Edition 41: 22 March 2017
Editorial Team:
Orçun Çetinkaya, LL.M., Ezgi Baklacı, LL.M., and Pelin Oğuzer, LL.M.
Turkey Continues Capital Markets Reforms, Updating Rules and Processes for Material Events Disclosures

Turkey’s Capital Markets Board (“Board”) has introduced new thresholds, scope of information and processes for disclosing material events, as well as amended announcement processes for the Public Disclosure Platform to ensure the market activities are in line with the government’s project to establish Istanbul as an international financial center.

Changes to Material Events Disclosures

Notable changes include:

– The obligation to disclose material events will now arise on the prospectus or issue document’s approval date. Previously, no specific start date was stated for this obligation.

– The combined total annual limit has increased from 50,000 to 250,000 Turkish Lira for transactions by persons with administrative responsibility (plus closely related persons and the issuer’s parent company) regarding shares and other securities relying upon such shares.

– The announcement threshold has increased from 100,000 to 250,000 Turkish Lira for transactions executed within a calendar year by persons with administrative responsibility (plus closely related persons and the issuer’s parent company) regarding the issuer’s securities (except publicly offered shares).

– The disclosure requirements for non-listed companies which have issued capital market instruments for qualified investors will now also apply to:

– Fund users while issuing lease certificates.

– Companies which have issued domestic capital markets instruments via private placement.

– New disclosure requirements now apply to companies with debt securities in the Offering Market for Qualified Investors.

– The scope of issues which must be disclosed has been expanded.

– Fund users must now also publicly disclose certain specified events, similar to issuers.

– The Board can now request announcements be made in other languages besides Turkish, if it considers necessary.

– The procedures required for efficient execution of public disclosure procedures must now be fulfilled by the issuer’s board of directors.

Changes to the Public Disclosure Platform

Notable changes include:

– Under certain conditions, disclosures by foreign companies or entities, whose capital market instrument are traded in the Turkish stock market, can now be made by third party service providers.

– The Public Disclosure Platform operator will determine the circumstances for cancelling and re-instating electronic certificates (which allow access to the platform), subject to the Board’s approval.

Please see these links for the full text of the amendment regulations published in Official Gazette number 29975 on 10 February 2017 (only available in Turkish):

– Amendments to the Communique on Public Disclosure Platform (VII-128.1)

– Amendments to the Communiqué on Material Events Disclosure (II-15.1a)

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Turkey Introduces Additional Condition for Determining Market Abuse

Turkey’s Capital Markets Board (“Board”) has introduced an extra condition for actions which will be deemed to constitute market abuse. Accordingly, the perpetrator of the action must now also make an order or transaction regarding the capital market instrument, either before or after the allegedly abusive act.

The Communiqué Amending Market Abuse Actions (“Amendment Communiqué”) was published in Official Gazette number 29983 on 18 February 2017.

Previously market abuse was simply defined as giving false, wrong, or misleading information, rumors, or making material public disclosures, comments or reports in order to affect the:

– Prices or values of capital market instruments.

– Investors’ decisions.

– Market indicators which may impact prices, values or decisions.

The Amendment Communiqué introduces an additional condition for determining market abuse. Accordingly, on top of the criteria above, the person who carried out the alleged market abuse must now also make an order and/or transactions regarding the related capital market instruments, either before or after the action in question.

The new condition applies to information disseminated by those who know (or should know) the actions are false, wrong or misleading.

The Amendment Communiqué also clarified the scope of the actions which do not constitute market abuse. In particular, actions within the scope of press freedom will not be deemed market abuse.

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

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Turkey Updates Licensing Rules for Renewable Energy Resource Areas

Turkey’s energy regulator has updated the electricity market license regulatory regime. The changes relate to integration of general principles for production licenses and pre-licenses for Renewable Energy Resource Areas (“RERA”) within the existing licencing regime (more).

