Regulation of Retail Trade
The Law on Regulation of Retail Trade numbered 6585 as published on 14.01.2015. Secondary legislation such as the Regulation on Shopping Malls, Regulation on Retailers Council and the Regulation on Principles and Rules Applicable to Retail Trade were also introduced.
The mentioned law aims to facilitate the opening and operation of retail businesses, performing retail trade according to the conditions of effective and sustainable competition in a free market environment, consumer protection, ensuring balanced growth and development of retail businesses and regulation of the activities of retail businesses and their relations with each other, manufacturers and suppliers.
With the application of the Law, definitions of Shopping Malls, Department Stores, Dealers, Craftsman’s Enterprises and Special Authorized Businesses, Store Branded Products, Retail Information System “PERBIS” are introduced.
The first amendment introduced with the mentioned Law is the Retail Information System “PERBIS” established by the Ministry in order to carry out the necessary applications and other procedures for the opening, operations, and closing of retail businesses, notifying the relevant institutions and organizations, evaluation, finalization and to create a database on these enterprises. Public information included in PERBİS and the code of practice shall be determined by the regulation to be issued.
The business and work permits for retail businesses under this law are also found in this Law through the PERBIS system.
One of the biggest regulations introduced by the Law is the regulations regarding claims on premium and costs. Department stores, chain stores, dealers and special authorized businesses cannot request premiums and costs which do not directly affect the product’s demand from the producer or suppliers for the establishment and renovation of a shop, turnover deficit, contribution fees for banks and credit cards or similar reasons. The mentioned retail businesses cannot request premium or costs from the producer or supplier for services on advertisement, announcement or shelf space allocation if the type or quantity is not determined in the contract for claims on premium and cost directly affecting the demand of the product subject to sale. The premium or cost request is limited to the contract period and the product subject to the premium or cost request is offered for sale on the shelf during the contract period.
It is seen that retail companies request premiums and other similar costs from producers and suppliers while they do not purchase the goods of producers and suppliers who refuse to pay. Although this is not completely prohibited by law, it is noted that certain conditions were introduced. This issue also damages the competition to the detriment of the consumer as it is seen that producers and suppliers who are not able to cover the claim premium won’t be able to survive. Because premium demands are necessarily reflected as an increase in the prices of the products.
Regulation on Principles and Rules Applicable to Retail Trade also includes a similar regulation with the Law. Accordingly, department stores, chain stores, dealers and special authorized businesses can request premiums and costs such as activity bonus and advertisement, magazine, announcement, shelf allocation, prioritized allocation and point of purchase costs for services such as marketing and product placement that directly effects the demand of the product, provided that type and ratio of the premium and cost and duration and/or amount of the service is indicated in the contract made with the producer or supplier and the service is provided in the indicated duration and/or amount. However, these retail businesses cannot request premiums and costs that do not directly affect the product’s demand from the producer or suppliers for the establishment and renovation of a shop, turnover deficit, contribution fees for banks and credit cards or similar reasons. A shelf allocation service is accepted if the goods subject to requests on premium or cost are offered for sale in the pallet, basket, stand and other display units of the retail enterprise,
Determining the duration and amount of provided services that are not included in the Law and the condition to provide such services for the indicated duration and/or amount is required with the Regulation. No expense regardless of its name and qualification, which does not directly affect the product demand, can be claimed. However the expenses that directly affect the product demand are not defined neither in the Law nor the Regulation.
The Law also regulates the payment periods in accordance with Article 1530 of the Turkish Commercial Code. Accordingly; payments resulting from the purchase and sale transactions between producers or suppliers and retail businesses are made on the date stipulated in the contract. The payment period for fast moving consumer goods whose shelf life is limited to 30 days; cannot exceed 30 days following the delivery of the goods provided that the creditor producer or suppliers is small enterprise and the debtor is a large scale enterprise. The provisions of Article 1530 of the Turkish Commercial Code will be applied for matters not regulated in this law. Interest, default and payment periods are specially regulated with the mentioned article.
Payment periods are also regulated in the Regulation on Principles and Rules to be applied to Retail Trade. The payment periods for fast moving consumer goods with a 30 day shelf life that may cause a threat to human health, cannot exceed thirty days from the delivery date if the creditor producer or supplier is a small enterprise and the debtor is a large scale enterprise. The stated fixed term is also valid for payments with an installment plan. Changes in the scale of the enterprises for parties during the contract period will also be taken into consideration. The payment periods shall be calculated separately for each delivery, if the fast moving consumer goods with a shelf life of 30 days are delivered piece by piece. In cases where the delivery date cannot be determined, the date of the shipment waybill will be accepted as the delivery date.
