Following the footsteps of the European Union, Türkiye revised its e-commerce legislation last month to establish a fair, transparent, and competitive ecosystem.
In the preamble of the Law Amendment, the Ministry of Commerce (“Ministry”) has underlined that the relevant regulation change aims to prevent the presence of concentration in the e-commerce sector; in other words, to prevent gatekeepers from acting as private rule-makers and disrupt the different sectors with the network effect.
Within this context, “Law on the Amendments (the “Amending Law”) to the Law on the Regulation of Electronic Commerce №6563" (the “Law”) dated 07 July 2022 has been adopted and published.
The Amending Law is quite comprehensive and seems to dramatically affect the business conduct and projections of the existing major players in the market depending on their market share.
The crucial headings of the Amending Law, with effective dates such as 01.01.2023 and 01.01.2024 for different obligations, are summarized below.
Definitions of Electronic Commerce Intermediary Service Provider and Electronic Commerce Service Provider have been made
In addition to the definitions of “Service Provider” and “Intermediary Service Provider” currently set out in the Law, the terms “Electronic Commerce Intermediary Service Provider” (“ECISP”) and “Electronic Commerce Service Provider” (“ECSP”) have been defined to specifically subject the marketplaces and those who provide goods and services (sellers, etc.) in the e-commerce world, to liabilities.
In this regard,
- Intermediary Service Providers that enable the execution of agreements or placing orders for the supply of goods or services of other Electronic Commerce Service Providers, regardless of whether they sell in the electronic commerce marketplace, are defined as Electronic Commerce Intermediary Service Providers;
- Service Providers that execute agreements or take orders for the supply of their own goods or services, whether in the electronic commerce marketplace or their own electronic commerce environment, are defined as Electronic Commerce Service Providers (“ECSP”).
It has been regulated that players acting in specific industries cannot be considered ECISP or ECSP
The Amending Law stipulates that enterprises operating in the fields of travel agency, civil aviation, private pension, banking, insurance, financing, capital market, payment services (including open banking) and electronic money, betting and chance games, and electronic communication can not be considered as ECISP or ECSP with respect to the implementation of this Law.
!! At this point, it should be underlined that the entities operating in the relevant sectors will continue to be subject to the Law but will be kept free from the obligations that only relate to ECISPs and ECSPs.
Subsidiaries of e-commerce players and/or companies with which they have organic relations will also be taken into account when applying the new obligations
While a series of obligations were imposed on ECISPs and ECSPs with the Amending Law, the concept of “economic integrity” was defined.
In the justifications section of the Law, it is emphasized that the definition has been made in the broadest way possible by saying that “Economic integrity is regulated in a way that covers both horizontal and vertical control relations, real or legal persons and commercial companies and businesses connected with these people”.
In this respect, while evaluating the threshold value for whether ECISPs and ECSPs are subject to any obligation, it may be necessary to take into account the companies with which they are in economic integrity, and it may also be possible to apply the related obligation to the companies with which an ECISP or ECSP is in economic integrity.
In this sense, it will be necessary to consider the players in the sector not individually but in integrity with their subsidiaries and/or other companies with which they have organic ties.
Obligation to obtain an Electronic Commerce License has been introduced
One of the most important innovations introduced by the Amending Law is the Electronic Commerce License.
ECISPs and ECSPs that exceed certain thresholds (the net transaction volume being over ten billion Turkish Liras (for ECIPS) or over ten million Turkish Liras (for ECSPs) Liras, and the number of transactions excluding cancellations and refunds being over one hundred thousand in a calendar year) are required to obtain an Electronic Commerce License from the Ministry in order to continue their activities.
These institutions are required to pay the applicable license fees, which will be determined using a gradual calculation method based on the net transaction volume realized in a calendar year, and to renew their licenses every year.
When we look at the rates to be taken into account for the calculation of license fees as set out in the wording of the Amending Law, it is noted that the license fees reach such amounts that are even higher than the amounts of sanctions imposed by certain regulatory and supervisory institutions.
It should be noted that the issuance and renewal of a license, payment of license fees, determination of annual rates of change in volumes of electronic commerce, and the procedures and principles regarding the implementation of this article will be regulated pursuant to a regulation that is to be issued in the future.
Unfair commercial practices have been prohibited and specific examples have been cited in this regard
Even though all unfair commercial practices committed in connection with electronic commerce are clearly already prohibited pursuant to the Law, it has been accepted that by the Amending Law that any practices would be treated as unfair if they significantly disrupt the commercial activities of ECSPs, or reduce their ability to make reasonable decisions, or force them to take certain decisions, causing them to become a party to a commercial relationship that it would not normally be a party to.
Besides, the following actions of ECISPs with respect to ECSPs, i.e., sellers in the marketplace, have been clearly considered as unfair commercial practice.
- Failure to make payments to ECSPs, i.e sellers, within the period stipulated in the Law,
- Making unilateral price changes in the sales prices by ECISPs and forcing ECSPs to sell goods or services,
- The terms of the commercial relationship with ECSPs are not determined by the agreement, or the relevant contract is not clear, understandable and easily accessible,
- Making retroactive or unilateral changes in the provisions of intermediary agreements to the detriment of the ECSPs, or including any provisions that allow such a practice in the intermediary agreements;
- Receiving any sums from ECSPs even though no service is provided or the details of the service provided are not specified in the intermediary agreement,
- The downgrade of ECSPs in the ranking or recommendation system, or restriction, suspension or termination of services rendered to ECSPs due to lack of objective criteria or due to any judicial investigation/prosecution.
New obligations imposed on ECISPs
With the Law Amendment, critical obligations that will affect the business conduct of ECISPs have been introduced.