The Energy Market Regulatory Authority (“Authority”) published the Amendment Regulation on Electricity Market License Regulation (“Amendment Regulation”), in Official Gazette numbered 29989 on 24 February 2017, entering into effect on the same date.

Key arrangements under the Amendment Regulation include:

– The Authority will determine RERA pre-license terms on a case-by-case basis, up to maximum 36 months and in accordance with the term stipulated in the pre-license’s tender specifications.

– RERA pre-license applications must be made in accordance with the terms specified under the Regulation of RERA as published in Official Gazette number 29852 on 9 October 2016 (“RERA Regulation”).

– RERA generation licenses will be granted for 30 years.

– The procedures and principles for pre-license applications to build production facility based upon wind and solar energy will not apply for RERA pre-license applications. Rather, these are determined by Amendment Regulation.

– Applicants must apply to the Authority for a RERA pre-license within 45 days of signing a RERA Usufruct Agreement with the Ministry of Energy and Natural Resources.

– The Authority will make a procedural assessment of the application documents within 20 working days.

– If the Authority determines the application is not in accordance with the legislation, 15 working days will be granted to remedy any deficiencies.

– The Authority will complete its evaluation within three months of receiving full documentation, in line with the application requirements.

– To obtain a pre-license for RERA generation facilities, applicants must now obtain the letter of conformity from the General Directorate of Renewable Energy. The letter confirms that the proposed facilities confirming the requirements under RERA Regulation have been met.

– If a RERA pre-license term is not extended, it will be terminated:

– At the pre-license holder’s request

– If the pre-license holder goes bankrupt

– When a production license is obtained.

– If a RERA pre-license holder does not apply for a production license in due time, the General Directorate of Renewable Energy will be notified.

– RERA generation licenses cannot be renewed.

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

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Turkey Introduces New Rules for Wind and Solar Power Plants in Natural Protected Areas

Turkey’s Environmental and Urbanisation Ministry has introduced new principles for wind and solar power plants (“WPP” and “SPP” respectively). The rules outline restrictions on existing and new generation facilities in protected natural areas, as well as criteria where the local District Commission of Protection of Natural Heritage can allow projects to proceed.

Notable aspects of the rules include:

– New WPP projects are not permitted in sensitive areas which are subject to strict protection under legislation (“Sensitive Areas”). However, existing facilities can continue to operate until their current permission expires.

– WPP facilities currently in Sensitive Areas cannot increase their capacities by adding new turbines or changing their areas. However, the local District Commission of Protection of Natural Heritage can allow such expansions in certain limited circumstances.

– The following projects can continue activities in (i) qualified natural reserves and (ii) sustainable protection and controlled use areas:

– Existing WPP facilities; and

– WPP projects with approved construction plans.

– In (i) qualified natural reserves and (ii) sustainable protection and controlled use areas, the local District Commission of Protection of Natural Heritage can permit new WPP facilities to be built, provided:

– Wind turbines are at least 300 metres from both:

– Sensitive Areas.

– Bird migration routes.

– Wind turbines have automatic stop radar systems installed.

– An ecology-based scientific research report exist.

– New SPP projects will not be permitted in:

– First rank natural protected areas.

– Sensitive Areas.

– Qualified natural reserves.

– In certain circumstances, the local County Commission of Protection of Natural Heritage can allow new SPP facilities to be built in:

– Second and Third rank natural protected areas.

– Sustainable protection and controlled use areas.

The criteria for a new SPP projects to proceed are:

– It must be at least 300 metres from Sensitive Areas

– The combined total of existing and new SPP projects will not exceed 10% of a natural protected area.

Please see below links for full text of relevant principles, published in Official Gazette number 29959 on 25 January 2017 (only available in Turkish):

– Principles for Wind Power Plants

– Principles for Solar Power Plants

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Turkey Includes Legal Fees in Government Financial Support Mechanism for R&D and Design Centres

Turkey has amended the support scheme for R&D and design activities to now include third party services. The change means external legal counselling regarding designs, trademarks and patents is now eligible to be included in the government financial support scheme. The scope of general expenses for R&D and design centres has also been expanded, to now also include mailing, shipping and courier costs.

