UNFAIR COMPETITION LAW

Unfair Competition Provisions in the New Turkish Commercial Code

November 2011 Unfair competition provisions are regulated by Articles 54 to 63 of the new Turkish Commercial Code (“YTTK”) No. 6102.

The Turkish Commercial Code (“TK”) No. 6762 defines unfair competition as deceptive acts or abuse of economic competition in other ways contrary to the rules of good faith. The definition made within the scope of the YTTK, different from the definition in the TK, also determines between whom the acts of unfair competition can take place. Accordingly, deceptive and dishonest acts and commercial practices that affect the relations between competitors or suppliers and customers are unfair and unlawful. Any act within this scope will constitute unfair competition. Imitating products belonging to another enterprise, imitating competing brands, making deceptive advertisements for the quality of their own products, using deceptive names and signs by pretending that they have qualities that are not present in the products or in the enterprise are cases that constitute unfair competition. The purpose of the regulations in the law is stated as ensuring honest and undistorted competition for the benefit of all participants in the market. As stated in both the definition and the purpose article, YTTK aims to expand the application area of unfair competition provisions and to prevent them from being applied only among competitors.

Unfair Competition Situations

Article 55 of the YTTK lists situations of unfair competition under six main headings. However, these situations specified in the article are not limited. When we look at the cases specified in the article, it is seen that the number of examples has been increased compared to the TK and especially examples that aim to protect consumers and public interests, not just protecting competitors. Another innovation is that among the cases listed in the article, cases containing unfair general transaction conditions are also included. The situations of unfair competition listed in the article are briefly stated below:

Behaviors and Practices Contrary to the Honesty Rule:

<!-- [if !supportLists]-->1.       <!--[endif]-->Denigrating someone else's business, business products or activities in a way that is false or misleading,

<!-- [if !supportLists]-->2.       <!--[endif]-->Making false or misleading statements about his own business, business products or activities,

<!-- [if !supportLists]-->3.       <!--[endif]-->Trying to create the illusion that he has received honors, diplomas or awards, or using misleading professional names and symbols,

<!-- [if !supportLists]-->4.       <!--[endif]-->Causing confusion with someone else's work products or activities,

<!-- [if !supportLists]-->5.       <!--[endif]-->Comparing himself, his products, his prices with the others, others’ products or others’ prices with in a way that is untrue, misleading, unnecessarily disparaging his competitors or taking advantage of their reputation;

<!-- [if !supportLists]-->6.       <!--[endif]-->Mislead customers about its or its competitors' ability by selling products below the supply price;

<!-- [if !supportLists]-->7.       <!--[endif]-->Mislead the customer about the true value of the product by offering additional executions,

<!-- [if !supportLists]-->8.       <!--[endif]-->Limiting the customer's freedom of decision with aggressive sales methods,

<!-- [if !supportLists]-->9.       <!--[endif]-->Concealing the characteristics, quantity, purpose of use, benefits or dangers of work products or activities and thus mislead the customer,

<!-- [if !supportLists]-->10.    <!--[endif]-->Not clearly stating the title and not giving price or cost information clearly in the announcements regarding sales in installments or similar legal transactions,

<!-- [if !supportLists]-->11.    <!--[endif]-->Not clearly stating the title in the advertisements regarding consumer loans or not making clear statements regarding the net amounts, total expenses, effective annual interest of the loans,

<!-- [if !supportLists]-->12.    <!--[endif]-->Using contract formulas that contain incomplete or incorrect information about the subject, price, payment terms, contract duration, and certain rights of the customer in installment sales or consumer loan agreements.

Behaviors and Practices Leading to Breach or Termination of Contract:

<!-- [if !supportLists]-->1.       <!--[endif]--> In order to be able to make a contract with customers, directing them to act in violation of the contracts they have made with others,

<!-- [if !supportLists]-->2.       <!--[endif]-->Trying to benefit himself or others by offering unfair benefits to third parties' workers, agents and other assistants,

<!-- [if !supportLists]-->3.       <!--[endif]-->Directing workers, attorneys or other assistants to disclose or seize production and business secrets,

<!-- [if !supportLists]-->4.       <!--[endif]-->In order to make a contract, to direct the person who has made a sales in installments, cash sales or consumer loan agreement to withdraw from this agreement or to terminate the agreement.

