Edition 45: 25 May 2017
Editorial Team:
Orçun Çetinkaya, LL.M., Ezgi Baklacı, LL.M., and Pelin Oğuzer, LL.M.
Public Consultation in Turkey Regarding Regulation Which Establishes Data Controller Register

Turkey’s Data Protection Authority (“Authority”) recently held a two week public consultation period on the details of draft legislation which establishes the Data Controller Registry (“Registry”), ending on 20 May 2017. Stakeholders could submit opinions and suggestions to the Authority.

The Data Protection Law introduced numerous obligations for natural and legal persons who process personal data in Turkey (“Data Controller”). Data Controllers must register with the Registry before they begin to actively process personal data (Article 16 of the Law).

Key points under the Draft Data Controller Registry Regulation (“Draft Regulation”) include:

– Data Controllers must register with the Registry before they begin to actively process data and persons or entities which later become under the scope of the proposed legislation will have 30 days to register.

– The Authority can determine registration exemptions, depending on criteria such as quality and quantity of processed personal data, as well as the purpose of processing.

– An online system (“VERBIS”) will be established for registering and carrying out actions on the Registry.

– Administrative fines between TRY 20,000 and TRY 1,000,000 will apply for failure to comply with the provisions of the Draft Regulation.

– Legal entities with headquarters in Turkey must fulfil their obligations under the Law through the bodies or persons that are entitled to represent the legal entity.

– Data Controllers residing abroad must appoint a legal entity residing in Turkey or a real person who is a Turkish citizen as their representative (a “Data Controller Representative”) and register with the Registry.

– Data Controller Representatives will be entitled to:

– Respond to requests by the Authority and third parties

– Receive notices on behalf of the Data Controller.

– Data Controller Representatives must appoint a contact person for communications with the Authority regarding the data controller’s obligations.

– Data Controllers must prepare a “data protection retention and erasure policy” to meet the legislative retention periods.

Under the new regime, Data Controllers must prepare a “personal data processing inventory” outlining information about the Data Controller’s:

– Personal data processing activities.

The purpose of data processing.

– Data categories.

– Transferees.

– Data subjects.

The Draft Regulation clearly states the information to be disclosed to the Registry depends on the Data Controller’s personal data inventory. That is, Data Controllers must disclose the information they note in their data inventory to the Registry. 

Please see this link for the full text of the Draft Regulation, announced on 5 May 2017 (only available in Turkish).

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Turkey Updates Contest Rules for Renewable Energy Resource Areas

Turkey’s Ministry of Energy and Natural Resources has amended legislation governing large-scale renewable energy resource areas (“RERA”). The General Directorate of Renewable Energy’s (“General Directorate“) authority has been expanded, to now also include the power to determine technical and administrative aspects of RERA contest announcements. Changes are also made to contract execution and tender announcement processes.

The Regulation Amending the Renewable Energy Resource Areas Regulation (“Amendment Regulation”) was published in Official Gazette number 30035 on 11 April 2017. The Amendment Regulation makes changes to the Renewable Energy Resource Areas Regulation (“Regulation”), published in Official Gazette number 29852 on 9 October 2016 (more information about the Regulation).

Notable changes under the Amendment Regulation include:

– The General Directorate’s authority has been expanded, to now include the power to determine technical and administrative aspects of RERA contest announcements.

– Clarification that the purchase period can only be extended in certain circumstances, as specified in the Regulation.

– Clarification that electricity generated by RERA facilities can be included in the Renewable Energy Resource Support Mechanism as of the date the facility becomes partially operational, without any application being necessary.

– If financial proposals by applicants are the same, the RERA Commission will now determine which applicant’s proposal will be considered in the reverse auction.

– The General Directorate is no longer required to include the following in tender announcements:

– Connection capacities to be allocated based on connection areas.

– Features of components to be used and production processes.

– Minimum criteria for factories established within RERA facilities.

– The tender’s date and time.

– The specific document list for RERA applications which was stated in the Regulation has now been removed. Rather, the Amendment Regulation now states in a general manner that the documents set out in the tender specifications for each RERA project should be presented to the General Directorate.

– Companies which are entitled to apply for a RERA pre-license regarding electricity production will be fined if they do not apply to the Energy Market Regulatory Authority within 45 days.

