Draft Guidelines on Competition Infringements on Labour Markets Have Been Published by the Turkish Competition Authority

The Turkish Competition Authority has published its Draft Guidelines on Competition Infringements on Labor Markets (the “Guidelines”) and collected public opinion on it until 27 September 2024.

Article 4 of Law No 4054 on the Protection of Competition (“Law No 4054”) prohibits agreements between undertakings, concerted practices and decisions and actions of associations of undertakings that directly or indirectly prevent, restrict competition. This also applies to the provision of services on the labour market, which should be competitive and offer diverse options to employees, even though certain market-related characteristics and factors, such as weak employee organisation and disproportion between the bargaining power of the parties, may lead to a weakening of the competitive environment. The Guidelines aim to set out the essential principles in relation to the maintenance of competition on labour markets for the identification and supervision of practices that may affect the markets for goods and services and cause the prevention, distortion or restriction of competition. The Guidelines generally focus on (i) wage-fixing agreements, (ii) employee no-poaching agreements, (iii) information exchange and (iv) ancillary restraints.

1. Wage-Fixing Agreements

Wage-fixing agreements, concluded by undertakings acting in a concerted manner, are one of the most common types of infringements on labour markets. While wages are protected under the Turkish Code of Obligations No 6098, the Labour Law No 4857 and Article 55 of the Constitution of the Republic of Türkiye, wage-fixing agreements between employers prevent a competitive environment on labour markets by artificially determining not only the levels of wages, but also the working conditions of employees. Agreements that determine and fix the wages and working conditions of employees are deemed unlawful and constitute an infringement of competition pursuant to Article 4 of Law No 4054. The Guidelines state that wage-fixing agreements are similar in purpose to price maintenance agreements, which are considered to be used by cartels.

2. Employee No-Poaching Agreements

Another agreement arranged between undertakings that prevents competition is employee no-poaching agreements. The main purpose of these agreements is to prevent an undertaking from offering a job to or employing an employee of another undertaking, thereby restricting employee mobility and competition. The Guidelines state that employers using employee no-poaching agreements are considered to be in cartels, since such agreements create conditions suitable for the sharing of employees between undertakings at horizontal level, as specified in Article 4.1 (b) of Law No 4054.

The Guidelines state that wage-fixing and employee no-poaching agreements are considered infringements and anti-competitive whether made directly between undertakings or through a third party, according to the facts of the relevant case.

3. Information Exchange

Information exchange refers to the unilateral or reciprocal exchange of employee-related individual data between undertakings. According to the Guidelines, any exchange of information that is likely to prevent and restrict competition on the labour market will be deemed as an infringement, regardless of whether it is directly between undertakings or through third parties/channels (independent market research organisations, private employment agencies, etc.).

Assessments will be made in light of the characteristics of the labour market and the characteristics of the relevant case at hand, based on the Guidelines on Horizontal Cooperation Agreements on the exchange of competition-sensitive information by rival undertakings on the labour market.

4. Ancillary Restraints

Ancillary restraints are also evaluated under the Guidelines. According to the Guidelines, ancillary restraints are refer to contractual clauses or agreements that are directly related to and necessary for the implementation of a larger, legitimate transaction or collaboration, despite potentially having some restrictive effects on competition.

The Guidelines state that ancillary restraints must be (i) directly relevant, (ii) necessary, and (iii) proportional. The direct relevance condition for ancillary restraints requires that they be inseparable from the main agreement, directly related to the agreement and must depend on the scope of application of the relevant main agreement. In accordance with the principle of necessity, an anticompetitive ancillary restraint must be necessary for the implementation and existence of the main agreement. According to the principle of proportionality, the restriction in question should not exceed the duration of the main agreement and the objective should not be achieved by another element that causes the restriction or prevention of competition. In light of the assessments in the Guidelines, any restrictions that do not meet these three conditions will not be accepted as an ancillary restraint.

In addition, it is stated that the rules and principles mentioned in the Guidelines will also apply to Articles 5, 6 and 7 of Law No 4054 within the framework of the characteristics of the relevant case at hand and compliance.

5. Conclusion

While the Guidelines focus on wage-fixing agreements, employee no-poaching agreements, information exchange and ancillary restraints, as these are the most common competition infringements in labour markets, the Competition Board's assessments under Article 4 of Law No 4054 are very important for identifying competition infringements on labour markets.

In addition to developments in the local legislation, amendments that have already been enacted in Canada, specific and exemplary explanations on wage-fixing agreements and employee no-poaching agreements, as well as the mechanisms developed by the European Commission and the United States against infringements on labour markets will be an important source for the Guidelines and future legislative studies. It is expected that the Draft Guidelines on Competition Infringements in Labour Markets will be finalized pursuant to the collection of public opinion, published and entering into force in the coming period, which will constitute an important step to prevent competition between undertakings in labour markets.