The Regulation Amending the Regulation on Supporting R&D and Design Activities (“Amendment Regulation”) was published in Official Gazette number 29979 on 14 February 2017, entering into effect on the same date. The articles 1 and 4 will be in effect as of 1 March 2016.

Notable changes under the Amendment Regulation include:

– Costs for mail, shipping, courier are now deemed to be general expenses for design and R&D centres, meaning they become eligible to be covered by state financial support packages.

– Legal and scientific counselling services can now be provided to design and R&D centres by third parties.

– Discounts available under the Law on Supporting Research & Development and Design Activities numbered 5746 which are available for R&D have been re-regulated. The new provision includes more detailed conditions and processes. The Scientific and Technological Research Council of Turkey also becomes authorized to examine projects.

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

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Turkish Competition Board to Initiate Google Investigation

The Turkish Competition Board (“Board”) will conduct a full scope investigation into Google’s exclusivity agreements with original equipment manufacturers. The Board had previously ruled (after a preliminary investigation) that such a review was not necessary. However, the Board’s decision was effectively overturned by the Administrative Courts, on appeal by Yandex (the complainant).

Yandex’ Complaint to the Board

Yandex complained to the Board that Google (including the economic unity of Google Inc., Google International LLC and Google Reklamcılık ve Pazarlama Ltd. Şti.) had established agreements with original equipment manufacturers that violated rules on restrictive trade practices and abused its dominant position. It claimed that Google breached Articles 4 and 6 of Law No: 4054 on Protection of Competition.

The Board’s Preliminary Decision

The Board considered Yandex’ allegations and ruled that no further investigation was warranted. Rather than conduct further review, it instructed the Board’s Presidency to prepare an opinion to Google, instructing the company to remove provisions regarding exclusive pre-installation of certain applications from its agreements with original equipment manufacturers, as well as to cease related practices.

In its preliminary decision, the Board noted that while Google’s exclusivity agreements with original equipment manufacturers could prevent competition, these agreements do not prevent consumers from downloading other parties’ applications from the application store. Ultimately, the Board held that although consumers are free to download any application from the application store, prioritizing best rated applications within the stores will eventually hinder market competition.

Yandex’ Appeal

Yandex filed a lawsuit before an Administrative Court, seeking to suspend execution of the Board’s preliminary decision.

At the first instance, the Administrative Court rejected Yandex’ claim. Yandex appealed the lower court’s decision to a Regional Administrative Court.

The Regional Administrative Court recently held in Yandex’ favor, ruling to suspend execution of the Board’s decision not to investigate Google’s arrangements further. The effective result is that the Board will now pick up the topic again and initiate a full scope investigation into Yandex’ allegations about Google’s competition law violations.

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Turkish Competition Board: No Further Investigation of Price Fixing Needed in Eastern Mediterranean Cement Market

The Turkish Competition Board (“Board“) recently published a reasoned decision, deciding not to initiate a full scope investigation into an anonymous allegation of customer sharing and price fixing for bulk cement by six cement producers in the Eastern Mediterranean region. In a majority decision, the Board decided the price movements were likely the result of production cost increases and limited clinker capacities, declining to conduct further investigation.

The Board defined the relevant product and geographic markets as grey cement in Adana, Mersin, Osmaniye, Hatay, Kilis, Gaziantep and Kahramanmaraş.

The Board considered bulk cement sales for the 2014 to 2016 period in this market, focusing particularly on changes in sales volumes, price movements and other factors affecting cement costs. It considered the undertakings’ customer range, particularly focusing on whether customers supplied with cement between January 2014 and May 2016 made purchases from different undertakings.

The Board concluded that since the investigated undertakings have common customers, there was no evidence to support the allegations of customer sharing.

In a majority decision, the Board ruled not to initiate a full scope investigation. The Board noted:

– The amounts and percentages of price increases by separate undertakings in February to April 2016 were not consistent.

