On September 16, 2024, the Turkish Competition Authority (TCA) published its draft Guidelines on Competition Law Violations in Labor Markets (draft Guidelines) for public comment. The comment period ended September 27, 2024.
The draft Guidelines provide guidance on the application of articles 4 through 7 of the Law on the Protection of Competition (LPC) to employment-related agreements and business practices that might restrict competition in labor markets.
Application of LPC Article 4: Anti-Competitive Coordinated Behavior in Labor Markets
Article 4 of the LPC prohibits agreements and concerted practices between businesses, as well as decisions or practices of business associations, that are intended to or likely will prevent, restrict, or distort competition. The draft Guidelines state that, as a rule, wage-fixing agreements (where employers agree to limit employee salaries) and no-poaching agreements (in which competing employers agree not to hire each other’s employees) will be considered by the TCA to violate article 4.
The draft Guidelines detail the approach of the TCA to employment-related information sharing between employers. Information sharing for the purposes of restricting competition in labor markets will be considered to violate article 4 regardless of its actual effect. Sharing between employers of non-public information on the labor market that is not aggregated, is current or forward looking, and is presented in a way that makes it possible to determine the source of the data or the individual content of the data may be considered to have competition-restricting effect.
However, the draft Guidelines provide that employment-related “ancillary restraints” will not be prohibited under article 4. Ancillary restraints are restrictions directly relevant to a legitimate agreement that are necessary and proportionate to the agreement’s objectives, whose intent or effect is not to restrict competition. The draft gives an overview of how restrictions may qualify as “directly relevant,” “necessary,” and “proportionate” such that they could be considered a permissible ancillary restraint.
Application of LPC Article 5: Exceptions to Article 4 Prohibitions
Article 5 of the LPC provides that agreements, concerted practices, and decisions of business associations will be exempt from the prohibitions of article 4 if improvements in the production or distribution of goods or the provision of services are achieved, the consumer benefits therefrom, competition is not eliminated in a significant part of the relevant market, and competition is not restricted more than is necessary. The draft Guidelines emphasize, however, that wage-fixing agreements, no-poach agreements, and information-sharing between businesses with the intent to restrict competition will, as a rule, not be exempted under article 5.
Application of LPC Article 6: Abuse of Dominant Position
Article 6 of the LPC prohibits a business from abusing its dominant position in a market for goods or services. Regarding the application of article 6 to employment-related conduct of businesses, the draft Guidelines explain that abuse of a dominant position in the context of employment can take two forms. First, a business that is dominant in a labor market may engage in conduct that restricts labor mobility. Second, the exclusionary conduct of a business that is dominant in a goods or services market may have adverse effects on the relevant labor market.
Application of LPC Article 7: Anti-Competitive Mergers and Acquisitions
Article 7 of the LPC prohibits mergers and acquisitions that would create a dominant position, or strengthen an existing dominant position, and significantly lessen effective competition in the relevant market. The draft Guidelines explain that in determining whether a merger or acquisition would significantly lessen effective competition in labor markets, the TCA will assess criteria such as the shares of the transaction parties in the relevant labor market, the level of concentration of the market, the closeness of the qualifications of the employees employed by the transaction parties, the barriers to entry into the relevant product market, the organization of labor suppliers in the relevant labor market, the costs of changing workplaces, the possibilities of the competitors of the transaction parties to increase capacity utilization or make new investments, potential competitive pressure, whether the transaction increases the possibilities of cooperation between competitors operating in the relevant labor market, and whether the transaction carries the possibility of being a “killer acquisition” that wipes out future competition.
Non-Compete Agreements
The draft Guidelines do not discuss the treatment of non-compete agreements under the LPC other than noting that “provisions that prevent or make it difficult for employees to provide services to other employers through legal instruments, such as non-compete agreements, also restrict employee mobility.” In Turkish law, non-compete agreements are specifically allowed under Articles 444-447 of the Turkish Code of Obligations, which subject their enforceability to certain limits on their substance and temporal and geographic scope, and empower courts to limit the enforcement of oppressive non-competes on the basis of equity.
Prepared by Zeynep Timocin Cantekin, Legal Research Fellow, under the supervision of Hanibal Goitom, Chief, Foreign, Comparative, and International Law Division I
Law Library of Congress, October 22, 2024
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