Within the scope of The Law no 4054 on the Protection of Competition (“Law”); “Guidelines on Competition Violations in Labor Markets (”Guidelines“)”,was submitted for public opinion per Competition Board’s (“Board”) decision of 12.09.2024 with no. 24-37/888-M, in order to ensure legal certainty and predictability, and approved by the Board decision of 21.11.2024 with no. 24-49/1087-RM(4).
Turkish Competition Authority’s (“Authority”) aims to prevent monopolization and cartelization in the markets within the framework of Article 167 of the Constitution of the Republic of Türkiye. Although the applications of the Law also cover competition in labor markets, the main purpose of this law is to ensure inclusive development by ensuring efficient use of resources, increasing consumer welfare, promoting innovation and technological developments.
In addition to being a guide for the implementation of the Law, the Guidelines are also essential for setting out the fundamentals and principles for detection and supervision of conducts that prevent, distort or restrict competition in the labor markets and for the evaluation of their effect. Moreover, please note that the principles in the Guidelines will also apply to the examinations to be conducted under Articles 5, 6 and 7 of the Law, as applicable.
The regulations introduced by the Guidelines on Competition Violations in Labor Markets are as follows;
- In terms of the application of Article 4 of the Act no 4054
– Wage-Determination Agreements
– Employee Non-Solicitation Agreements
– Information Exchange between undertakings
– Principle and Fundamentals for Ancillary Restrictions (Direct Relevance, Necessity and Proportionality)
- Determination of the principles to be applied in terms of the examinations to be conducted within the scope of Article 5,6 and 7 of the Law.
REGULATIONS INTRODUCED BY THE GUIDELINES ON COMPETITION VIOLATIONS IN LABOR MARKETS
- Application of Article 4 of the Law
Article 4 of the Law prohibits agreements between undertakings, concerted practices and such decisions and practices of associations of undertakings which directly or indirectly prevent, distort or restrict competition in a particular goods or services market or which create or could create such an effect.
Labor, which is an input for the provision of goods or services, is recognized as one of the parameters of competition between undertakings. The fact that each undertaking aims to access the most qualified labor force at the cheapest cost may cause undertakings to retain their employees or suppress their wages. Therefore, undertakings may enter into anti-competitive agreements regarding the restriction of employee mobility and the determination of wages and other working conditions.
Just as in other markets, undertakings compete to retain their employees or to employ each other’s employees, in labor markets. In this framework, competition for labor, which is an input, cannot be considered separately from competition for other factors of production and therefore constitutes one of the areas of competition law practice.
Within the scope of Article 4 of the Law, agreements or concerted practices concluded between employers, which aim to determine the wages and other working conditions of employees, or which have this effect, and such decisions and actions of associations of undertakings are considered as violations of its provision.
For this reason, the Guidelines specifically regulate wage-fixing agreements and employee non-solicitation agreements, which are types of violations most commonly encountered in labor markets.
1.1 Wage-Fixing Agreements
The act No. 6098 on Turkish Code of Obligations and the Act No. 4857 on Labor Law; the definition of wages is the first condition for the determination of wage-fixing agreements. In the evaluation made within the context of competition law, in the light of the regulations introduced by the Guidelines, it is stated that wages are not the only element that constitutes the remuneration of employees’ labor, but also all kinds of working conditions that have a clear impact on employees’ job choices or general labor mobility will be evaluated within this scope.
In this respect, matters that give rise to rights or impose obligations on employees will be considered as working conditions. Accordingly, wage fixing agreements are defined as agreements where undertakings jointly determine the working conditions of their employees, such as wages, wage increases, working hours, fringe benefits, compensation, leave rights, and non-competition obligations. These agreements aim to determine working conditions at a certain level or range.
However, it is important to note that the situations that may be considered as wage-fixing agreements listed in the Guidelines are not limited (numerus clausus); on the contrary, situations that give rise to rights for employees or impose obligations on employees are considered as working conditions and agreements related to these situations may also be considered as wage-fixing agreements.
Wages and other working conditions provided by undertakings in return for the labor performed by employees under an employment contract are considered as costs and/or purchase conditions that constitute the price within the scope of Article 4 of the Law, and in this respect, agreements to determine such wages and other working conditions are deemed unlawful and prohibited per the same provision of the Law. Such agreements constitute a violation of competition in terms of their nature and purpose.
Another important provision of the Guidelines is that wage-fixing agreements may be concluded directly or indirectly between undertakings, and if a third party mediates or facilitates the agreement, the third party may be deemed to be a party to the infringement depending on the characteristics of the concrete case.
1.2 Employee Non-Solicitation Agreements
Within the framework of Competition Law, employee non-solicitation agreements are defined as agreements made directly or indirectly by an undertaking not to offer employment to or not to employ the employees of another undertaking.
An employee non-solicitation Agreements may also exist where the undertakings do not completely prohibit the offer of employment to or the hiring of each other’s employees but subject the employment to the approval of each other or the employee taking approval from their current employer. If these agreements are directed at the former employees of the undertakings, they will also be considered within the scope of a non-discrimination agreement. The important issue here is whether there is an agreement between competitors regarding employee mobility.
Employee non-solicitation agreements aim to share the labor horizontally between undertakings. Therefore, employee non-solicitation agreements that constitute an infringement in terms of purpose are considered as cartels.
