Recent Development
Law No. 7435 on the Amendment of the Law on the Union of Chambers and Commodity Exchanges of Türkiye and the Chambers and Commodity Exchanges and Certain Laws and the Decree Law No. 640 (“Law No. 7435“), published in the Official Gazette dated 1 February 2023 and numbered 32091, introduced significant amendments to Law No. 6585 on the Regulation of Retail Trade (“Law“). Law No. 7435 is available here (in Turkish).
What does the Law No. 7435 introduce?
The main amendments introduced by Law No. 7435 are as follows:
A. Developments on unfair commercial practices
“Unfair commercial practices” is defined as activities that significantly disrupt the commercial activities or reduce the ability to make reasonable decisions or cause one of the parties to be a party to a commercial relationship that it would not normally be a party to, in commercial relations between producers, suppliers and retail enterprises. It is regulated that unfair commercial practices in the supply chain is prohibited.
Although not limited in number, the following practices have been classified as unfair commercial practices by the amendments to the Law, and new administrative fines have been introduced for those who engage in unfair commercial practices:
| Unfair Commercial Practices | Consequence of non-compliance |
| Forcing the supply of goods or services from any natural or legal person, except for the contractual clauses in order to ensure quality standards | An administrative fine of TRY 20,000 will be imposed for each violation. |
| Reflecting the cost of the campaign to the party that does not want to sell with the campaign | An administrative fine in the amount of the reflected campaign cost will be imposed. If the violation is repeated within a calendar year, an administrative fine of twice the amount of the previous fine will be imposed for each repetition. |
| Failure to determine the terms of the commercial relationship in the supply of agricultural and food products through a written or electronic agreement. | An administrative fine of TRY 20,000 will be imposed for each violation. |
| Including provisions in the agreement that authorize unilateral changes that are detrimental to the other party or that are not clear and understandable | An administrative fine of TRY 20,000 will be imposed for each violation. |
| Receiving fees under the names of store opening and renovation, turnover deficit, bank and credit card participation fee, and others even if it does not provide any service that directly affects the product demand, or receiving premiums and fees even if it does not specify the type of service it provides as well as the amount or rate of the service fee in the agreement | An administrative fine in the amount of the unjustly received premium and fee will be imposed. If the violation is repeated within a calendar year, an administrative fine of twice the amount of the previous fine will be imposed for each repetition. |
| Cancelling orders of agricultural and food products that are perishable within 30 days from the date of production, within 30 days prior to the delivery date of the product, except in cases caused by the fault of the other party | An administrative fine in the amount of the canceled order will be imposed. If the violation is repeated within a calendar year, an administrative fine of twice the amount of the previous fine will be imposed for each repetition. |
| Reflecting the costs of spoilage or loss after delivery or transfer of ownership of agricultural and food products that are perishable within 30 days from the date of production, except in cases caused by the fault of the other party | An administrative fine in the amount of the reflected campaign cost will be imposed. If the violation is repeated within a calendar year, an administrative fine of twice the amount of the previous fine will be imposed for each repetition. |
These regulations on unfair commercial practices will enter into force on 1 January 2024.
B. Developments on payment terms
It is essential that payments arising from commercial relations between producers, suppliers and retail enterprises be made within the period stipulated in the agreement.
However, the payment terms for agricultural and food products that can spoil within 30 days from the date of production shall not exceed 30 days if the creditor is smaller in scale than the debtor, and 45 days in other cases. For agricultural and food products that do not spoil within 30 days from the date of production, the payment periods shall not exceed 60 days if the creditor is smaller in scale than the debtor.
An administrative fine will be imposed on those who fail to comply with the payment terms at the rate of five per thousand of the amount not paid in due time for each day up to 30 days, and one percent of the amount not paid in due time for each day after 30 days, not exceeding the unpaid amount. In determining the payment terms, the date realized before the date of delivery or transfer of ownership will be taken as basis.
These regulations on payment terms will enter into force on 1 January 2024.
C. Developments on common use areas
The definition of “common expense” and “common income” have been added to the Law in parallel with the Regulation on Shopping Centers, which has been amended by the Regulation Amending the Regulation on Shopping Centers published in the Official Gazette dated 18 August 2022 and numbered 31927, and new administrative penalties were stipulated.
- Developments on common expenses
Expenses that are not related to the property of the shopping center, such as electricity, water, natural gas, non-renewal maintenance, repair, security and cleaning expenses related to common use areas, as well as expenses related to the duties of the payroll management employees working in the shopping center are regulated as common expenses.
The Law stipulates that retail enterprises in the shopping center may only be charged a participation fee for these expenses, and that no fee may be charged for expenses that are not common expenses, such as advertising, marketing and consultancy, and expenses that are not documented. Those who violate this regulation will be imposed an administrative fine of twice the amount of the amount unfairly collected from the retail enterprises.
- Developments on common income
All kinds of income derived from rental, advertising, marketing, cultural and artistic activities as well as other common use area income and from advances for common expense participation share are regulated as common income.
Common income can be used to finance common expenses, and those who violate this regulation will be subject to an administrative fine equal to the amount of common income not used to finance common expenses.
- Developments on common income and expense reports
As stipulated in the Regulation on Shopping Centers, shopping center owners or managers are obliged to prepare and send every year the common income and expense reports for the previous year to the retail establishments in the shopping center. Those who fail to prepare the common income and expense report or send it to the retail establishments will be subject to an administrative fine of TRY 20,000 for each retail establishment in the shopping center.
These regulations on common use areas entered into force on 1 February 2023.
D. Upper limit and increase of administrative fines
Law No. 7435 introduced a limitation to all administrative fines regulated under Article 18 of the Law, according to the size of the enterprise subject to the relevant violation. In this regard, the total amount of administrative fines issued within a calendar year cannot exceed TRY 5 million for small-scale enterprises, TRY 50 million for medium-scale enterprises, and TRY 250 million for large-scale enterprises.
This upper limit will be increased every year by the revaluation rate determined and announced by the Ministry of Treasury and Finance in accordance with the repeated Article 298 of the Tax Procedure Law No. 213 of the previous year.
Conclusion
With the amendments introduced by Law No. 7435, the unlawfulness of unfair commercial practices encountered in the supply chain is clearly regulated, but the examples of unfair commercial practices are not limited. The Law introduces new and deterrent administrative fines to prevent unfair commercial practices. Regarding payment terms, the legislator aims to protect small and medium-sized enterprises in the agriculture and food products sector against large-scale enterprises, in addition to imposing legal upper limits on the terms agreed on in the agreements between the parties in order for these enterprises to collect their receivables in terms appropriate to their commercial needs. It is observed that the amendments made to the Law regarding the use of common areas are in line with the recently amended Regulation on Shopping Centers. In addition, new administrative fines have been set for those who violate these regulations. It is important that retail sector stakeholders carefully review the amendments to the Law and complete their efforts to comply with the Law by the effective dates of the relevant regulations.
