The Constitutional Court Upholds Amendments to the E-Commerce Law

Basis of the Annulment Request

The amendments to the E-Commerce Law were claimed to be unconstitutional on the following grounds;

(a). An obligation to obtain a license has been introduced for e-marketplaces and e-sellers that meet the criteria related to the net volume of transactions and the number of transactions excluding cancellations and returns within a calendar year; however, it has been argued that there is no public benefit in determining the license fees based on the net volume of transactions, that creates a situation leads to disproportionate interference in the activities of e-marketplaces, and it also violates the freedom of enterprise and property rights. Additionally, considering that the existing legislation on competition law can prevent unfair competition practices of e-marketplaces, it has been claimed that the rule does not carry the necessity element of the proportionality principle, leads to unfair competition, is not suitable for the purpose of preventing unfair competition, and does not comply with the principle of equality.

(b). New regulations stipulate that e-marketplaces are barred from engaging in marketing and promotional activities on online search engines using trademarks that are the main elements of domain names registered in the Electronic Commerce Information System without the consent of the respective e-marketplace or e-sellers; however, it has been argued that the lack of clarity regarding the procedures and principles and the general framework of the consent required under this regulation could lead to arbitrary practices, which is inconsistent with the principles of legal certainty and predictability as well as the non-transferability of legislative power. Moreover, it has been claimed that leaving the authority to determine the procedures, principles, and scope of the required consent to the administration may lead to discrimination among e-marketplaces, which in turn would violate the principle of equality.

(c). Considering that there is no public interest in determining certain obligations imposed on e-marketplaces based on their "net transaction volumes", that this situation causes disproportionate interference with the activities of e-marketplaces, that it also violates the freedom of undertaking, and that the relevant regulation may cause unfair competition, it has been argued that the law is not conducive to achieving the objective of preventing competition, that it will cause unfair practices among e-marketplaces, and that in this way, the freedom of undertaking is violated in the context of the principle of equality.

(d). Certain restrictive provisions have been regulated regarding the use of discount and advertising budgets; however, it has been argued that these conditions violate the e-marketplaces' freedom of enterprise, property rights, and freedom of contract, that the regulations lack public interest, and that this situation could lead to practices contrary to the principle of equality for e-marketplaces, infringe upon freedom of expression, and also that empowering the Ministry to determine the usage upper limits for services to be provided by e-marketplaces within the scope of these budgets contradicts the principles of legal certainty, the legality of administration, and the non-transferability of legislative power.

(e). New regulations stipulate limitations on the services e-marketplaces can provide, including the offering of financing options, acceptance of electronic money, transportation and postal services, and the publication of advertisements for goods and services; however, it has been claimed that the restriction leads to disproportionate interference in the activities of e-marketplaces, violating the freedom of enterprise and property rights, that there is no public interest in the said restrictions, and due to the restrictions causing unfair competition, they also do not conform with the principle of equality.

(f). New regulations stipulate that e-marketplaces are prohibited from offering for sale or mediating the sale of goods that are branded by the e-marketplace itself or by entities with which it is in economic unity, or for which they have branding rights; however, it has been argued that the restriction leads to disproportionate interference in the activities of e-marketplaces, and considering that unfair competition practices by e-marketplaces can be prevented with existing competition law, the rule does not fulfill the necessity element of the proportionality principle, and that the said restrictions will lead to unfair competition. Moreover, it has been claimed that the rule does not comply with the principle of equality and that limiting e-marketplaces' control over their own products constitutes an infringement of property rights. Furthermore, in the application of the provision, excluding periodicals such as magazines and newspapers, as well as e-book readers, it has been argued that there is no justified reason for sectoral discrimination in e-marketplaces, which violates the principle of equality and limits e-marketplaces' control over their own products, as well as the grounds mentioned above.

In addition to the alleged illegality claims mentioned above, it has been claimed that each regulation separately may lead to unhealthy and imbalanced growth of the e-commerce market and to the formation of monopolies or oligopolies, which will reduce the diversity of e-marketplaces and thus impair the principle of consumer protection, and that it is incompatible with international treaties related to fundamental rights and freedoms, and contrary to the Constitution.

Assessment of the CC

The CC individually evaluated each of the clauses of the E-Commerce Law subject to the annulment request but has found them all constitutionally compliant based on fundamentally the same reasons. In the assessment made by the CC concerning the explained clauses of the E-Commerce Law; it has ruled that there is a reasonable balance maintained between the necessity of the e-commerce market operating in accordance with the requirements of the national economy and social objectives, and the presence of a legitimate public interest purpose for the safe, healthy, and orderly functioning of the e-commerce sector. This balance observes the principle of proportionality regarding the restrictions on fundamental rights and freedoms.

Furthermore, regarding the claims that it is possible to prevent unfair competition practices of e-marketplaces with existing competition law legislation, it has been considered that the provisions of competition law are corrective in nature rather than merely preventive. It falls within the discretion of the legislator to apply measures before the disruption of the competitive environment for the purpose of protecting consumers and small businesses. Therefore, it has been assessed that it is possible to take additional measures to prevent such situations in the e-commerce field before the competitive environment is compromised.

According to the CC decision, the amendments made to the E-Commerce Law will continue to be in effect in their current form. In parallel with this process, the case concerning the Regulation on Service Providers of Electronic Commerce Intermediary Services and Electronic Commerce Services, which has come into force for the implementation of the E-Commerce Law, is still under review by the Council of State. E-commerce sector is eagerly awaiting the decision to be made by the Council of State and how this decision, along with the CC ruling, will shape the e-commerce industry.

You may find the Turkish version of the CC Decision here.

Dilek Akdaş Kökenek, Partner
Dilara Kürkçüoğlu, Associate