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conduct generation activities provided that they amend their agree-
ments in accordance with the new regulations in a way to fulfill the
conditions of free competition. However, Draft Law sets forth an
important restriction in that regard. As per Article 9 of the Draft Law,
distribution companies cannot conduct activities other than distribution
activities and become a shareholder to other legal entities who engage
in market activities either directly or indirectly. On the other hand,
while generation companies are restricted to be a controlling share-
holder of a distribution company under the EML, the Draft Law pro-
vides that the legal entities who engage market activities can be direct
or indirect shareholder of a distribution company without indicating
any control restriction. Without a doubt, such a shareholding structure
providing a vertical integrity should be assessed in light of competition
law.
The Draft Law regulates that the distribution companies who also
engage in retail sale activities may only realize such activities by incor-
porating a new company with the same shareholding structure and
obtaining a supply license for new company regarding the said distrib-
ution area.
Supply License:
The wholesale and retail sale activities, which necessitate different
types of licenses as “wholesale license” and “retail sale license” under
the EML, are regulated under one license type, namely the “supply
license” under the Draft Law. As per Article 10 of the Draft Law, sup-
ply companies can conduct wholesale and/or retail sale activities with-
out any limitation of area. In addition, it is indicated that supply com-
panies may also import from and export to the countries with which the
interconnection condition is satisfied.
Market Operation Activity:
The market operation activity which is included in the electricity
market activities by the Draft Law is defined as the operation of the
organized wholesale electricity markets and financial reconciliation
activities in such markets.
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