Unauthorized Use of Work Products of Others:

<!-- [if !supportLists]-->1.       <!--[endif]--> Unauthorized use of a business product such as an offer, account or plan entrusted to him,

<!-- [if !supportLists]-->2.       <!--[endif]--> Unauthorized use of a third party business product such as an offer, account or plan,

<!-- [if !supportLists]-->3.       <!--[endif]--> Taking advantage of someone else's ready-to-market work products by technical reproduction methods.

Unlawful Disclosure of Production and Business Secrets

Disregard with Business Conditions

Using Transaction Terms Which Against Honesty Rule

<!-- [if !supportLists]-->1.       <!--[endif]-->Significantly deviating from the legal regulation to be implemented directly or through interpretation, or

<!-- [if !supportLists]-->2.       <!--[endif]-->Using pre-written general terms and conditions, which stipulate the distribution of rights and obligations that are significantly contrary to the nature of the contract.

Lawsuits That Can Be Filed

Article 56 of the YTTK states the lawsuits that can be filed in the presence of unfair competition. These cases are as follows:

Declaratory Action: The declaratory action is only a case for the determination of unfair competition. This case is foreseen for situations where even the detection of unfair competition may be sufficient.

Unfair Competition Prevention Action: With this action, it is aimed to put an end to an existing unfair competition act. This lawsuit is foreseen for ongoing unfair competition violations.

Unfair Competition Revocation Action:  This action, which is in the nature of a restitution lawsuit, is intended to eliminate the material situation that is the result of unfair competition or to correct these statements if the unfair competition act is made with false and misleading statements. With the lawsuit in question, all the negative effects of the act leading to unfair competition in the market should be brought to the agenda. Correction of false and misleading statements can be achieved through this action. However, However, this case does not have a compensation nature. A claim for compensation and a lawsuit can be filed together.

Action for Damages: The Action for damages can be opened in two ways as material and moral damages. The person who has been harmed by the act of unfair competition with an action for damages will be able to demand compensation for the damage she has suffered. The opening of this lawsuit depends on the fault of the perpetrator and the damage of the plaintiff. In this case, the plaintiff will prove both the fault of the perpetrator, the amount of damage and the causal connection. Proving damage is not always easy. For this reason, in Turkish Code of Commerce Article 56/1(e), )“…it may also decide on the compensation for the benefit deemed possible by the defendant as a result of unfair competition.” statement is stipulated. In this case, upon the request of the plaintiff, the judge may adjudicate compensation in proportion to the defendant's profit.

It is also possible to file a lawsuit for moral damage against the act of unfair competition. The lawsuit for mental anguish can be filed in accordance with Article 58 of the Turkish Code of Obligations. In this case, the judge may also order the payment of a certain compensation or denunciationof the act and the announcement of this decision through the press. Although the judge decides on the scope and form of the announcement, in practice this announcement is made in daily newspapers.

One of the innovations foreseen in terms of lawsuits is that it is clearly stated in the law that customers whose economic interests are damaged or endangered can also file these lawsuits. In addition, it is clearly stated that the lawsuit, which is listed in the first three places above, can also be brought by chambers, professional associations and non-governmental organizations aimed at protecting the economic interests of the consumer. Thus, the law made it clear that these regulations were not intended to protect competitors only, and prevented the narrow interpretation that these lawsuits could only be brought by competitors.

The Lapse of Time

The above-mentioned lawsuits regarding unfair competition should be filed within one year from the date of learning of the act, and probably within three years from the commission of the act. With the article 60 of the YTTK, it also states that if the act is also a crime regulated in the Criminal Code, if a longer statute of limitations is foreseen, it will be subject to this statute of limitations.

Conclusion

As it can be understood from the situations listed above, while counting the cases of unfair competition by way of analogy, the number of examples given compared to the TTK (Turkish Commercial Code) has increased and it has made arrangements especially for the protection of consumers and public interests. This approach expands the scope of application in terms of the protection of unfair competition and harmonizes the regulations in Turkey with the regulations of the European Union. However, it should be avoıided that the implementation of these regulations in a way that limits competition and their interpretation more broadly than necessary. For this reason, it is very important to determine the honesty rule underlying the article and the violation of the honesty rule.