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Electronic Commerce Practices Have Started to Become Clear With the Enforcement of The Regulation

Electronic Commerce Practices Have Started to Become Clear With the Enforcement of The Regulation

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In accordance with the law which was published in the Official Gazette on July 7, 2022 making amendments to the "Law on the Regulation of Electronic Commerce”, new obligations were introduced concerning the Electronic Commerce Service Providers (“ECSPs”) and Electronic Commerce Intermediary Service Providers (“ECISPs”). This new regulation has raised many questions and controversies.

With the "Regulation on Electronic Commerce Intermediary Service Providers and Electronic Commerce Service Providers" published on December 29, 2022, the details of the amendments made by the law and the new obligations of ECISPs and ECSPs have been clarified.

Upon the examination of the regulation, it draws attention that some of the obligations imposed on ECISPs and ECSPs are based on their commercial activity volume and that, different definitions are made accordingly. In this regard and in the scope of the regulation;

  • Medium-sized ECISPs: means ECISPs with a net transaction volume of over ten billion Turkish liras in a calendar year, 
  • Large-scale ECISPs: means ECISPs with a net transaction volume of over thirty billion Turkish liras and whose number of transactions, excluding cancellations and returns, is over one hundred thousand, and who also have the obligations stipulated in this Regulation for medium-sized ECISPs, 
  •  Very large-scale ECISPs: means ECISPs with a net transaction volume of over sixty billion Turkish liras and whose number of transactions, excluding cancellations and returns, is over one hundred thousand, and who also have the obligations stipulated in this Regulation for medium-sized and large-scale ECISPs, 
  • Medium-sized ECSPs: means ECSPs with a net transaction volume of over ten billion Turkish liras and whose number of transactions, excluding cancellations and returns, is over ten million,  
  • Large-scale ECSPs: means ECSPs with a net transaction volume of over thirty billion Turkish liras and whose number of transactions, excluding cancellations and returns, is over ten million, and who also have the obligations stipulated in this Regulation for medium-sized ECISPs, 
  • Very large-scale ECSPs: means ECSPs with a net transaction volume of over sixty billion Turkish liras and whose number of transactions, excluding cancellations and returns, is over ten million, and who also have the obligations stipulated in this Regulation for medium-sized and large-scale ECSPs.

The main and important topics regulated by the regulation is summarized as follows:

Obligation to Give Information 

Pursuant to the regulation, both ECSPs and ECISPs are required to provide certain information on their websites and marketplaces, regardless of trading volumes. Additionally, ECSP are obligated to confirm the accuracy of the information provided about their companies on ECISP marketplaces and to check the validity of this information within the first three months of each calendar year.

Furthermore, both ECSPs and ECISPs are required to create a "transaction guide" outlining contract information and payment obligations in relation with the orders on their website and marketplaces.

Illegal Content  

The regulations stipulate that ECISPs or ECSPs have no responsibility for any illegal or prohibited content provided by them to the marketplaces, regardless of their trading volumes. However, although there is no responsibility, ECISPs  are still required to remove any identified illegal content within 48 hours and inform relevant public authorities and ECSP once the violation is known.

Unfair Commercial Practices

In relation to Unfair Commercial Practices, certain rules were established through amendments to the Regulation of Electronic Commerce Law. In general, unfair commercial practice of the ECISPs is a general term given to commercial practices that seriously disrupt ECSPs’ commercial activities, reduce their ability to make a reasonable decision, or force them to be involved in a legal proceeding. The Regulation maintain the regulations established by the law. In this regard, the following cases are considered unfair commercial practices, including but not limited to:

a) Failure to make payment to ECSP for goods or services in full, including the complete sales price of the product, within five business days from the date of the entry of the product sales price into the possession of ECISP and the delivery of the order to the buyer.

b) Coercion of ECSP into participating in promotional sales of goods or services, including unilateral changes in the sales price  by ECISP.

c) Lack of written or electronic agreement determining the conditions of commercial relations with ECSP, lack of clarity or accessibility of this agreement, and failure to store the agreement in an internal communication system.  

ç) Unilateral or retrospective changes to the terms of the intermediation agreement, against the ECSP or inclusion of a clause or any provision in an intermediation agreement that enables this.,

d) Charging ECSP for services not provided or for services of a type or amount not specified in the intermediation agreement.  

e) Lowering, restricting, suspending, or terminating services offered to ECSP or putting behind the ECSP in the ranking or in the recommendation system, even though there is no objective criterion in the intermediation agreement or on the ground that an application has been made to public institutions or judicial authorities,

f) Determination of cancellation rights beyond those specified in the Law on Consumer Protection (7/11/2013, n.6502) by ECISP without prior approval from ECSP. 

g)  Making false or misleading statements or notifications by ECISP to ECSPs regarding ECISP's own products and activities.

Violation of Intellectual and Industrial Property Rights 

It is provided that the person whose Intellectual and Industrial Property Rights have been violated shall apply to ECISP with the information and documents listed in the regulations. If the application is incomplete, ECISP shall inform the applicant of the deficiencies of the application with its reasons, and incase of a complete application, remove the product from circulation within forty-eight hours and inform ECSP as well as the applicant. In accordance with the regulation, ECSP may contest the decision. From the this objection, ECISP shall take a decision within twenty-four hours and the parties can apply in accordance with the general rules against the decision. 

