Law No. 6563 on the Regulation of Electronic Commerce ("Law") and its secondary regulation, the 10th Chamber of the Council of State issued a stay of execution last year and filed an application to the Constitutional Court ("Constitutional Court") on the grounds that (i) the scope of trade secrets would be harmed due to the audit clause and (ii) the authority granted to the Ministry of Trade regarding experts was not demarcated, and (iii) there was a lack of assurance.
In the application subject to the decision of the Constitutional Court published in the Official Gazette dated May 20, 2024 and numbered 32551; the expression "...at least twenty-five percent of the shares or..." in subparagraph (j) added to Article 2 of the Law by Article 2 of the Law No. 7416 dated 1/7/2022, the first sentence of paragraph (2) added to Article 11 by Article 5 of the Law No. 7416, the expression "...to determine by regulation the procedures and principles regarding the rights and obligations of the expert and the appointment of the expert..." in the first sentence of paragraph (1) of additional Article 1 added by Article 7 of the Law No. 7416. ...to determine the rights and obligations of the expert and the procedures and principles regarding the appointment of the expert by regulation...", the second sentence of paragraph (1) of the additional Article 1 added by Article 7 of Law No. 7416, and paragraph (3) of the additional Article 4 added by Article 10 of Law No. 7416, are contrary to Articles 2, 7, 13, 35 and 48 of the Constitution.
The phrase "...at least twenty-five percent of the shares or..." in Paragraph (j) added to Article 2 of the Law by Article 2 of Law No. 7416 was examined by the Constitutional Court.
- It was argued that the criterion of holding at least twenty-five percent of the shares in determining the state of economic integrity does not give the shareholder a decisive role in the management of the company and that this situation disproportionately restricts the freedom of enterprise. It was stated that the criterion of economic integrity is disproportionate to prevent cartelization and monopolization in the electronic commerce market.
- Article 48 of the Constitution guarantees the freedom of work and enterprise. The restrictions and obligations imposed on electronic commerce intermediary service providers limit the freedom of enterprise.
- In order for restrictions to comply with the Constitution, they must be made by law, be specific and foreseeable, and observe a reasonable balance between public and private interest.
- Article 167 of the Constitution stipulates that the state shall ensure the healthy and orderly functioning of goods and services markets and prevent monopolization. Regulations introduced to prevent electronic commerce intermediary service providers from abusing their economic power are considered legitimate.
- The Constitutional Court concluded that the restriction of the activities of the electronic commerce intermediary service providers with whom the electronic commerce intermediary service providers are in economic integrity imposes a reasonable restriction on the freedom of undertaking and a balance is observed between public interest and personal interest and decided that the relevant article is not contrary to Articles 13, 48 and 167 of the Constitution and the annulment request was rejected.
The First Sentence of Paragraph (2) Added to Article 11 of the Law by Article 5 of Law No. 7416 was examined by the Constitutional Court.
- It was argued that the Ministry of Trade's failure to provide a general framework and objective criteria when determining the rights and obligations of experts is contrary to the principles of legal certainty and predictability, that objective criteria are not set forth in determining who the experts will be and their rights and obligations, and that this situation is contrary to the principle of inalienability of legislative power, and that the right to property is violated as there are no guarantees regarding the protection of software and algorithms of electronic commerce service providers that can be considered as trade secrets.
- The basic principles and principles regarding the authority of the Ministry to appoint experts are determined by law. Therefore, it is concluded that the rule is not contrary to the principles of inalienability of legislative power and legal certainty.
- It is decided that the article of the law is not contrary to Articles 2 and 7 of the Constitution and the request for annulment is rejected.
Paragraph (3) of the Additional Article 4 of the Law added by Article 10 of the Law No. 7416 was examined by the Constitutional Court.
- Electronic commerce intermediary service providers must obtain and renew a license from the Ministry of Trade in order to continue their activities if the net transaction volume exceeds TRY 10 billion and the number of transactions exceeds 100,000 within a calendar year. The application for obtaining a license must be made in the calendar year following the date on which the specified thresholds are exceeded, and the license renewal application must be made in March of each year as long as the thresholds are exceeded.
- In this context, it has been argued that the obligation to obtain and renew licenses imposed on electronic commerce intermediary service providers constitutes a disproportionate interference with their activities.
- It was stated that due to the high license fees, electronic commerce intermediary service providers may have to pay a large portion of their commission income and that this situation violates the right to property and freedom of enterprise.
- It was argued that the rule was not necessary to prevent unfair competition; on the contrary, it led to unfair competition.
You can access the relevant decision of the Constitutional Court from this link. (Only available in Turkish)
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