Hepsiburada provides an update on recent regulatory changes in Turkey

ISTANBUL, July 14, 2022 /PRNewswire/ — D-MARKET Electronic Services & Trading (d/b/a “Hepsiburada”) (NASDAQ: HEPS), a leading Turkish e-commerce platform (hereinafter referred to as “Hepsiburada” or the “Company”) ), informs the market of recent regulatory changes in Turkey.

In its most recent Annual Report on Form 20-F (“Form 20-F”) filed with the United States Securities and Exchange Commission on May 2, 2022, the Company has informed its shareholders of the potential changes to the Electronic Commerce Law and the expected impact that the approval of these changes could have on the activities of Hepsiburada and on the industry as a whole. See risk factor “Regulation of the Internet and e-commerce in Turkey is recent and subject to further developmenton page 38 of Form 20-F. July 1, 2022, the Turkish Parliament has approved an amendment to the Electronic Commerce Regulation Law (Law No. 6563) (as amended, the “Electronic Commerce Law”) with the aim of preventing unfair competition, a harmful competitive environment and monopolistic business practices in the Turkish e-commerce market. The changes were ratified by the President and announced in the Official Journal on July 7, 2022available at https://www.resmigazete.gov.tr/07.07.2022.

Hepsiburada believes that the e-commerce law is an important step for the Turkish e-commerce industry aimed at facilitating a more transparent, healthy and fair e-commerce market as well as preventing the formation of dominant positions in this market.

Provisions of the Amendments include, but are not limited to:

  • limits on the total amount of advertising and marketing spend and discounts given to customers in an effort to prevent e-commerce platforms from gaining asymmetric market share through excessive discounts and excessive marketing using disproportionate economic power. This provision comes into force on January 1, 2023;
  • restrictions imposed on e-commerce businesses whose annual net transaction value (as defined in the e-commerce law) exceeds a certain threshold (set initially and indicatively at TRY 60 billion for the year 2022, which is subject to annual adjustment based on the aggregate Net Transaction Value generated in the Turkish e-commerce market during the previous calendar year) by engaging in certain business operations, such as payments and financial services. The restrictions also limit specified referral activities within its platform and the provision of last-mile delivery services to third parties. This provision comes into force on January 1, 2024;
  • prohibit the sale of private label products for all e-commerce businesses. This provision comes into force January 1, 2024; and
  • a new obligation for e-commerce companies operating in Turkey Obtain and annually renew an e-commerce license upon payment of a fee if such businesses exceed certain net transaction value and annual order volume thresholds defined in the e-commerce law. Effective license fees will be calculated based on a tiered rate of the net transaction value of an insider spin-off Turkey for the previous calendar year, so that the effective license fee applied would be the sum of progressively higher proportions of the net transaction value of the e-commerce enterprise exceeding the thresholds specified in the e-commerce law. The applicable marginal rates range from 0.03% of the annual net transaction value on the portion of the net transaction value between the lower thresholds (initially set at indicative thresholds of TRY 10 billion and TRY 20 billion for 2022 ) to 25% of the annual net transaction value on the part of the net transaction value above the higher threshold (initially set at an indicative threshold of TRY 65 billion for 2022). This provision comes into force January 1, 2025.

In addition to the new provisions summarized above, the amendments have redesigned commercial terms in commercial agreements with merchants, access and portability of merchant data, use of data obtained from customers and merchants, terms of payment to merchants as and when these payments will be made in full within five working days from the date of receipt of the order by the buyer as well as the amounts of the penalties for non-compliance with a view to prevent unfair commercial practices. These provisions come into force January 1, 2023. The new amendments also introduced an annual reporting requirement to monitor companies’ compliance with the amended provisions of the Electronic Commerce Act.

Hepsiburada is currently evaluating the operational and financial impact that the implementation of these new changes will have on the Company. However, based on Hepsiburada’s initial review of e-commerce law, the Company anticipates that these changes will create a more favorable operating environment over time, through, among other things, standardization of marketing expenses and customer discounts. Additionally, Hepsiburada does not expect the new changes to restrict its core strategic initiatives such as payments, financial services and last mile delivery services. Hepsiburada is confident that it is well placed to benefit from potential changes in market dynamics as a result of this legislation which should ensure a level playing field.

About Hepsiburada

Hepsiburada is a leading e-commerce technology platform in Turkey, combining a globally proven e-commerce business model with a unique “super app” to meet the daily needs of our customers and help improve people’s daily lives. Customers can access a wide range of products and services, including same-day delivery of groceries and essentials, products from international merchants, airline tickets and payment services through our integrated digital wallet , Hepsipay. As at the end of March 2022we had seamlessly connected 44.2 million members and 82.9 thousand active merchants.

Founded in Istanbul in 2000, Hepsiburada was built to lead the digitization of commerce in Turkey. As a women-founded organization, we are committed to taking meaningful action to empower women. Through our Technology Empowerment for Women Entrepreneurs program, we have reached over 32,000 women entrepreneurs across Turkey nowadays.

Forward-looking statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding (a) the expected timetable for the implementation of changes to the Electronic Commerce Act; (b) the Company’s expectations regarding its current and future net transaction values ​​and associated thresholds under electronic commerce law; (c) the potential impact of the Electronic Commerce Act on the competitive landscape of the electronic commerce industry in which the Company operates; and (d) Company’s anticipated liability for license fees. These forward-looking statements can be identified by words such as “may”, “could”, “will”, “expect”, “anticipate”, “aim”, “future”, “intend”, “expects”, “believes”, “estimates”, “objectives”, “likely”, “forecasts” and similar statements.

These forward-looking statements are based on management’s current expectations. However, it is not possible for our management to predict all risks, nor to assess the impact of all factors on our business or the extent to which any one factor, or combination of factors, may cause actual results will differ materially from those contained in any forward-looking statements we may make. These statements are not promises or guarantees, but involve known and unknown risks, uncertainties and other important factors and circumstances that may cause Hepsiburada’s actual results, performance or achievements to be materially different from its expectations expressed or implied by forward-looking statements, including other changes in Hepsiburada’s business or legislative or regulatory developments. We therefore caution you not to rely on these forward-looking statements, and we qualify all of our forward-looking statements with these cautionary statements. For a discussion of additional factors that may affect the outcome of these forward-looking statements, see our 2021 Annual Report filed with the United States Securities and Exchange Commission (“SEC”) on Form 20-F (File No. 001- 40553), and in particular the “Risk Factors” section, as well as other documents filed with or provided to the SEC by the Company from time to time. Copies of these filings are available online from the SEC at www.sec.gov or in the SEC Filings section of our Investor Relations website at https://investors.hepsiburada.com. These forward-looking statements represent management’s estimates as of the date of this press release. These forward-looking statements should not be taken to represent the views of the Company as of any date subsequent to the date of this press release. All forward-looking statements contained in this press release are based on information currently available to the Company, and the Company and its authorized representatives undertake no obligation to update these forward-looking statements in light of new information or events. future. Accordingly, undue reliance should not be placed on forward-looking statements.


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