Please see this link for the full text of the Regulation (only available in Turkish).

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Turkish Financial Incentives Scheme Extended for Investments in Storage and Nuclear

Turkey has extended the scope of financial incentives offered for investments in certain industries. The Investment Incentive Scheme divides Turkey into six regional categories, grouping provinces based on their socio-economic development and targeting incentives accordingly. Under the changes, investments in licensed storage or nuclear power plants are now eligible to the incentives which are offered to the 5th regional category. An exception applies for investments made in the 6th Region, which will continue to be eligible for the 6th region incentives only.

Incentives are outlined in Cabinet Decision 2012/3305, which entered into effect on 15 June 2012. The Decision Amending the Decision Regarding Governmental Grants on Investments was published in Official Gazette number 30055, on 3 May 2017, entering into effect on the same date. Please see this link for the full text of the Amendment Decision (only available in Turkish).

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Real Estate Certificates Now Regulated Under the Capital Markets Law in Turkey

Turkey has taken a series of new measures involving companies and public institutions in the wake of the State of Emergency declared on 21 July 2016. Under the changes, certain provisions of the Communiqué on Real Estate Certificates (VII-128.2) (“Communique”) have been moved to the Capital Markets Law No. 6362 (“Law”).

The provisions moved from the Communiqué to the Law state address:

– The definition of real estate certificates.

– The Capital Markets Board’s (“Board”) power to determine principles and procedures for real estate certificates, as well as exemption conditions.

– Principles and conditions for convening meetings of real estate certificate owners if it is understood obligations will not be fulfilled by the maturity date.

The changes were made by Decree No. 690 on Taking Certain Measures within the scope of the State of Emergency, published in Official Gazette number 30052 on 29 April 2017. Please see this link for the full text of the Decree (only available in Turkish).

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VAT Exemption for Foreigners Purchasing Residence and Office Premises Using Foreign Currency

Turkey has introduced a VAT exemption for the first time a particular property is purchased by a foreigner as a residence or office, provided the property is held for at least one year and the purchase was made with foreign currency. VAT on such purchases usually ranges from 1% to 18%.

Purchasers who satisfy the exemption conditions can receive the exemption for multiple property purchases, provided each transaction involves a property being purchased in this way for the first time.

To be eligible for the VAT exemption, at least 50% of the amount must be paid before the date the acquisition invoice is issued, with the balance paid within one year.

If the premises are sold within one year, the selling party must pay the VAT as well as postponement interest, calculated as per Article 48 of the Law numbered 6183.

Parties eligible to apply for the exemption are:

– Turkish citizens living abroad for more than six months (with some exceptions).

– Foreign natural persons who are not residing in Turkey.

– Legal entities which have registered offices and headquarters outside Turkey, which do not make any profit in Turkey through a workplace or resident representative.

The Communiqué Amending the Communiqué on General Value Added Tax Application was published in Official Gazette number 30057 on 5 May 2017, entering into effect on 1 April 2017. Please see the link for full text of the Amendment Communiqué (only available in Turkish).

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Turkish Citizenship Now Offered in Return for US $1.5 Million Investment into Real Estate or Venture Capital Funds

Foreign investors holding at least US $1.5 million shares in either real estate or venture capital investment funds for three years are now entitled to Turkish citizenship. Citizenship will only be given if the Capital Markets Board confirms these details.

The Regulation Amending the Regulation on Implementation of the Turkish Citizenship Law was published in Official Gazette number 30057 on 5 May 2017, entering into force on the same date. Please see this link for the full text (only available in Turkish).

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Turkey Updates Packaging Rules and Introduces National Database for Human Medicinal Products

Turkey has introduced a centralized database to track medicinal products for human use (“Medicinal Products”), as well as information about parties involved in related transactions. Medicinal Products will now be tracked in the national system, using a 2D code system. The database is in line with the EU’s approach and will support authorities to identify and prevent counterfeit pharmaceuticals being produced and sold in Turkey. Changes have also been made to rules for mandatory information on packaging and inserts, to support the new system.

The Regulation on Packages, Package Inserts and Pursuit of the Medicinal Products For Human Use (“Regulation”) was published in Official Gazette number 30048 on 25 April 2017, entering into effect on the same date. The Regulation is in line with EU Directives 2011/62/EU and 2001/83/EC.

