The application principles of amendments made on 26.01.2023 in the Law on the Regulation of Retail Trade No. 6585 ("Law"), which came into effect as of 01.01.2024, have been clarified by the "Regulation Amending the Regulation on Principles and Rules to be Applied in Retail Trade" ("Regulation"), published in the Official Gazette on 14.12.2023.

The purposes of the changes are;

•    to comply with the provisions addressing unfair trading practices arising from the imbalance of bargaining power in the agricultural and food supply chain, as stipulated in Directive 2019/633 of the European Parliament and of the Council dated 7/4/2019 on Unfair Trading Practices in Business-to-Business Relationships in the Agricultural and Food Supply Chain. 

•    to meet the needs arising from the dynamic nature of the retail trade sector and public expectations,

•    to establish sustainable competition conditions among producers, suppliers, and retail businesses, create a more efficient and fair supply chain, 

•    to prevent practices that could negatively impact the living standards of the farming community, and protect small businesses engaged in agricultural activities. 

While the changes originate from agriculture and food supply, they are of a nature that encompasses the entire retail trade, affecting all stakeholders in the sector.

Key changes in the Law and Regulation can be summarized as follows:

A. Unfair Commercial Practices in the Supply Chain

One of the most significant changes introduced is the inclusion of the concept and definition of "unfair commercial practices in the supply chain." The definition of unfair commercial practices is as follows:

"Unfair commercial practices are activities in commercial relations between producers, suppliers, and retail businesses that significantly disrupt the commercial activities of one party, reduce their ability to make reasonable decisions, or cause them to be a party to a commercial relationship they would not normally be a party to under normal circumstances."

Activities considered as unfair commercial practices in any case and their administrative sanctions are listed as follows:

Only the unfair commercial practices that are considered as such "if they comply with the definition in the law" are exemplified as follows*:

•    Reflecting costs related to administrative and punitive sanctions or customer complaints, except for situations arising from the other party's fault.

•    Engaging in commercial retaliations, such as delisting products, reducing the ordered quantity of products, discontinuing marketing or campaign-like services related to these products, or imposing financial obligations, in the absence of provisions in the contract regarding criteria based on objective measures, such as non-compliance with the agreed delivery date, failure to ensure product quality and storage conditions, or when resorting to public institutions or judicial authorities due to reasons such as.

•    Causing harm to the other party by making false or misleading statements or notifications regarding the essential aspects of the business scale, products, and activities.

•    Returning agricultural and food products that can deteriorate within thirty days from the production date, except for fast-moving consumer goods specified in Article 12/C, claiming that they cannot be sold after delivery or transfer of ownership, within thirty days.

Due to the broad definition of the prohibition of "unfair commercial practices" provided in the law and detailed in the regulation, it is possible to interpret it extensively. Therefore, these changes are anticipated to have a profound impact on the relationships between producers, suppliers, and retail businesses in various aspects, whether existing or newly established.

B. New Regulations in the Trade of Agricultural and Food Products

Significant new regulations have been introduced concerning the supply of agricultural and food products:

• The first of these is the mandatory requirement, as mentioned under the heading of "unfair commercial practices," to "determine the conditions of the commercial relationship through a written contract or written means such as email, fax, or other electronic tools indicating mutual agreement."

• Another critical change pertains to payment terms. In the supply of agricultural and food products, maximum payment terms of varying nature have been stipulated based on the scale of the commercial relationship's creditor and debtor. The aim is for smaller-scale suppliers (creditors) compared to the debtor (buyer) to collect their receivables in a shorter timeframe. Accordingly, the maximum payment terms prescribed by the regulation are as follows: *

The scales of the businesses mentioned in the table can be determined in accordance with the principles specified in the Small and Medium-Sized Enterprises Regulation, which can be accessed through this link.

In this context, in order to establish the scale, the debtor party in the commercial relationship is obliged to request from the creditor and provide the Business Class and SME Qualification Certificate indicating the business scale through the “E-Devlet” platform.

In calculating the periods in the table:

• Priority will be given to the delivery date for the periods between the delivery date and the date of transfer of ownership.
• In the case of partial deliveries, the date of each delivery will be taken into account.
• If the delivery date cannot be determined, the date of issuance of the shipping document will be considered.

• Furthermore, it has been specified that the payment period for payments made by employers to organizations providing meal card services and agreed retail enterprises shall not exceed 30 days from the invoice date.

Conclusion

In case of non-compliance with the aforementioned regulations, administrative fines are envisaged for each violation at different amounts and rates. Violations can be identified through inspections conducted by the Ministry of Trade. As these changes may necessitate the modification of certain ongoing retail trade practices, it is crucial for producers, suppliers, and retail businesses to dedicate intensive efforts to comply with this legislation. This includes reviewing their practices and contracts and making necessary revisions to avoid facing the specified sanctions.

(Administrative fines to be applied in case of violation are as follows:

*An administrative fine of 20,000 Turkish Liras (applicable for the year 2024) will be imposed for each violation.

** For each day of exceeding the thirty-day limit, an amount equal to 0.5 per mil of the unpaid amount, up to thirty days, and an administrative fine equal to 1% of the unpaid amount for each day beyond the thirty-day limit will be applied, not exceeding the unpaid amount.

*** In case violations are repeated within the same calendar year, an administrative fine of double the amount of the previous administrative fine will be imposed. (Excluding proportionally applied administrative fines.)