The law has introduced the definition of store branded products and principles regarding their sales. Accordingly, the name, title or brand of the retailer, also the name, title or brand of the producer shall be clearly and properly printed on the product and/or packaging of store branded products that are fast moving consumer goods produced locally.
Regulation on Principles and Rules Applicable to Retail Trade also regulates store branded products. The name, title or brand of the retailer, including the name, title or brand of the supplier, are printed on the packaging and/or on the store branded product that is a fast moving consumer good produced domestically in accordance with the Law. Also the department store or chain store which the good is produced for is indicated on the packaging and/or on the product. The producers name, title or brand on the packaging and/or on the store branded product is printed with the same font as the store brand, 25% of the size and in brackets, in an appropriate and readable style. Numbers, letters, words, signs and symbols related to the producers name, title or brand are used in-full, readable, unchanged and clearly.
The Law also regulates sales and shopping festivals. Retailers can organize discounts or promotional sales campaigns in accordance with the procedures and principles stipulated in the Consumer Protection Law No. 6502 and relevant laws. However the duration of the campaign shall not exceed three (3) months in case of business openings, transfers, closings, changes in address or operations, and six (6) months in the event of liquidation according to the provisions of the Turkish Commercial Code. Retailers shall not organize discounts without a predetmined start and end date.
According to Regulation on Principles and Rules to be applied to Retail Trade, discount or promotional sales campaigns by Retailers are made to for certain periods and for purposes such as promoting a product, brand or business, encouraging product purchases and increasing sales or strengthening the image of the business or brand, including the same goods or services at a lower price offered by retail businesses, more goods or services at the same price, and additional goods or services at a free or reduced price.
In case of transfer and closing of the business and changes in address and activity, the start date of the campaign is notified to the provincial directorate.
The duration of the discount or promotional sales campaigns shall not exceed three (3) months in case of business openings, transfers, closings, changes in address or activities, and six (6) months in the event of liquidation according to the provisions of the Turkish Commercial Code No. 6102. While calculating these time periods; the date of the business license for the opening date of the business, the liquidation date in the case of liquidation, the starting date of the campaign for business transfers, closings and changes to the address or operations are taken into account.
Retail businesses shall not organize discounts without a predetermined starting or end date. Posters, banners and similar tools, excluding price tags, announcing discounts and promotional sales shall include the start and end dates that are easily seen and read. Online announcements shall include the start and end dates of the campaign.
Local Administrations and public professional organizations and affiliate companies and other legal entities; can organize provincial, regional or national shopping festivals in certain periods of the year, together or separately, with the collaboration of retail business. The amount of fund allocated by public professional organizations for these festivals cannot exceed five percent of their budgets. The start and end dates, and festival program and area are notified to Ministry
Pursuant to Regulation on Principles and Rules to be applied to Retail Trade, the start and end date of the Shopping Festival and festival program, are notified, at least one month before and in written form to the provincial directorate if the festival is organized in the district or on a provincial level, or the Ministry if it’s organized on a regional or national level. The shopping festival shall not exceed sixty days within one year. The festival event calendar, the district, province, region and/or national application area, budget, the business name and/or commercial title, contact information including the address, phone number of the participants, the internet address of the publicity and contact information of the legal entities organizing the festival shall be included in the festival program.
According to the Law continuous discount sales are; the sales of clearance, end of season, surplus, defective and similar goods by retailers at a discounted price or ex-factory price throughout the year. Signs that showing or indicating the sales will be placed in a location that is easily readable on the front and in the stores of retail businesses that are involved in continuous discount sales.
In order for shopping malls to use these signs, all retail businesses located in the shopping mall shall operate within the scope of continuous discount sales. All goods for sale shall operate within the scope of 75% discount sale in order for retailers, including those located in the shopping mall, to use these signs. Parallel regulations are included in article 18 of the Regulation on Shopping Malls. Accordingly, the use of signs that show or indicate the type of continuous discount sales by the shopping mall depends on the fact that each of the retail businesses are engaged in continuous discount sales. Shopping malls shall place signs that are easy to read and see on the front of the mall. Retailers such as restaurants, cinemas, barbers and shops providing services on eating, recreation, culture etc. and other retailers that are unsuitable for continuous discount sale are not taken into consideration on this matter. The shopping center owner and management are jointly responsible for the proper use of signs that show or indicate the type of discount sale by the shopping center.