Notable changes under the Regulation include:

– Records of transactions involving Medicinal Products will now be tracked via 2D codes.

– A centralized national database will be established to record details of:

– Transactions.

– Real and/or legal entities which are entitled to deal with medicinal products.

– The following entities must now record all data about purchase, sale, refund, transfer or deactivation of Medicinal Products in the central system, as well as retain related documents (either electronically or physically) for five years:

– Licensees.

– Pharmaceutical warehouses.

– Authorized export firms.

– Pharmacies.

– Medical consumable centres.

– Public and private reimbursement bodies.

The Regulation continues similar requirements as prior legislation regarding the information and symbols to be used on inner and outer packages of Medicinal Products, as well as package inserts. However, applicants for licenses or authorization must now guarantee the outer packages of their Medicinal Products will not cause any likelihood of confusion with other products.

The Regulation outlines a range of transitional provisions for implementing the new packaging rules:

– Medicinal Products which are already on the market must comply with the Regulation by 31 December 2018.

– Packaging and package inserts for Medicinal Products which were granted a license, or a license application was filed, before 25 April 2017 must be bought in line with the new rules by 30 September 2017.

– Medicinal Products produced before 31 December 2017 can be released into the market with existing packaging, until the Medicinal Product’s relevant expiry date.

– Medicinal products produced from 30 December 2017 onwards must comply with the Regulation.

Please see this link for full text of the Regulation (only available in Turkish).

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Turkey Updates Pricing Regime for Human Medicinal Products

Turkey has updated the pricing regime for human medicinal products. Changes apply particularly to price calculation methods and caps, including where changes occur to price preserved reference products and the original reference price. The changes also allow price increases caused by currency fluctuations (relative to the Euro) to enter into effect quicker.

The Decision Regarding Pricing of Human Medicinal Product (“Decision”) was approved by Council of Ministers’ Decision number 2017/9901 on 6 February 2017.

Notable changes introduced by the Decision include:

– The ceiling price will now be 80% of the real reference price for price preserved reference products which were presented to the market in any pharmaceutical method, anywhere in the world, before 1 August 1987.

– If the original reference price drops below 60% of a reference product’s value:

– Increases between 60% and 100% of the base value: The reference price may not be more than 60% of the original reference price.

– Increases of more than 100% of the base value: The reference price will be calculated as 60% of the new original reference price.

– If the original reference price drops below 80% of a price preserved reference product’s value:

– Increases between 80% and 100% of the base value: The reference price may not be more than 80% of the original reference price.

– Increases of more than 100% of the base value: The reference price will be calculated as 80% of the new original reference price.

– A provision is repealed regarding price changes for selling products to approved Turkish stores from a reference price or reference country.

– Changes to product prices caused by increases in the Euro’s value will now enter into effect five days after the Commission Decision is announced, instead of 45 days. Changes due to decreases in the Euro’s value will continue to take effect 45 days after announcement.

Please see this link for full text of the Decision (only available in Turkish).

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Turkish Competition Authority to Investigate Expo Market

The Turkish Competition Authority (“Authority”) has announced that it will launch a sector enquiry, focusing on the expo industry. The enquiry will seek to better understand any behavioural and structural competition law problems in the area, as well as generate options for solving these problems. Stakeholders can submit opinions and suggestions to the Authority until 31 August 2017.

The Authority will particularly consider problems stemming from relationships between:

– Expo facility operators and the expo organizers.

– Expo organizers and expo participants.

– Undertakings providing services and the expo area operators or expo organizers.

The Authority had identified problems with the relations between market participants. In particular, non-compete obligations for expo organizers or participants, as well as expo area operators’ obligations to supply single buyers. The sector inquiry aims to identify the effects of such arrangements on the sector’s competitive nature and to draw a framework for potential exemptions.

The Authority considers the market’s nature to be prone to abusive conduct, especially regarding expo facility management and expo organization. The sector inquiry aims to make a detailed examination of the sector’s structure, particularly focusing on any abusive conduct.

The Authority also seeks to address the legislation regulating the sector and the structure of the institutions implementing it, from a competition law perspective.

