Competition law is a legal discipline constructed around regulations designed to safeguard competition within goods and services markets. This legal branch aims to uphold fair competition in commercial activities and is categorized under three primary headings. Within this framework, competition rules proscribe agreements, decisions, and concerted practices among enterprises that restrict competition. Moreover, these rules prohibit enterprises in dominant positions within a market from abusing such positions. Additionally, mergers and acquisitions exceeding specified thresholds are subject to regulatory scrutiny. In essence, competition law is an intricate legal framework designed to foster equitable competition, curb market dominance, and establish a balanced commercial environment.
Competition law in the United States is known as "antitrust law" for historical reasons, and it is referred to as "anti-monopoly law" in China and Russia. The enforcement of competition law holds significant importance, particularly in preventing the emergence of entities such as monopolies and cartels. A monopoly denotes the domination of a single enterprise within a market, granting it the power to dictate prices and product quality at will. Such a scenario restricts consumer choices and curtails competition. To avert such situations, competition law oversees business activities, identifies unfair competition, and administers legal sanctions explained in Article 1 of the Law on the Protection of Competition No. 4054, the purpose of this law is to: "...prevent agreements, decisions, and practices that prevent, distort, or restrict competition in markets for goods and services, and the abuse of dominance by undertakings dominant in the market, and to ensure the protection of competition by performing the necessary regulations and supervision to this end."
Operation of the Process: The Competition Authority, established according to Article 20 of the same law, is responsible for ensuring the establishment and development of competitive markets for goods and services in a free and healthy competitive environment. It supervises the implementation of this Law and ensures that its responsibilities are fulfilled. Article 27 of the Law designates the Competition Board, acting as the executive body of the Competition Authority, with the obligation to prove concrete and material facts about violations of competition law (investigations arising from notifications, complaints, or spontaneous suspicions) and, guided by the resulting consequences, to effectively apply the provisions of competition law to the specific case at hand.
Agreements, Concerted Practices, and Decisions Limiting Competition
Agreements, actions, and concerted practices among undertakings (entities engaged in the production, marketing, and sale of goods or services in a specific market), whether direct or indirect, with the intention or effect of preventing, distorting, or restricting competition, constitute violations of competition legislation. Such agreements and decisions among competitors, customers, and suppliers with anti-competitive, disruptive, or restrictive effects are against competition law. Undertakings aiming to hinder, disrupt, or limit competition in specific markets through direct or indirect actions, as well as individuals and entities participating in such agreements, decisions, or activities, are in violation of competition law. The Competition Board does not require written contractual stipulations when detecting violations.
Agreements: The agreement does not have to conform to the provisions of the Turkish Civil Code or the Turkish Code of Obligations. There is no form requirement; any written, verbal, or implied agreement is accepted as valid. It is sufficient for the parties to acknowledge that the agreement binds them; implementation is not necessary.
Concerted Practices:Within the framework of competition law, the term 'concerted action' pertains to collaborative conduct or behavior exhibited by undertakings, lacking explicit formal agreements yet unified in restricting, distorting, or negatively impacting competition. This encompasses scenarios wherein enterprises synchronize their conduct, exchange sensitive information, or engage in joint endeavors leading to the harmonization of actions, thereby influencing market conditions in contravention of equitable competition principles. There is potential for the activities of enterprises, such as modifications in pricing or supply-demand equilibrium, to mirror those prevailing in markets where competition is suppressed, distorted, or constricted. Essentially, this implies the existence of orchestrated restrictive behaviors that mimic established market conditions.
Concerted actions are considered violations of competition law if their cumulative consequences are deliberately crafted to impede competition or erode market competitiveness. The categorization of concerted practices hinges upon the legal norms dictated by jurisprudence and the nuanced attributes of each case. Demonstrated through logical evidence, the contention can be substantiated that concerted actions have not been undertaken.