– Cement prices underwent a slight upward trend in 2014 and 2016 during March and February. However, prices actually decreased in this period in 2015.

– Production costs increased in November 2015 to January 2016, with the first price increases following in March 2016.

– Demand in February and March 2016 was much higher than in the same period for past years.

– In February 2016, demand increased relative to the previous month. Demand also increased again in March 2016.

– Demand increase prior to March 2016 (when the alleged violations occurred) were likely to increase prices.

– Capacity utilization rates were high throughout 2016.

However, a single dissenting Board member (Fevzi Özkan) argued that almost all of the undertakings increased their prices between February 2016 and April 2016, even if the increases were for different percentages and different quantities. He claimed this is an indicator of concerned practice because it cannot be reasonably explained by other factors.

Please see this link for the full text of Board decision number 16-33/579-255, dated 13 October 2016; published on the Competition Authority’s website on 6 February 2016 (only available in Turkish).

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Turkey Revises Rules for Adding Vitamins and Minerals to Food in line with European Union

Turkey continues to make changes to food regulations in order to harmonize its approach with the European Union (more). New regulations introduce principles and procedures for adding vitamins, minerals and certain other items to foods. These also update restrictions on active pharmacological ingredients from veterinary drugs which can be present in food from animal origins, along with maximum residue limits.

Two regulations were published in the Official Gazette number 30000 on 7 March 2017:

– Regulation on Addition of Vitamins, Minerals and Other Certain Other Items into Turkish Food Codex.

– Regulation on Classification of Pharmacological Active Ingredients in food of animal origin and Maximum Residue Limits of Turkish Food Codex.

Notable changes include:

– Vitamins and minerals which are in a form ready to be used by human bodies can be added to food, up to certain thresholds (excluding unprocessed food such as fruit, vegetables and meat, as well as beverages with more than 1.2% alcohol). The added vitamins and minerals must also meet at least one of the following criteria:

– Address a predictable or verifiable vitamin and/or mineral deficiency in the general population (or a part of the population).

– Potentially improve nutrition or address vitamin/mineral deficiencies for the general population (or a part of the population).

– Reflect changes in commonly accepted scientific information on the role of vitamins and minerals in nutrition, as well as their impact on health.

– Foods with added vitamins and minerals must be labelled with information about:

– Energy value.

– Quantities of food items.

– Total amount of added vitamins and minerals.

– Labels, advertisements and promotions of foods with added vitamins and minerals cannot contain:

– Any expression indicating or implying a balanced and diverse diet cannot provide necessary nutrition in sufficient quantities.

– Any misleading or deceptive messages about the food’s nutritional value being attributed to the additions.

– A 2012 regulation on permitted types and quantities of active pharmacological ingredients in food from animal origins has been updated.

Please see the following links for the full text of the regulations (only available in Turkish).

– Regulation on the Addition of Vitamins, Minerals and Other Certain Other Items into Turkish Food Codex

– Regulation on Classification of Pharmacological Active Ingredients in food of animal origin and Maximum Residue Limits  of Turkish Food Codex

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Turkish Patent and Trademark Office Releases Statistics for 2016 Intellectual Property Activity

The Turkish Patent and Trademark Office (“TPTO”) has released its annual report (“Report”), outlining 2016 statistics for patents, trademarks, industrial designs, utility models and geographical indications, as well as insight into the TPTO’s administrative structure and financial status.

Notable among the Report’s information is the TPTO’s cooperation during preparation and enforcement process for the new Industrial Property Law, which was finalized in December 2016 and entering into effect on 10 January 2017 (more).

Another significant development in 2016 was the World Intellectual Property Organization appointing the TPTO as an International Patent Search and Examination Authority. On 6 October 2016, the TPTO became entitled to provide research and examination reports for the patent applications filed within the scope of the Patent Cooperation Treaty.

Noteworthy statistics from the Report include:

Table

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

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