As with wage-fixing agreements, employee non-solicitation agreements may be concluded directly between undertakings or through a third party. It is regulated that the third party may be accepted as a party to the breach depending on the characteristics of the case.
1.3 Information Exchange
Within the scope of the Guidelines, information refers to any type of data that is directly or indirectly related to the labor force, and information sharing refers to the exchange of these types of data between undertakings. Information exchange may take place directly between undertakings or through a third-party medium such as intermediary institutions and platforms; through associations of undertakings, independent market research organizations or private employment agencies; and through channels such as websites, media, algorithms.
Any exchange of information for the purpose of restricting competition in the labor market will be deemed to restrict competition, regardless of its effect.
The Guidelines on Horizontal Agreements provide a framework on how the Board evaluates the exchange of information in terms of competition law. Competition-sensitive information that may lead to this result in the labor market is information regarding wages or other working conditions that have a clear impact on employees’ job choices or general labor mobility. For example, information about employees’ job choices and working conditions such as raise rates, working hours, fringe benefits, compensations and leave entitlements that have a clear impact on general labor mobility may be considered as competition-sensitive information and the exchange of such information may have anticompetitive purpose or effect. Any exchange of information for the purpose of restricting competition in the labor market will be deemed to restrict competition, regardless of its effect. On the other hand, it will also be examined whether the exchange of competitively sensitive information by competitors in the labor market has a restrictive effect on competition. In assessing the anticompetitive effect of the exchange of information, the characteristics of the relevant market, the nature of the information exchanged and the manner in which the exchange of information is implemented will be taken into account.
The possibility of anti-competitive effects of information exchange should be taken into account not only by undertakings that are competitors in the labor market, but also by undertakings that exchange information as third parties, such as independent market research organizations and private employment agencies. These exchanges of information between undertakings may give rise to anti-competitive effects.
- It is accepted that the exchange of information that meets all of the following conditions will not, in principle, have anti-competitive effects:
- The exchange of information should be conducted by an independent third party,
- It should not be possible to understand the data source or individual data content,
- The information subject to exchange must be at least three months old,
- The information must include data from at least ten participants,
- No participant’s data should have a weight of more than 25% of the total data.
1.4 Ancillary Restrictions
Restrictions imposed on the parties to an agreement that do not have the purpose or effect of preventing, distorting or limiting competition, and which, although they do not constitute the essence of this agreement, are necessary for the realization of the objectives to be achieved by the agreement and are directly related to these objectives, are called ancillary restrictions. In other words, restrictions that do not constitute the primary purpose of the main agreement, but are directly related, necessary and proportionate for the realization and maintenance of the agreement, are ancillary restrictions.
Restrictions that are found to be ancillary restrictions will not be evaluated within the scope of Article 4 of the Law, while restrictions that are not found to be ancillary restrictions will be evaluated within the framework of employee non-attraction and wage determination and will be considered as a violation in terms of purpose.
In assessing whether labor restrictions related to the main agreements between undertakings that are not anti-competitive in their purpose or effect are ancillary restraints, it will be evaluated whether such restrictions are directly related, necessary and proportionate to the main agreement within the scope of competition law, together with the criteria set out in the Guidelines. Restrictions that do not fulfill the conditions of direct relevance, necessity and proportionality at the same time will not be considered as ancillary restraints.
2. Application of Other Articles of the Law
In terms of the examinations to be conducted under Articles 5, 6 and 7 of the Law, it is regulated that the principles set out in the Guidelines shall also be applied to the extent appropriate.
As a rule, Article 5 of the Law titled “Exemption” states that all agreements, decisions and actions restricting competition that meet the conditions set forth in Article 5 of the Law may be exempted from the application of Article 4 of the same Law. However, it is accepted that agreements that are deemed to restrict competition to a disproportionate extent due to their legal and economic nature and that are assumed to be unlikely to create economic benefits that will eliminate their negative effects on competition are unlikely to meet the conditions for exemption. As a matter of fact, wage fixing and employee non-distortion agreements in labor markets and information exchanges for the purpose of restricting competition are among such restrictions and, as a rule, these restrictions will not benefit from exemption.
Article 6 of the Law prohibits the abuse of dominant position by one or more undertakings if they are in a dominant position in the market for goods, services or labor, and states that these violations will be evaluated according to the specific circumstances of the case.
In the examination to be conducted within the scope of Article 7 of the Law, it will be evaluated whether the merger of one or more undertakings with the aim of creating a dominant position or strengthening an existing dominant position or the acquisition of the assets or partnership shares of another undertaking significantly reduces competition.
In Conclusion;
The Guidelines includes detailed regulations that aim to contribute to the determination and control of behaviors that prevent, distort or restrict competition in labor markets and to ensure competition in the Turkish Labor Markets. We would like to inform you that the detailed regulations regarding Competition Violations in labor markets should be carefully examined and complied with without delay by undertakings.
You may access the full text of The Guidelines from the link below.
For detailed information and professional support during the compliance process, feel free to contact us.
This Legal Alert has been prepared for general information purposes only on current legal issues, and the evaluations contained in this Legal Alert do not constitute legal advice or a legal opinion. It is not possible to impose any liability on SRP-Legal Law Office due to the content of this Legal Alert. It is recommended to obtain the opinion of a legal advisor regarding your questions and enquires within the scope of this Legal Alert.