Undertaking: In competition law, an undertaking refers to natural and legal persons engaged in the production, marketing, and sale of goods or services in a given market, characterized by their independent decision-making ability and forming an economic entity. This concept of an undertaking, developed based on the notions of 'economic activity,' 'independence,' and 'economic integrity,' independently of its legal character, differs from the concepts of 'firm,' 'company,' or 'enterprise' found in other legislation. Accordingly, for competition law purposes, private or public companies capable of freely making decisions regarding their economic activities and self-employed professionals are considered undertakings. On the other hand, a company where all decisions regarding economic activities are driven by its parent holding company or a doctor or lawyer working under an employment contract and subject to the decisions of a company or institution is not regarded as an undertaking.
Undertakings Association: Undertakings association encompasses all kinds of legal or non-legal entities established by undertakings to achieve specific objectives. The most typical examples of undertakings associations are associations where natural people represent undertakings. It does not matter whether the association of enterprises is established according to the law and has no legal personality. Similarly, industrial and trade chambers, professional associations, unions, and bar associations are also considered undertakings associations.
Prohibited Actions Regulated by Competition Law
Article 4 within the scope of Competition Law explicitly prohibits actions aiming to restrict, distort, or hinder competition in a specific market for goods or services or actions that result in such effects. This provision encompasses agreements between enterprises, concerted practices, and decisions made by business associations under specific conditions. Among these prohibited activities are determining purchase or sale prices for goods or services, dividing or controlling markets, engaging in actions to limit competition, obstructing the activities of rival enterprises, or expelling them from the market, and applying disparate conditions to persons in equal circumstances. Activities stipulated within the framework of Article 4 are deemed unlawful and forbidden to ensure the healthy functioning of competition and the protection of consumers. Regulatory authorities enforce sanctions against such actions.
Prohibited activities encompass the following within the framework of Competition Law:
Price Fixing and Coordination: Agreements made among enterprises to determine prices or coordinate them concertedly adversely affect competition. Such actions impose higher costs on consumers and limit their choices.
Market Division and Allocation: Agreements among enterprises aimed at dividing or sharing markets disrupt the natural course of competition and diminish market diversity. These actions prevent the establishment of a healthy and diverse competitive environment.
Abuse of Dominant Position: It is forbidden for enterprises holding a dominant position in the market to misuse this advantage by exerting pressure on competitors or impeding competition. Such behaviors have negative implications for diversity in competition and consumer options.
The instances of abuse of the dominant position mainly include the following:
Actions that directly or indirectly hinder the entry of another enterprise into the commercial activity field or aim to complicate the activities of competitors in the market.
Making distinctions directly or indirectly by presenting different terms for equal buyers with the same and equal rights and obligations.
Imposing restrictions on resale conditions, such as requiring the purchase of another product or service together with a product or service or linking the display of a product or service requested by buyers who are intermediary enterprises to the display of another product or service or not allowing the sale of a purchased product below a specific price.
Actions aiming to disrupt competition conditions in another product or service market by capitalizing on the financial, technological, and commercial advantages created by dominance in a specific market.
Restricting production, marketing, or technical development to the detriment of consumers.
Formation and Coordination of Cartels: A cartel is formed by agreements and concerted practices that restrict competition between competitors, such as price fixing, sharing customers, suppliers, regions, or trade channels, limiting supply or imposing quotas, and collusion in tenders. Coordinating prices, production, or distribution by establishing cartels seriously hinders competition. These actions force consumers to pay higher prices and restrict the healthy functioning of the market.
Unilateral Boycotts and Exclusion Agreements: Unilateral boycotts signify a business's actions to exclude or remove other companies from engaging in market activities. It entails an enterprise independently deciding to refrain from doing business with competitive entities or to drive them away from market activities. Such actions disrupt market competition, limit consumer choices, and hinder the healthy functioning of competition.
Exclusion Agreements: Exclusion agreements are agreements or actions made between businesses to exclude or prevent specific companies or types of industries from the market. Such agreements or actions seriously disrupt competition, as they restrict the activities of particular businesses or kinds of companies in the market, rendering competition ineffective. This diminishes consumer choices and impedes the establishment of fair competition in the market. Both unilateral boycotts and exclusion agreements are considered activities that hinder the healthy operation of competition and adversely affect consumers. In competition law, such actions are prohibited and closely monitored by competition authorities. Violations of these prohibitions can result in sanctions.
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