Intermediation Agreement 

The regulation sets out the minimum elements of the intermediation agreement to be made between ECISP and ECSP. These elements are:

a) Information on intermediation services offered to ECSP,

b) Situations that require the restriction, suspension or termination of intermediation services and the processes concerning these situations

c) Information on service fees requested from ECSP and when and how these fees may vary or be updated,

d) Parameters used for ordering and recommending goods or services to buyers, if multiple parameters are used, the priority order among them, and the effects on the ranking, of direct or indirect payments made with the purpose of effecting the ranking,

e) The duration of payments to be made ECSP,

f) Information on the access to the internal communication system and the operation of the internal communication system,

g) Information that the intermediation agreement will be stored in the internal communication system in a way that is easily accessible to ECSP,

h) Information regarding (if it is the case) the determination of a longer period than the duration of the right of cancellation specified in the Law n.6502,

i) Information on the proof of ownership of intellectual and industrial property rights and measures taken in relation to the use and the infringement of these rights,

j) Information on the data obtained during ECSP's activities as a result of the provision of intermediation services, regarding, whether or not ECSP will have access to this data after the termination of the contract, and for how long access will be provided,

k) Information that ECISP will provide technical means for ECSP to carry for free and effectively, and to access to the information specified in the sub paragraph (c) of the first paragraph of Article 21 (only for medium, large and very large ECISP),

l) Information that ECSP requests for data access and data transfer will be fulfilled by anonymizing the buyer information within fifteen days. (only for medium, large and very large ECISP).

Also, according to the regulation, ECISP makes the notification of amendments to the intermediation agreement to ECSP, through the internal communication system and through an additionally approved “electronic communication address.

Unless a longer period is specified by ECISP, the amendments to the agreement are implemented at the end of a fifteen-day period starting from the date of notification. This period is thirty days in cases where; a technical development is required by ECSP, the commission rates and other service fees are increased, the intermediation services are restricted, suspended or terminated, new penalties are imposed on ECSP, or the balance of rights and interests is prejudiced against ECSP.

ECSP may terminate the intermediation agreement without compensation by giving notice through the internal communication system before the end of this thirty-day period for the amendments to be implemented at the end of the thirty days period. The termination takes effect on the date of the notice.

Additionally, ECISP's termination of the intermediation agreement is also subject to certain criteria.

In this regard, it is provided that the termination, restriction or the suspension of the agreement cannot be made for reasons other than those specified in the agreement. Besides, at least three business days are given for ECSP to make explanations before these sanctions are applied and it is indicated that these sanctions can be applied if no explanation is made or if the explanation is not satisfactory.

Sale of Branded Products

The regulation stipulates that ECISP or companies with whom they are in an economic entity, are prohibited from selling the mentioned companies’ brands or intercede for the sale of those brands on the marketplace.

Advertising and Discount Budgets

Under the regulation, the marketing and promotion communication made with all kinds of suitable tools through written, auditory, visual media, digital platforms, social media, or in open or closed spaces, or through identifiable individuals, for the purpose of promoting, increasing visibility of the goods and services or facilitating the access to them, influencing the purchase or rent decisions of consumers or providing direct or indirect economic benefits to real or legal entities, including sponsorship activities, shall be considered as advertising and marketing communication.

In this regard, various restrictions and limitations are envisaged for ECISP and ECSP (only for large and very large ECISP and large and very large ECPS) depending on the scale of their commercial activities.

In addition, the costs borne by ECISP on behalf of buyers and ECISPs, and the costs borne by ECSPs on behalf of buyers, the promotional, award, point, coupon, gift voucher and similar opportunities and other economic benefits provided to them, shall be evaluated within the framework of the discount budget.

Electronic Commerce License

As is known, the law envisaged an obligation for ECISP and for certain ECSPs to obtain an "Electronic Commerce License". Pursuant to this obligation, an ECISP whose net transaction volume is over 10 billion Turkish Lira and whose number of transactions exceeds 100,000 transactions, excluding cancellations and returns, as well as large and very large scale ECISP and ECSPs that generate more than half of their total sales revenue from electronic commerce sales, are required to obtain and renew a license from the Ministry. According to the regulation, license fees are gradually increased according to the volume of commercial activity of ECISP and obligated ECSP.

Other Obligations

In addition to the above, medium, large and very large scale ECISPs and medium, large and very large scale ECSPs are subject to the following obligations if they satisfy the conditions envisaged in the Regulation:

- Obligation of notification of a share transfer,

- Obligation to make conduct an independent audit,

- Obligation to make regulations regarding payment services for very large scale ECISP in electronic commerce marketplaces, and very large scale ECSP.

The provisions regarding the establishment of an internal communication system will come into force on 01.07.2023, while the provisions regulating monetary thresholds for data sharing and usage as well as electronic licenses will come into force on 01.01.2024. The remaining provisions have come into force on 01.01.2023.

By Alperen Kocalan, Associate, KP Law