Please see this link for the full text of the Announcement (only available in Turkish).

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European Competition Watchdog Publishes Findings from its Two Year Examination of the e-Commerce Industry

In May 2015, the European Competition Commission (“Commission”) launched an e-commerce sector inquiry as part of the Digital Single Market strategy, based on EU competition rules. On 10 May 2017, the Commission published its Final Report, including its findings regarding competition aspects of the e-commerce sector. The Report separately addresses e-commerce of consumer goods and digital content. The Commission sought information from a variety of participants in the EU e-commerce market, regarding online Sales of consumer goods and distribution of digital content. The Commission gathered evidence from nearly 1,900 companies and analysed around 8,000 distribution contracts.

The Report highlights the following major market trends:

– A large proportion of manufacturers decided over the last decade to sell products directly to consumer through their own online retail shops, thereby increasing competition with their distributors.

– Increased use of selective distribution systems, where the products can only be sold by pre-selected authorised sellers, allows manufacturers to better control their distribution networks, primarily in terms of distribution quality and price.

– Increased use of contractual restrictions to control product distribution. Restrictions take various forms, depending on the business model and strategy, including:

– Pricing restrictions.

– Marketplace (platform) bans.

– Restrictions on the use of price comparison tools.

– Exclusion of pure online players from distribution networks.

Notable Commission findings include:

– The growth of e-commerce over the last decade had a significant impact on companies’ distribution strategies and consumer behaviour. Particularly, increased online price transparency and price competition.

– Some of practices may be justified. For example, to improve the quality of product distribution, others may unduly prevent consumers from benefiting from greater product choice and lower prices in e-commerce.

– For digital content, the availability of licences from content copyright holders is essential for digital content providers. Such licenses are a key factor in determining the market’s competition levels.

– Certain licensing practices can cause difficulties for new online business models and services to emerge. However, assessing these licensing practices must consider the characteristics of each relevant industry.

– Almost 60% of digital content providers who participated in the inquiry have contractually agreed with right holders to “geo-block”. Geo-blocking prevents consumers from purchasing consumer goods and accessing digital content online from other EU Member States.

– Competition enforcement for geo-blocking must be done on a case-by-case basis, including analysis of potential justifications for restrictions.

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Turkish Constitutional Court: Municipality Re-Zoning and Failing to Return Property Gifted for Specific Purposes Breaches Constitutional Property Rights

Turkey’s Constitutional Court recently considered circumstances where an applicant had gifted land to the local municipality for road construction, without receiving compensation. The municipality later re-zoned the property as a residential area, merging it with another land parcel in the process. The Constitutional Court ruled the municipality had breached the applicant’s constitutional property rights by failing to return the land, sending the matter back for a re-trial. It held that, in these circumstances, the burden imposed by the municipality’s failure to return the property outweighs public interests.

The applicant filed a civil law suit against the municipality, seeking to cancel registration for the re-zoned and merged property, as well as other remedies. However, the First Instance Court rejected the applicant’s claim, stating that:

– Title or price claims cannot be made for property allocated for public services and facilities, which was transferred with the previous owner’s consent (Article 35, Expropriation Law)

– Municipalities are entitled to transfer the properties in their development plans to real persons (Article 18, Construction Law).

The applicant appealed the case to the Constitutional Court, claiming a breach of their property rights under Article 35 of the Constitution. The Constitutional Court held the municipality had breached the applicant’s constitutional rights by failing to return the property.

It sent the matter back to the First Instance Court for a re-trial, based on the following reasoning:

– The legitimate expectation to acquire property is within the scope of the right to acquire property, so is protected under the Constitution.

– The applicant holds a legitimate expectation to receive their gift back, if it was not used for the original donation purposes (Article 244, Code of Obligations numbered 818).

– The land was donated on the condition it would be used for a road.

– Re-zoning the land into a housing area should be considered as an intervention into beneficial property ownership rights.

– Statutory basis exists for intervention into beneficial property ownership rights (Expropriation Law; Construction Law).

– A reasonable balance must be found between:

– Public interests.

– Protecting private property rights.

– In these circumstances, protecting the applicant’s individual constitutional property right should take priority.

Please see this link for the full text of the Decision (only available in Turkish).

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