The Article 4 of Law on the Protection of Competition No. 4054 (the “Competition Law”) prohibits all agreements between undertakings, decisions by associations of undertakings and concerted practices that have (or may have) as their object or effect the prevention, restriction or distortion of competition within a Turkish product or services market or a part thereof. Whether the agreement is a legally valid or binding agreement is irrelevant as to the assessment under competition laws. The Competition Law prohibits both binding freewill agreements and non-binding reciprocal relations, to the extent that they have the object or effect of restricting competition.
- From a competition law perspective, the concept of “agreement” is much broader than “contract” within the meaning of contracts law.
The term “agreement” is interpreted broadly to comprise: (i) any form of coordination which is legally valid and binding and (ii) all reciprocal intent statements not having the characteristics of a legal or formal agreement. Examples include but are not limited to gentlemen's agreements, reciprocal statements, information exchanges concerning competition-sensitive topics, commitments, situation appraisal memoranda and cooperative statements.
Broadly speaking, restrictive agreements can be divided into horizontal and vertical agreements:
Horizontal agreements concern dealings between direct competitors, which operate at the same level of the production/distribution chain. For example, agreements among three bakers or two cement dealers or five car producers are considered as horizontal agreements.
Vertical agreements are agreements between companies that operate at different levels of the production and distribution chain. The most common example for a vertical agreement is the agreement between a producer and its distributor.
Even though information exchanges do not per se constitute a restrictive agreement, exchanging the following types of information may result in a violation of Article 4 of Competition Law , similar to horizontal and vertical agreements.
The Competition Law contains the following non-exhaustive list of certain types of prohibited agreements:
- Fixing the purchase or sale price of goods or services or elements such as cost and profit which form the price or any terms of purchase or sale (price fixing),
- Partitioning markets for goods or services, and sharing or controlling all kinds of market resources or elements (market sharing),
- Controlling the amount of supply or demand in relation to goods or services, or determining them outside the market (output restrictions),
- Complicating and restricting the activities of competing undertakings, or excluding undertakings operating in the market by boycotts or other behavior, or preventing potential new entrants to the market (obstructing competitors),
- Except for exclusive dealing, applying different terms to persons with equal status for equal rights, obligations and acts (discrimination),
- Contrary to the nature of the agreement or commercial usages, obliging to purchase other goods or services together with a good or service, or tying a good or service demanded by purchasers acting as intermediary undertakings to the condition of displaying another good or service by the purchaser, or putting forward terms as to the resupply of a good or service supplied (product tying).
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