Some of these changes will be applied to all players in the industry, whereas others will be applied only to players who exceed a certain net trading volume threshold.
In this direction, all ECISPs in the sector must:
- notify the relevant public institutions about any illegal issues by removing the contents they are aware of being illegal without delay;
- operate a notice and take down mechanism for violations of intellectual and industrial property rights;
- not sell, or mediate in the sale of, any goods bearing a brand that itself has created, not offer access to these goods in case these goods are offered for sale in different electronic commerce environments, and not promote each other (this obligation shall not apply to the brands of persons who generate more than half of its total sales revenue from sales other than electronic commerce);
- enable that information available in the documentation required to be issued as per the Tax Procedure Law, can be placed in the electronic commerce marketplace where the sale is made;
- not use the registered trademarks, which constitute the main element of the domain names of ECISPs and ECSPs registered in Electronic Commerce Information System (“ETBIS”) , in online search engines, in marketing and promotion activities without the permission of ECISP and ECSP; and
- verify the identification details of ECSPs
In addition to the above obligations, ECISPs with a net transaction volume of over ten billion Turkish liras in a calendar year must
- use the data obtained from ECSPs and the buyers only for the purpose of providing intermediary services, and not use this data while competing with ECSPs;
- provide the technical opportunity for ECSPs to transfer the data obtained through its sales free of charge and to provide access to such data;
- not provide access between its own electronic commerce environments and not promote each other in these environments, with the exception of electronic commerce environments included in its net transaction volume;
- notify the Ministry of certain share transfers or acquisitions or company establishments performed by the company's partners or itself;
- have to get conducted audit through audit firms authorized by the Capital Markets Board perform audits;
- inform the Ministry of the procedures regarding the detection of illegal issues involving contents provided by ECSPs, and of all identified violations.
In addition to the above obligations, ECISPs with a net transaction volume of thirty billion Turkish lira and more than one hundred thousand transactions excluding cancellations and refunds in a calendar year must
- make expenditures on advertisings as limited to the rates specified in the wording of the Law Amendment and offer promotions, rewards, points, coupons, gift certificates and similar opportunities; and
- not restrict ECSP's commercial relations or their offering or advertising of goods or services at the same or different prices through alternative channels, or not compel them to provide goods or services from any person.
ECISPs that exceed a certain threshold are restricted from offering certain financial products and operating in the transportation field.
In addition to the above-mentioned obligations, ECISPs with a net transaction volume of over sixty billion Turkish lira and a number of transactions excluding cancellations and returns over one hundred thousand in a calendar year, are also limited in terms of the services they can offer in the fields of finance and transportation.
In this context, ECISPs exceeding the specified threshold;
- Not allow banks or companies covered by the Law numbered 6361 with which they are in economic integrity, to operate with respect to the rendering any kind of services they offer (including lending transactions, excluding payment transactions);
- 1) not allowed to carry out activities regarding the acceptance of electronic monies issued by electronic money institutions with which they are in economic integrity and which are covered by the Law numbered 6493; and 2) not provide any services that fall under the scope of the limited network exception of the Law numbered 6493 or allow these services to be provided by those with whom it is in economic integrity,
in the electronic commerce marketplaces where they offer intermediary services
The above rule can be interpreted as that ECISPs (reaching the above threshold) cannot provide wallet service in electronic marketplaces where they offer intermediary services, either by obtaining a license or relying on a limited network exception. It is also prohibited to provide such service through companies in which ECISPs are in economic integrity.
Therefore, ECISPs falling into this scope will need to offer wallet services and other electronic money services through a licensed electronic money institution with which they are not in economic integrity.
Another limitation of activity imposed on ECISPs is regarding the field of transportation.
With the Amending Law, ECISPs with a net transaction volume of sixty billion Turkish lira and more than one hundred thousand transactions excluding cancellations and returns in a calendar year, are prohibited to engage in the activities of transporting goods, organizing transport operations and providing postal services, excluding the sales in the electronic commerce marketplaces where it provides intermediary services, its sales performed as an electronic commerce service provider, and its sales performed outside of electronic commerce.
A special regulation has been introduced regarding Listing Platforms
With the Amending Law , a particular obligation has also been introduced for listing platforms.
Accordingly, ECISPs with a net transaction volume of sixty billion Turkish liras and more than one hundred thousand transactions excluding cancellations and refunds in a calendar year are prohibited to enter into contracts for the supply of goods or services or to allow the placement of orders in the same environment in the event that they provide an electronic medium for the publication of goods or services listing.
In addition to ECISPs, certain obligations have also been imposed on ECSPs
It is stipulated in the Ameding Law that most, if not all, of the obligations imposed on ECISP will also apply by analogy to ECSPs to the extent appropriate.
The issue of which of the obligations specified for ECISPs would also apply to ECSPs has been determined by means of different threshold scenarios set out in Article 9 of the Law Amendment.
Administrative fines have been updated
Certain administrative fines foreseen for cases of violation of the Law have been rearranged by considering the severity of the act, proportionality, measurability and deterrence principles, and new sanctions have been introduced for some newly added issues to the Law. It is possible to reach the relevant amounts from the wording of the Law Amendment.
Conclusion
We can say that the said the Amending Law has critical financial and operational effects, especially for big players, and will cause the e-commerce sector to reshape in Turkiye.
In addition, we can say that the Law Amendment has a very comprehensive and intricate structure in terms of formulation thereof.
For this reason, players acting in the e-commerce sector in Türkiye will need to make an important mapping activity, determine which obligations will apply to them, and establish a proactive operational calendar accordingly.
Originally Published by Medium.com
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