Unfair competition in terms of Turkish Commercial Code

problems of unfair competition in Turkish commercial code
unfair competition in Turkey

Dear readers of our blog, today we are going to start a series of articles that may be useful for foreign entrepreneurs doing business in Turkey. To be more precise, in this article we will focus on the laws regulating competition rules and some important aspects of Turkish labor and commercial law.

Until the Law on Protection of Competition under the number 4054 came into force on 07/12 in 1994 there had been no code governing the rules of healthy competition in Turkey. This law is mostly based on Articles 85, 86 of the European Community Treaty. It is necessary to note that the problems of unfair competition are also regulated within the legislation of new Turkish Commercial Code 6762 (Article 54 et seq). Thus, the protection of competition is governed simultaneously by two different codes of Turkish law. In this series of articles we will try to summarise the most important statements of these laws and explain the features of their application in practice.

At fist, we will try to figure out in which way the competition rules are set out in the new Commercial Code of Turkey. The concrete definition of "unfair competition" is not openly specified in the Turkish commercial code, but this term is usually defined as: fraudulent and dishonest acts committed between competitors, as well as between customers and suppliers, which have negative impact on commercial relationships. There are some examples of fraud in actions, which lead to violation of fair competition rules given in the Article 55 of the Turkish Commercial Code.

  1. actions performed in order to mar the reputation of another company, discredit its activities or manufactured goods.
  2. dishonest advertising campaigns, as well as campaigns aimed at discrediting the competitor company.
  3. applying Fraudulent strategies for the purpose of convincing the customer to terminate the contract with the competitor company.
  4. attempts to establish relations with the employees and managers of another enterprise to gain access to the trade secrets.
  5. disclosing the industrial and commercial secrets of competitor enterprise.

Once again we want to draw your attention to the fact, that dishonest actions mentioned above are just examples, each case must be thoroughly analyzed by law experts in order to decide whether it can be classified as unfair competition or not.

If a person or a company has become a victim of unfair competition which has brought harm to its reputation, resulted in losing customers, decline in sales or reduction of profit, it is possible to request revealing and preventing illegal actions in the local court as well as demand compensation for moral and material damage. Such trials usually take place in the commercial court of first instance (asliye ticaret mahkemesi). Important detail: according to the Turkish Commercial Code, the punishment for offenses that fall under the classification of "unfair competition" may reach 2 years of imprisonment.

The criminal court cases connected with the actions of unfair competitors must start from filing a complaint in the local prosecutor's office. In practice, during such criminal court cases, the decision on assigning criminal penalties is based on the results of the trial in the Commercial Court of First Instance. If the offender is an enterprise, then it's official representative, for example CEO will act as a defendant during the criminal trial.

Laws on unfair competition of the Turkish Commercial Code are applicable to employees as well. One of the main legal obligations of employees is dedication to the workplace and the confidentiality of industrial and commercial secrets. Therefore, even if the former employee is no longer working in the company, he has no right to take actions related to unfair competition. That is why in some labor contracts there is a condition that after quitting the job, the employee has no right to work in the same sector for a certain period.

Illegal use of another company's trademark may also refer to the problems of unfair competition. In this case, the original owner of a trademark may prevent its further usage by the offender by means of requesting a ban through the court. Similarly, the company which has come across such violations possesses the legal right to claim compensation for moral and material damage. The amount of the material compensation is calculated on the basis of the profits that the offender has received as a result of fraudulent actions, or in some cases on the basis of the loss that a company or an individual suffers being a victim of unfair competition. If the court reaches the corresponding decision, Information on the enterprise which has violated the laws mentioned above, may be published in a national newspaper in Turkey.