Goods subject to continuous discount sales are defined according to the Regulation on Principles and Rules to be applied to Retail Trade. Continuous discount sales are applied to;
a) Goods having scarcity on stock amount in the series due to reasons like halt of production and limited production,
b) Goods that were produced for being sold in a certain season or period of time, being subject to sale either close to end of the related season or period or after end of the related season or period,
c) Goods being produced with the aim of export, however, cannot be exported due to various reasons
d) Goods having substantive, economic or legal defects regarding to goods’ shape, color, size and similar qualities,
e) Goods used for display,
f) Goods which were returned,
g) Goods that are put on sale with ex-factory cost and goods carrying similar qualities.
Signs showing and indicating continuous sales shall be used by the retailer if at least 70% of each product group offered for sale carries the mentioned qualities. These signs shall be placed in the entrance or the front of the floor or aisle allocated for continuous discount sales in the store and the front of the retail business in a location that is easy to read and see.
Retail businesses that operate periodically throughout the year and have goods, 70% of which carry the mentioned qualities, offered for sale during this period are considered have made sales throughout the year.
The burden of proof; that 70% of goods in each product group carry the mentioned qualities and that the goods subject to continuous sale are offered at a discounted price or the goods are offered for sale at the ex-factory price, lies with the retailer engaged in continuous discount sales.
The area corresponding to at least five per thousand of the sales area must be reserved for the purpose of organizing social and cultural events in shopping malls. The Ministry is authorized to increase this rate one fold or to decrease it by half.
Common use areas such as emergency medical intervention unit, prayer room, infant care room, children’s playground and other common areas are created in shopping malls by taking into consideration the needs of the disabled and elderly and children. Pursuant to the Regulation on Shopping Malls, the owner of the shopping mall is responsible for the creation of Common use areas according to this Regulation and the relevant standards of the Turkish Standards Institute, while the shopping mall owner and management are jointly responsible for the appropriate use, taking security measures against possible accidents in these areas and in fulfilling other obligations regarding these areas. The regulation also includes provisions on the ratio of the area for social and cultural events and the announcement of these events. Also regulation on emergency medical intervention unit, personnel, infant care room and children’s playground, prayer room, recreation areas, WC’s are introduced. Regulations have also been made to share the common expenses not related to the shopping center between the owners and tenants.
Article 4 of the Regulation on Shopping Malls determines the qualities of the Shopping Mall. Also the project and licensing of shopping malls have been regulated. The amendment enabled the use of the occupancy permit granted to the shopping mall in accordance with this Regulation as the business license in the application of the Law.
The allocation of space and shelves in shopping centers has also been included in the Law to regulate competition in terms of the consumer. Five percent of the total sales are leased to artisans and tradesmen over the current market value in shopping malls. If there is no sufficient demand by artisans and tradesmen or empty areas are not full within 20 days of the announcement, such spaces can be leased to other requesting parties.
At least three per thousand of the total sales area in shopping malls is allocated to be rented out to those who are practicing professions that are endangered with cultural or artistic value. The rental value of these places shall not be more than a quarter of the current market value. The professions in question are determined and announced by the Ministry by taking the opinion of the relevant professional organization. Also a quota is determined in the Law for local goods and goods with a geographical indication. According to the Regulation on Shopping Malls, the owner and management of the shopping mall are jointly responsible for the implementation of the allocation rates.
Shelf allocation has also been included in the Regulation on Principles and Rules to be applied to Retail Trade. Accordingly, department stores and chain stores, dealers and special authorized businesses engaged in the sales of fast moving consumer goods, shall allocate at least 1% of their shelf area located in their sales areas for the sale of local products indicated in the Law and Regulation. Shelf allocation is not mandatory for local products that are not suitable for the variety of products that the retailer can offer for sale within the scope of its main business. If the local products are positioned in stands and similar units in the sales area, the obligation of shelf allocation shall be determined as met.
Shelf allocation is made upon written application to the retailer by the local producer and supplier. If the applications made by the producer or supplier are rejected due to valid reasons or if the goods are not a local products the shelf areas can be used for the sales of other goods. The burden of proof regarding the application belongs to the producer and the supplier. The sales area of dealer and special authorized businesses shall be calculated as the sales area of department stores and chain stores.
