New Guidelines on Competition Infringements In Labour Markets

On 3 December 2024, the Turkish Competition Authority (the “TCA”) unveiled its long-awaited Guidelines on Competition Infringements in Labour Markets (the "Guidelines"). [1] These Guidelines are grounded in Article 4 of Law No. 4054 on the Protection of Competition (the "Law"), which identifies agreements and concerted practices of undertakings that directly or indirectly hinder, limit, or distort competition in specific goods or services markets as potential competition infringements in labour markets. They provide a framework for evaluating competition violations in labour markets. Key areas addressed include wage fixing, employee non-poaching agreements, information exchange, and the application of Articles 5, 6, and 7 of the Law to labour market competition violations.

The Guidelines follow the Draft Guidelines [2] previously released for public consultation by the TCA. Below, we summarise the key highlights of the Guidelines:

1. Importance and Structural Characteristics of Labour Markets

The Guidelines underscore that competition for labour is as critical as competition for other production factors. In competitive labour markets, employers are expected to offer attractive wages and working conditions, while employees choose job opportunities based on their qualifications and expectations. Labour markets are characterised by a high number of employees on the supply side and a relatively low number of employers on the demand side. This imbalance often leads to employers having higher bargaining power, which can result in anticompetitive agreements detrimental to employees.

2. Types of Competition Infringements

Article 4 of the Law prohibits agreements and practices that prevent, distort or restrict competition in a particular market for goods and services. The Guidelines identify several types of anticompetitive agreements and practices that are common in labour markets in relation to Article 4 of Law.

• Wage-Fixing Agreements: Agreements or concerted practices between employers, as well as practices and decisions of associations of undertakings, that aim at or result in fixing employees’ wages and other working conditions are considered as cartels and a violation of Article 4 of the Law. Working place and time, working hours at the workplace, annual leave periods, supplements to the wage, breaks, social benefits such as wedding and maternity leave, private health insurance and individual retirement systems are mentioned as examples among other working conditions.

• No-Poaching Agreements: Agreements or concerted practices where employers agree not to offer jobs to each other's current or former employees, or which make employment conditional upon another employer’s approval, are also considered as cartels and a violation of Article 4 of the Law. What is important is whether there is an agreement between competitors to limit employees’ mobility. It is not necessary that employers be competitors in output markets in that assessment. Undertakings that are competitors on the labour market are regarded as competitors, irrespective of their activities in the output market.

• Exchange of Information: Sharing competitively sensitive information related to wages and working conditions can facilitate anticompetitive agreements and is subject to scrutiny under the Guidelines. Competitively sensitive information includes information on wages or other working conditions that have a clear impact on workers' job choices or on overall labour mobility. Unlike the Draft, the Guidelines set out the necessary conditions for the exchange of information not to have anticompetitive effects, and these conditions are as follows:

(i) The exchange of information must be conducted by an independent third party;

(ii) It must not be possible to understand the data source or individual data content;

(iii) The information subject to the exchange must be at least three months old;

(iv) The information must contain data of at least ten participants;

(v) No participant's data must have a weight of more than 25% in the total data.

3. Ancillary Restraints

The Guidelines provide criteria for assessing whether certain restraints are ancillary to a main agreement and therefore not subject to Article 4. These criteria include direct relation, necessity, and proportionality of the restraint to the main agreement.

• Direct relation: means restraint is an indispensable part of the main agreement and directly related to the main agreement’s objective. In other words, in the absence of the main agreement, the relevant restraint would not exist. The restraint should be aimed at supporting or facilitating the objective of the more main agreement and serve to achieve the objective of the main agreement at the same time.

• Necessity: means that the restraint is obligatory in order to implement or maintain the main agreement between the parties. If the implementation of the agreement would be more difficult or less profitable in the absence of the restraint, the relevant restraint is not deemed necessary.

• Proportionality: means that it should not be possible to attain the objective in question with the restraint by using a tool that is less restrictive of competition, and the scope of the restraint should be limited to the objective, geographic scope, duration and parties to the main agreement. The Board will consider whether a restraint is proportional depending on the conditions of the concrete case. However, especially, in the following cases where:

o The duration of the restraint is not clearly defined, or the duration of the restraint is longer than necessary to attain the objectives with the restraint,

o Restraints are imposed on employees other than those who have key importance for implementing the main agreement, or it is not clear which employees the restriction is imposed on,

o The restraint exceeds the geographic region where the main agreement is implemented,

o The restraint covers all of the parties to the agreement, or more parties than necessary, in cases where it is

sufficient to impose the restriction to only one party or a few parties to the main agreement, it will be concluded that the restraint does not meet the proportionality condition.

4. Implications for Employers and Businesses

Employers and businesses operating in Türkiye should carefully review their practices and agreements related to labour markets to ensure compliance with the Guidelines and to avoid potential legal repercussions. Key areas of focus should include:

✓ Avoiding wage-fixing and no-poaching agreements.

✓ Ensuring that any exchange of information related to labour markets does not facilitate anticompetitive

practices.

✓ Assessing whether any restraints related to labour in the company’s existing agreements are ancillary and meet the criteria outlined in the Guidelines.

5. Conclusion

The Guidelines provide a framework for addressing competition violations on labour markets. They emphasise the importance of maintaining a competitive environment for labour supply and demand and outline the implications of agreements that restrict competition, such as wage-fixing and no-poaching agreements. The Guidelines also clarify the conditions under which information exchange and ancillary restraints are permissible, ensuring that such practices do not have anticompetitive effects. Employers and businesses must align their practices with these Guidelines.

[1] Adopted on 21 November 2024, under Decision of the TCA numbered 24-49/1087-RM

[2] Please find here our client alert on the Draft Guidelines.