines ranging from TRY 10,000 to TRY 500,000,000 can be imposed. The amount of the administrative fine to be imposed is determined as follows: - by specifying the lower and upper monetary limits (for example, in case of failure to remove illegal content, an administrative fine of TRY 10,000 to TRY 100,000 will be imposed for each violation); or - by imposing a fine of certain fractions of the net sales amount (for example, in the case of offering its own brands for sale, an administrative fine of five percent of the net sales amount of the calendar year preceding the date of the violation will be imposed); or - by specifying the net amount to be applied per violation (for example, in case of violation of the prohibition on providing access between media, an administrative fine of TRY 10,000,0000 will be applied) In cases where there is a reference only to electronic commerce intermediary service providers during the enforcement of sanctions, it would be possible to argue that by analogy, the relevant amount is also applicable to electronic commerce service providers. In addition to administrative fines, it is also provided that the Ministry may render a decision to block access. 4. Expansion of Ministerial Powers By way of the Law, the Ministry is authorized: - to take measures for protecting competition by determining the mandatory elements to be included within the scope of intermediary services agreements; - to inspect compliance with the Law, to explain the results of its inspection, to appoint experts in cases requiring technical knowledge or expertise;
- to determine the procedures and principles regarding the application of the articles regulating the obligation to provide information, order, principles regarding commercial communication, the conditions for sending commercial electronic messages, the content of such messages and the recipient's right to reject the message at hand to intermediary service providers with a regulation to be adopted, - to obtain the subscriber information of persons who send commercial electronic messages via voice calls or text messages from the Information and Communication Technologies Authority. 5. Enforcement The articles subject to amendment will enter into force as of January 1, 2023, apart from the following, which the Law has explicitly seen fit to go into effect at the specified times. In addition, the article regulating advertising and promotion expenditure limits shall enter into force on January 1, 2023 to be applied to the net transaction volumes of 2022. The provision on data transfer and access to data free of charge, as well as the article regulating sanctions, will enter into force as of January 1, 2024. There is an obligation to comply with the provisions prohibiting electronic commerce intermediary service providers to offer their own brands for sale, and the relevant provisions restricting activities related to banking and electronic money, and the provision restricting activities related to transportation business until January 1, 2024. In addition, the obligations regarding obtaining an electronic commerce license will be required commencing from January 1, 2025. On the other hand, intermediary services agreements between intermediary service providers and service providers in electronic commerce marketplaces prior to the entry into force of the Law will be brought into compliance with the Law within 6 months. 1 The Law states that the definitions of electronic commerce service provider or electronic commerce intermediary service provider do not encapsulate businesses operating in the fields of travel agency, civil aviation, individual retirement, banking, insurance, financing, capital markets, payment services, betting and games of chance and electronic communications.