We are heading towards the days when we will lose the taste of online shopping, start discussions in the business world, eliminate competition and seriously hit the economic development of our country. Because with the changes made in the E-Commerce Law, applications that are not available anywhere else in the world are being introduced.
It is noteworthy that special regulations have been made in the law to prevent some companies and to support the growth of others. It creates a parallel structure to the Competition Authority. It contains regulations that will eliminate competition in the market. If the ‘E-Commerce Law’ comes into effect in 2023 in its current form, a blow to our economy, which is trying to recover, will come from here and inflation will go even higher.
The Ministry of Commerce’s making changes in the E-Commerce Law, without discussing and notifying the relevant parties, will frighten foreign investors and cause irreparable harm to those who sell products from electronic or online marketplaces, and to consumers.
Since the Law on the Amendment of the Law on the Regulation of Electronic Commerce published in the Official Gazette dated July 7, 2022, if it enters into force in 2023, it will eliminate competition, and everyone involved in business life, especially the consumer, will be affected by this development. So who will win? Department of Commerce officials know the winners and losers better than anyone. The Competition Authority also sees how the market will deteriorate. The winner of the regulations will be a few companies that shape this law with the ministry bureaucracy in the background! As a country, as consumers, as people in business, we will all be on the losing side. It’s that clear.
It is not possible to list the damages that the new regulations in the E-Commerce Law will cause to Turkey with one or two articles. In the electronic commerce sector, it brings regulations that will cause difficulties in competition law practices, which are under the jurisdiction of the Competition Authority. It will not only create a competition law problem in the sector, but will also cause a conflict of authority between the Competition Authority and the Ministry of Trade. It will both hinder the development of the sector and bring along some uncertainties.
E-commerce regulations are being discussed not only in Turkey, but everywhere, especially in the USA and the European Union (EU). Work is underway for a number of new public regulations regarding platforms, including marketplaces. In Turkey, the Ministry of Commerce is completely separated from the practices in the world with the regulation of the “E-Commerce Law”. Because the ministry, instead of making changes that will support the sector and contribute to its development, as in the USA and EU, preferred to make legal arrangements to pave the way for some companies when the opportunity came. The Turkish business world, consumers and producers have not even been taken into account!
The Ministry of Commerce has reduced the discussions and regulations that should be made in the digital field only to e-commerce.
The most striking aspect of these developments is the strange reasons that the Ministry of Commerce hides behind while regulating the ‘E-Commerce Law’ by entering the jurisdiction of other institutions.
The claim of the Ministry is as follows; “To protect the conditions of effective and fair competition, to reduce the dependence of electronic commerce service providers on e-commerce marketplaces and to monitor the activities of e-commerce intermediary service providers.”
However, the law, which was prepared with an extremely interventionist approach and contains some prohibitions, contains definite regulations that will reduce the number of players and competition in the market. It also interferes with the authorities of many public institutions, especially the Competition Authority. The aforementioned ‘E-Commerce Law’ in its new form will disrupt the markets, change the balance of the parties in production and consumption, and drag those who sell through electronic platforms into uncertainty.
Now let me give some details from the law.
For example, it is impossible to understand and explain the license fees and fines brought to e-commerce. With this arrangement, competition in the sector will be eliminated, and the ecosystem around electronic commerce will also deteriorate, and the relevant parties will suffer irreparable losses.
The table is as follows; Some of the marketplaces that continue their activities as full taxpayers and are corporate taxpayers in Turkey pay 7.5 percent of their sales revenue as Digital Service Tax (DHV). Another significant burden on digital commerce is ad withholding, which is 15 percent of digital advertising spending. Turkey was the country that implemented the DHV, which was announced to be abolished in 2023 in accordance with international agreements, with the highest rate in the world. In addition, Turkey is one of the rare countries that collects digital advertising withholding along with DHV.
However, the most important issue is the regulation of the Ministry of Commerce in the ‘E-Commerce Law’ regarding the collection of license fees over the trade volume realized in e-commerce marketplaces. The license fee limits the growth of platforms. But such a limit has no economic rationale in any way. Such a limit cannot be set in order to ensure competition. Because such a border hinders competition. In order to prevent unfair competition, such a limit in the sector, which is controlled in every respect, harms consumers.
On the other hand, the additional burdens to be brought to e-commerce by the law will directly increase the transaction costs of the marketplaces that digitize the tradesmen and SMEs and make the lives of millions of people easier. These increases will be an additional burden on vendors and customers.
Now the government, the economy bureaucracy, on the one hand, is making VAT discounts to fight inflation, while the Ministry of Commerce is making strange regulations such as the license fee that imposes an additional tax burden on e-commerce. Isn’t this a contradiction?
As if the Ministry of Commerce has made such a license fee arrangement, it allows some companies to make a direct loss. For example, the license fee to be paid by the e-commerce company for a marketplace with a net annual transaction volume of 100 billion is more than its net income. Because e-commerce companies with a net transaction volume of 10 to 65 billion TL will pay license fees at rates ranging from 3 per thousand to 25 percent. In other words, the Ministry of Commerce will not grant the right to live for an e-commerce company that has reached the 100 billion mark. It will incur losses by having to pay license fees far above its income. He will want it to shrink. By preventing competition, it will cause harm to the consumer.
Now let me summarize some of the remarkable changes in the law and some of the problems that the innovations will cause in legal, financial and economic terms.
E-commerce license fee;
An exorbitant tax system was put into effect, actually parallel to the Tax Procedure Law. As if that wasn’t enough, a gradual system was adopted and exorbitant cost differences were created between companies that were supposed to compete freely and on equal terms in free market conditions.
Exorbitant administrative fines;
An alternative sanction system was introduced to the Law on the Protection of Competition and the competencies of the Competition Authority were disabled with an alternative “parallel” structure established under the Ministry of Commerce.
Ad limit to marketplaces;
The revenues and thus the employment volumes of subsidiaries such as the agency that provides employment with its advertising budget are reduced. Organizations and media that serve with these advertising budgets are also being hit.
ban on e-money and payment services;
It is not possible to understand the logic of banning marketplaces and e-commerce companies from providing e-money and payment services. Fast and easy e-commerce is blocked. Especially product returns etc. In these matters, consumers are condemned to long refund periods imposed by banks.
State-sponsored violation of competition;
Some marketplace companies are exempted from the law, creating a violation of competition by the state. Enthusiasts can find out who these companies are. There is also a GSM operator, an airline, a postal company…
Can a ministry support publicly traded companies with the “I did it” logic? Could there be such a law? Every part of it is in conflict with a law, legislation. I will continue to evaluate the E-Commerce Law regulation of the Ministry of Commerce so that the developments do not remain as they are and do not harm the country.
The issue was brought to the Constitutional Court with the CHP’s application for annulment. At the very least, the Supreme Court will evaluate whether the law’s restrictions on media advertising and unequal regulations in license fees violate the principle of equality of the Constitution. It is noteworthy that the CHP did not object to the law in the parliamentary debates and filed a lawsuit afterwards. It was beneficial in terms of creating the opportunity for such an important issue to be reviewed by the Constitutional Court.
That’s it for today…