The organized retail sector is one of the largest sectors in Turkey with an annual business volume of $80 billion, 100,000 stores and a direct employment capacity of 1.5 million people. These are the sales and service areas frequented by most of the Turkish population to meet their daily needs and demands.
In particular, retail e-commerce, among commercial transactions carried out on the Internet, has achieved a significant growth rate with the potential it has in the world and in our country. Removing time and place restrictions from purchases and creating momentum in transactions is increasing customer attraction day by day.
Due to the Covid-19 pandemic, which emerged in China in early 2020 and spread rapidly around the world, the closure of physical stores and markets in many countries and the urging of consumers to stay at home they have had a significant impact on retail. e-commerce. Meanwhile, many consumers have started to use the e-commerce method for the first time to meet their mandatory needs (for example, elderly consumers and those who live in small towns), and most suppliers have either took place for the first time or invested more in e-commerce.
The organized retail and e-commerce sectors are trying to keep up with all these developments on the one hand, and on the other hand they are trying to comply with the legislations issued by regulatory authorities to protect consumers.
Reflecting the objective of consumer protection, EU Directive 2019/2061 on the implementation and modernization of consumer protection regulation was published on July 7, 2021. The directive is also known as of the “Omnibus Directive”, and it amends four different European directives, including Directive 98/6/EC on consumer protection in the indication of the prices of products offered to consumers (Price Labeling Directive).
According to the Price Labeling Directive, member states of the European Union are required to transpose it into their national legislation until November 28, 2021. The Price Labeling Directive brings important changes to protect and inform the consumer, in particular with regard to advertisements for sale at reduced prices and the determination of the reduced price.
Due to its close trade relations with the European Union, Turkey has chosen to harmonize its national legislation with the Price Label Directive.
In this context, the Turkish Ministry of Commerce implemented the Commercial Advertising and Unfair Commercial Practices Regulations (Regulations) on March 1, 2022.
The settlement amended existing regulations on personalized pricing, discount sale advertising, customer feedback and certain examples of unfair trade practices. It is understood that one of the main purposes of all these important amendments is to protect consumers, especially in the area of e-commerce, which has gained serious momentum with the Covid-19 pandemic.
The new rules on advertising discount sales introduced by the regulation are the ones most in need of explanation for proper implementation.
Price advertising is one of the most preferred and effective advertising. All businesses will be delighted to reach more customers by effectively using price advertising. However, at this stage, the retail sector in particular has raised concerns about the ambiguity of some new rules which may also cause problems for practitioners. On the other hand, as the regulations entered into force shortly after their publication, the retail sector did not have enough time to assimilate the changes and comply with them. Consequently, it has become more important for legal practitioners to find answers to the most controversial provisions of the regulations.
Article 14(3) of the regulation on the advertising of discounted sales and the determination of the discounted sale price is amended as follows:
‘Sale price reduced
Discount sale announcements
Section 14 (3):
In determining the selling price of a good or service before the application of the discount, the lowest price applied in the thirty days preceding the discount is taken into consideration. When calculating the discount amount or rate in advertisements for perishable goods such as fruits and vegetables, the price just before the discounted price is taken as the basis. The burden of proof regarding these matters rests with the advertiser.
Obviously, the amendment of Article 14(3) has raised many questions from the retail sector and retail chains regarding the interpretation of the scope of the provision.
Some examples of such issues are whether it would be against the rules to directly share pricing information without mentioning the pre-discount price or whether statements such as “constantly cheap” or “crazy price” etc. are contrary to the regulations or if the discounts provided for customer loyalty cards are within the scope of the regulations etc.
Hundreds of questions arose in terms of new products being offered for sale and whether the manufacturer’s recommended retail price information would be against regulations.
Considering the retail sector’s urgent need for a clear interpretation of the new provisions, we have identified some areas where the regulation will at least not be applied, and have developed responses and comments in line with international practice.
As a result:
Advertisements about the reduced price without mentioning the price before the discount fall outside the scope of Article 14(3).
As the regulation regulates the situation where the previous sale price and the reduced sale price are included in advertisements at the same time for advertising purposes only. In this case, it will not be a problem to share only the current price information of the product in the advertisements. Likewise, expressions such as “constantly cheap”, “crazy price”, etc. are also appropriate as long as there is no previous price to compare.
It is possible to have the same interpretation for discounts on loyalty cards. Personalized discounts made through loyalty cards are in compliance with the policy as long as they are not included in any advertising.
The regulation does not apply to new products offered for sale.
Since the regulations target advertisements on the previous sale price of products, it is considered that the company may be able to advertise on the previous sale price of seasonal or first-launched products. Therefore, advertising of the manufacturer’s or supplier’s recommended retail price was considered to be in compliance with the regulations. In this regard, companies are only required to pay attention to the unfair competition provisions of the Turkish Commercial Code.
Ads such as “buy 1 get 1 free OR buy 3 pay 2” are not in scope.
As noted above, advertisements referencing past pricing information are subject to the settlement. Therefore, sales promotion campaigns in which no discount is granted on the price, instead two or more products are offered to customers at the same price, do not fall within the scope of the Regulation.
Clearly, the retail sector and e-commerce businesses will continue to struggle to comply with the regulations and find answers to their questions.
More recently, the Turkish Ministry of Commerce prepared a draft guideline on the implementation of the regulation to address existing questions and compliance issues. Although the draft guidelines provide satisfactory answers to many questions, many areas still require clarification.
The Turkish Ministry of Commerce and the organized retail sector are working together to optimize the draft guidelines to address current issues.