Competition Law and Unfair Competition Lawsuits: An Overview under the Turkish Commercial Code

In Turkey, competition law is primarily regulated by the Turkish Commercial Code (TCC) and Law No. 4054 on the Protection of Competition, enforced by the Turkish Competition Authority. These laws aim to ensure a free, fair, and competitive market, preventing monopolistic behavior and unfair competition. This guide delves into how the TCC addresses unfair competition, the legal procedures for filing lawsuits, and the potential sanctions imposed for violations.

• The TCC focuses primarily on unfair competition practices such as misleading advertising, product imitation, or unethical practices that harm competitors. Law No. 4054, on the other hand, targets anti-competitive behavior, including cartels, price-fixing, and abuse of a dominant market position.

• Both laws affect a wide range of industries, from consumer goods to telecommunications and technology sectors. Foreign and local companies are subject to these laws if they operate in the Turkish market.

• Misleading and False Advertising: Providing false information in advertisements or exaggerating product qualities to gain an unfair advantage in the market.
• Product Imitation: Selling counterfeit goods that closely mimic competitors' products, causing confusion among consumers.
• Unjustly Attacking Competitors: Engaging in slander campaigns or spreading misleading information to damage competitors' reputations.
• Violation of Confidentiality: Misuse of trade secrets or business plans obtained improperly from competitors.

• Turkish courts assess unfair competition based on whether the action violates the principles of honesty in business transactions, as outlined in Article 54 of the TCC.

Companies affected by unfair competition can file civil lawsuits seeking financial compensation for damages or injunctions to prevent further violations. These lawsuits can be initiated by:

• Competitors directly harmed by the unfair practice.
• Consumers who were misled or suffered damages from unfair trade practices.
• Professional associations in industries that are negatively impacted.

• Injunctions: Courts can issue injunctions to stop ongoing unfair competition practices.
• Compensation for Damages: Affected parties can claim compensation for financial losses, lost business opportunities, and reputational harm.
• Criminal Penalties: In cases involving fraudulent or harmful activities, fines or imprisonment can be imposed, particularly if the acts involve fraudulent misrepresentation.

• The Turkish Competition Authority can impose interim measures to prevent anti-competitive conduct, such as suspending certain business activities or mandating specific changes in business operations.

• The rise of e-commerce and digital platforms has seen an increase in misleading advertising and imitation product claims, with many disputes now centered on online retail and digital marketing practices.

• While the TCC focuses on unfair competition, Law No. 4054 addresses cartel behavior, where companies engage in price-fixing or market-sharing agreements to undermine fair competition. Such activities are strictly prohibited and heavily penalized by the Turkish Competition Authority.

• Companies have brought lawsuits involving unlawful use of trademarks and trade dress, particularly in the consumer goods sector, where brand identity plays a significant role in market competition.

• Recent amendments have focused on regulating digital markets and e-commerce, as competition violations in online retailing and advertising have become more prevalent. The Turkish Competition Authority has initiated investigations into online platforms for engaging in anti-competitive practices such as preferential treatment for their own products.

• The Turkish Competition Authority has significantly increased penalties for violations of both unfair competition rules and anti-competitive conduct, with fines reaching up to 10% of a company’s global turnover for serious infractions.

Unfair competition law in Turkey serves to protect market integrity and ensure businesses can compete on a level playing field. The Turkish Commercial Code, along with Law No. 4054, provides clear mechanisms for addressing unethical business practices, offering remedies for both affected businesses and consumers. As Turkey's economy grows and digital markets evolve, it is critical for businesses to stay compliant with these laws to avoid severe financial and legal consequences.