Video surveillance is mandatory excluding WC’s and infant care rooms in the mentioned regulation. These records shall be kept for at least 30 days. The management of the shopping mall is responsible for the storage of such records.
Administrative fines a result of an audit in the Regulation are implemented in accordance with the Law. An administrative fine of 2,000 Turkish Lira shall be imposed to those who do not comply with the measures and secondary regulations made by the Ministry within the framework of the law and those who do not provide the accounts, documents and other records required by the authorized auditor or provide insufficient information or those who prevent auditors from performing their duties.
The working hours of retail businesses are determined by the governor by taking the opinion of the authorized body upon the joint proposal of professional organizations by taking into account the occupation, season and tourism-specific conditions and similar conditions. In determining the working hours of tradesmen and craftsmen enterprises, the opinion of the relevant tradesmen and craftsmen is taken by the professional institution. The Ministry is authorized to determine the working hours of the retailers on regional and national scale depending on the field of activity upon joint request of the upper professional organizations. A fixed regulation is not in place regarding the working hours. Details were included regarding the regulation within the Regulation on Principles and Rules to be applied to Retail Trade, while it changes depending on the region, conditions and the decision of the relevant authority for each district and region.
The Retailers Council was established in coordination with the Ministry in order to enable mutual exchange of information and opinions to ensure that retail trade is carried out in accordance with the purpose of this Law, contributing to the creation of policies towards the sector, determining problems and measures to be taken and to enable cooperation between the relevant institutions and organizations. The relevant regulation was enacted on 19.07.2019.
The Law also mentions the establishment of Supply and Distribution Cooperatives.
The law also regulates the issue of audits. The ministry and the competent authorities are authorized to carry out audits with the retail businesses regarding the application of this law, the problems and complaints in practice. A related regulation has not been issued and principles have been determined in the Regulation on Principles and Rules Applicable to Retail Trade.
It is seen that the penal sanctions are also regulated for failing to comply with the Law. Accordingly, if a heavier penalty is not necessary according to other laws;
a) In case of an action in violation with the regulation on claims on premiums and costs of this law, in the amount of the unfairly received premiums and costs for each violation in the store or branch,
b) an in case of failure to comply with the stipulated obligations of this Law for store branded products, to large stores and chain stores, an administrative fine of 10,000 Turkish Lira for each product group in each store or branch,
c) a 5000 Turkish Lira fine for failing to comply with the obligations regarding discount and promotional sales periods and continuous discount sales,
ç) in cases where the areas that are required for social and cultural events in shopping malls in accordance with the Law are not allocated or not sufficiently provided, a 20,000 Turkish Lira fine is imposed for each square meter not allocated from the required area, or twice the amount if it’s not resolved within the timeframe of at least thirty days provided by the Ministry,
d) in the event that common use areas such as immediate medical response unit, prayer room, infant care room, children’s playground are not created, a 50,000 Turkish Lira fine for each violation, or twice the amount if it’s not resolved within the timeframe of at least thirty days provided by the Ministry,
e) also, if areas to be reserved for artisans and craftsmen and for those carrying out endangered profession with an cultural or artistic value are not reserved in the shopping mall and for shopping malls failing to comply, in the current value for each square meter not allocated from the required area, or twice the amount if it is not resolved within the timeframe of at least thirty days provided by the Ministry,
f) and 20,000 Turkish Lira fine for each store or branch if areas for products with geographical indication and local products are not allocated according to this Law, or twice the amount if it is not resolved within the timeframe of at least thirty days provided by the Ministry,
g) 1,000 Turkish Lira fine for those failing to comply with the working hours determined in the Law,
ğ) 3,000 Turkish Lira fine for those failing to comply with the rules and regulations regarding commercial activities such as the purchase and sales of immovable and secondhand vehicles,
h) and 2,000 Turkish Lira fine shall be imposed for those failing to comply with the measure and secondary regulations made by the Ministry per Law, and those failing to provide accounts, document and other records requested by the authorized audio or those providing insufficient information or those who prevent the auditors from performing their duties.
Such penalties are equally imposed on department stores, chain stores, branch and special authorized businesses. If the actions leading to administrative fines are repeated within the calendar year, an administrative fine twice the amount is impose for each repetition. The fines in question were also repeated in the first paragraph of Article 11 and were repeated with reference to the article in which the fines were regulated.
It should be noted that the provisions of Law No. 394 on Weekend Holiday do not apply to retail businesses.