Short Rules on Price Reduction Campaign in Turkiye

1. What kind of price reduction campaigns are provided by law?

The Law on Protection of the Consumer no. 6502 (the "Law") does not provide for specific types of price reduction campaigns or limit them in any way; however, the Guidelines on Announcements with Price Information, and Bargain Sale Announcements and Commercial Applications ("Guidelines") mention price reduction campaigns through (i) e-commerce channels, (ii) online stores, (iii) physical stores, and (iv) sales through the seller’s website.

Please also note that deceptive or otherwise dishonest behaviours and business practices that affect relationships between suppliers and customers or among competitors are considered unfair and unlawful under Article 54 of the Turkish Commercial Code, numbered 6102.

In that regard, some generic examples of such unfair competition practices are: (i) denigrating the prices offered by others through false, misleading, or unnecessarily hurtful statements, (ii) making untrue or misleading statements about your prices or the form of sales campaigns, or putting a third party ahead of the competition through these means, (iii) unnecessarily comparing the prices offered with those offered by others, and (iv) offering selected goods, business products or activities for sale below the procurement price multiple times, emphasizing such offerings in advertising, and thereby misleading its customers about your or your competitors' capabilities.

Therefore, considering the general rules on unfair competition would be beneficial when dealing with price reduction campaigns.

2. What are the requirements and minimum content for price reduction announcements?

Price reduction announcements are regulated under the Regulation on Commercial Advertisement and Unfair Trade Practices and the Regulation on Price Labeling, in line with the Law. In addition, the Guideline sheds light on the provisions provided by the Regulation on Commercial Advertisement and Unfair Trade Practices.

Accordingly, expressions or images that may mislead consumers by causing confusion about which goods or services will be subject to the price reduction or the amount of the reduction, or that give the impression that a greater reduction will be applied than in reality, cannot be included in price reduction announcements.

Also, the price on which the reduction is applied, i.e., the previous price, should be the lowest price within the last thirty (30) days prior to the price reduction, except for goods that may easily be spoiled, such as fruit and vegetables.

Also, where the price reduction will only be applied in some stores or in some regions, this should be clearly indicated in the price reduction announcement. 

The minimum content that must be included in the price reduction announcements covers the following:

  • The previous price,
  • The first and last days of the price reduction,
  • A clear indication of any limits on the amount of goods or services that are subject to the reduced price.

Likewise, the reduced sale price and the previous price of goods or services subject to the price reduction must be indicated on tariffs and price lists and on the label in the same size.

3. Are there any limitations on the period of a price reduction campaign?

The primary legislation does not include a specific provision that places limits on the period of a price reduction campaign. However, each price reduction campaign should be organized within a reasonable period as the relevant authorities, such as the Board of Advertisement or Consumer Arbitration Committee, would evaluate every price reduction campaign on a case-by-case basis within the context of protection of the consumer. 

In addition, according to Article 11 of the Regulation on Price Labeling, the duration of sales with reduced prices due to the opening, transfer, change of business address, or field of activity of an enterprise must not exceed three (3) months, and in case of liquidation, six (6) months.

4. What must the displayed price/s include and how must the prior and the new price be indicated?

According to the Regulation on Price Labeling, both the reduced sale price and the previous price of goods or services must be indicated on tariffs, price lists, and labels at the same size. 

In addition, (i) the sale price of the goods with all taxes, (ii) the unit price of the goods, (iii) the date on which the sale price and unit price of the goods started to be applied, and (iv) if there is a deposit fee for the delivery and return of the packaging separately from the sale price of the packaged goods, it must be written on the label in Turkish.

The Regulation on Commercial Advertisement and Unfair Trade Practices imposes special requirements for advertisements containing price information. Accordingly, in advertisements containing price information;

  • It is prohibited to mislead consumers by providing incomplete or confusing information about the price;
  • The price presented to consumers in advertisements must be the total selling price of the good or service with all taxes;
  • Consumers must be informed about the amount and method of calculating any expenses arising from the delivery of the good or service that they will have to pay, if any;
  • In advertisements where installment amounts are given, the total price of the advertised good or service and the number of installments must be displayed in a readable size or audibly indicated together with the installment amount and number;
  • The time limit or stock limit on the validity of the reduced price must be clearly stated in the advertisements, if any.

5. Are there any competition law aspects of price reduction campaigns?

Competition law concerns may arise if the price reduction campaigns may be regarded as a price-fixing or any other type of agreement or concerted practice between undertakings in line with the Law on the Protection of Competition Numbered 4054.

In addition, the Turkish Competition Authority may assess the price reduction campaigns within the context of rebate systems, i.e., the discounts in price offered to customers in return for them engaging in a certain purchasing behavior. In this regard, the Turkish Competition Authority puts emphasis on whether price reduction campaigns restrict competition or not.

According to the Turkish Competition Authority's approach, the rebate systems are likely to have an exclusionary effect when the competitors do not have a similar product range to the competitor in the dominant position. In such cases, the Turkish Competition Authority evaluates in particular (i) whether package discount practices turn into predatory pricing practices by lowering unit prices below costs, and (ii) if a company in a dominant position has any reasonable economic or commercial motive for package rebate.

6. Are there any fines for infringing pricing rules?

If the rules regarding advertisements on discounted sale prices are violated, sellers, advertising agencies, and media organizations may be forced to suspend/correct the advertisement, to pay administrative fines, or to suspend their activities. According to the state-run news agency, the Advertising Board imposed administrative fines that amounted to two (2) million Turkish liras in 2021 on 142 different files, which is double the amount they imposed in 2020. So, it is not difficult to see that the Advertising Board is paying more and more attention to this issue every year. 

In addition, the Consumer Arbitration Committees and other relevant units of the Ministry of Trade may impose fines for violating pricing rules, whereas the Turkish Competition Authority may impose fines if such violations also violate competition rules.

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Istanbul
Iremgül Mansur