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29/09/2021 https://www.esin.av.tr/wp-content/themes/esin/images/esin.jpg

A New Era for Retail Businesses: Unfair Price Assessment Board

Legal Alerts
Covid-19
Competition
Consumer Goods & Retail

What’s New?

The Law No. 7244 on Reducing the Effects of the Novel Coronavirus (COVID-19) Outbreak on Economic and Social Life and Amendments to Certain Laws (“Law No. 7244“) entered into force after publication in the Official Gazette dated April 17, 2020 and no. 31102. One of the measures that the Law No. 7244 takes in the fight against the COVID-19 outbreak is the establishment of the Unfair Price Assessment Board (“Board“). The Board was established as an effort to combat the unfair price increases and stockpiling practices of manufacturers, suppliers and retail businesses. The Board will monitor the market; examine undertakings; impose administrative fines; and adopt further precautions when necessary. The formation, duties, working procedures and principles, secretarial services and other issues related to the Board will be determined by future secondary regulation.

What Does the Law Mean?

Article 6 of the Law No. 4054 on the Protection of Competition (“Competition Law“) already regulates excessive or exorbitant pricing. The term “excessive pricing” has been the subject of many Competition Board decisions solely targeting undertakings that have a dominant position in the market. The Competition Law imposes a special responsibility on dominant undertakings to prevent an abuse of a dominant position by applying exorbitant prices to consumers.

The Law No. 7244 places a duty of care on all manufacturers, suppliers and retail businesses to avoid excessive prices regardless of their position in the market. This situation may result in restricting non-dominant players’ ability to dictate their sales prices, particularly with regards to the maximum price they can charge. The Law No. 7244 ordains that (i) excessive prices may be punishable by an administrative fine between ten thousand TRY and hundred thousand TRY, and (ii) conduct to create scarcity, distort competition or prevent consumers from accessing goods may be punishable by an administrative fine between fifty thousand TRY and five hundred thousand TRY.

Additionally, the legislator enacted the article regarding the establishment of the Unfair Price Assessment Board by adding an additional article to the Law No. 6585 on Regulation of Retail Trade (“Law No. 6585“). The article’s purpose and scope of the Law No. 6585 targets the procedures and principles on the launching, activities and monitoring of retail businesses. As a result, it can be stated that the Unfair Price Assessment Board will only supervise excessive price increases and hoarding practices in relation to the retail market.

Conclusion

The newly established Unfair Price Assessment Board is authorized to monitor undertakings engaged in activities that prevent the consumer from accessing goods by creating scarcities in the market, disrupting market status and free competition. The activities of the Board will only be related to producers, suppliers and undertakings in the retail market, since the founding article of the Board is added to the Law No. 6585. The Board will sanction businesses charging excessive prices or stockpiling goods that are operating in the retail market, regardless of whether the undertaking holds a dominant position in the market. As such, all players in the retail market should follow and adhere to the principles and procedures of the Unfair Price Assessment Board once these are published, since the Board has the authority to impose administrative monetary fines.

Please stay up to date with further developments through the Esin Attorney Partnership Coronavirus Helpdesk.