The rapid growth of the shopping mall sector in Turkey in recent years without detailed regulation has lead to an ever expanding legal gap. With this in mind, on 14 January 2015, the Draft Law on the Regulation of Retail Trade (the “Draft Law”) was passed by the Turkish Parliament and is expected to be enacted within a short time period. The main novelties introduced by the Draft Law, which regulates the opening, activities and audit of retail businesses, mainly shopping malls, department stores and chain stores (“Retail Businesses”) are highlighted below:
- Working Hours: One of the most contentious issues surrounding the Draft Law, the working hours of certain or all Retail Businesses, may be determined by the relevant governor, pursuant to obtaining the opinions of the relevant municipality, chamber of commerce and other craftspeople’s associations. In the event of working hours being restricted, the failure by a shopping mall to abide by these hours shall result in the imposition of an administrative fine of TRY 50,000. There were speculations in the Turkish press (which were also supported by an earlier version of the Draft Law) that this provision could be used to close down shopping malls on Sundays. However, the Minister of Customs and Trade has since made an announcement that this is not the aim of the provision and there are no such plans.
- Common Areas: Pursuant to the Draft Law, every shopping mall must have common areas such as emergency medical response units, places of worship and child play areas. The details of these requirements will be regulated under the secondary legislation to be issued by the Ministry of Customs and Trade (the “Ministry”). Non-compliance shall result in an initial administrative fine of TRY 50,000 per breach, which would be doubled if the non-compliance has not been cured within the grace period granted by the Ministry. For existing shopping malls, these common areas must become operational within 1 year from the date the Draft Law enters into effect.
- Areas for Social and Cultural Activities: A further specification is that an area equal to 5 per thousand of the shopping space must be reserved for social and cultural activities. Failure to comply with this provision shall result in the imposition of an administrative fine of TRY 20,000 per breaching square metre, which would be doubled if the non-compliance has not been cured within the grace period granted by the Ministry.
- Allocation of Space for Craftspeople: Shopping malls must lease at least 5% of the total shopping area to craftspeople. Rent shall be at the market value. Shopping malls must also lease at least 3 per thousand of the total shopping area to those engaging in traditional crafts having a cultural or artistic value which are under risk of extinction. The rent shall be no more than a quarter of the market value. In the event of not abiding by these provisions, an administrative fine for each square meter not so leased may be imposed to be equal to the market value of the corresponding leasehold. Existing shopping malls must grant priority to craftspeople until the thresholds of the Draft Law are met whilst renting existing or future vacant spaces. Chain and department stores must allocate at least 1% of shelf space for the sale of local goods produced in the province in which the store is located. Failure to comply shall result in a fine of TL 20,000 per store.
- Regulation of Outlet Stores: The Draft Law has set forth that outlet stores must display this attribute on the façade of the store. However, in order for shopping malls to be able to display such sign, at least 70% of stores within the shopping mall must be outlet stores. If this requirement is not met by the date the Draft Law enters into effect, the shopping malls will have 2 years to ensure compliance.
- Establishment of a Retail Information System: The Draft Law foresees the establishment of a Retail Information System (“PERBIS”) in order to form a database on Retail Businesses and for all applications of these businesses to be made on a centralised system. Within this scope, applications for workplace opening and operation permits shall be made and submitted to all relevant institutions on PERBIS. Successful applicants shall be granted such permits through PERBIS. Construction and occupancy permits will continue to be issued at the municipality level.
[1] The definition of “shopping space” under the Draft Law refers to the aggregate area of all workplaces in a shopping mall, except for those used solely as bureaus or production, storage, accommodation or common areas.
