UNFAIR COMPETITION UNDER THE TURKISH COMMERCIAL LAW 11 December 2020

1. Unfair Competition Concept

The concept of unfair competition can be defined as all actions and acts that disrupt the economic order in violation of the rule of honesty and that cause results against the actors of the economic order. Unfair competition under Turkish law is regulated under the provisions of both the Turkish Code of Obligations ("TCO") and the Turkish Commercial Code ("TCC"). However, the provision of the TCO which includes the regulation on unfair competition foresees that the provisions of the TCC regarding unfair competition in commercial affairs will be applied.

The purpose of the provisions of the TCC, which will be applied on unfair competition in commercial affairs, is expressed as “ensuring honest and undistorted competition for the benefit of all participants”. In this respect, in accordance with Article 54 of the TCC; deceitful or other forms of violation of the rule of honesty and business practices that affect relations between competitors or between suppliers and customers are unfair and illegal. In order to accept the existence of unfair competition within the scope of the TCC, it is not necessary for any damage to occur and the existence of fault is not required.

2. Unfair Competition

Unfair competition is regulated in six categories in Article 55 of the TCC. However, these cases are exemplary and not counted as limiting.

(1) Advertisements and sales methods against the rule of honesty and other unlawful acts and especially;

1. Denigrating others or their property, business products, prices, activities or commercial affairs with false, misleading or unnecessarily hurtful statements,
2. Making untrue or misleading statements about itself, its commercial enterprise, business signs, goods, business products, activities, prices, stocks, form of sales campaigns and business relations or to put the third party ahead of the competition by the same means,
3. Trying to pretend to have an exceptional talent by acting as if he / she has not received a degree, diploma or award, or to use incorrect occupational names and symbols suitable for this.
4. Taking measures that cause confusion with someone else's property, business products, activities or jobs,
5. In a way that is untrue, misleading, unnecessarily denigrating the competitor or unnecessarily exploiting its reputation; comparing others, goods, business products or prices, or putting the third party ahead in similar ways,
6. Offering certain selected goods, business products or activities for sale more than once below the supply price, especially emphasizing these offers in their advertisements and thus misleading customers about their own or competitors' ability; in so far, if the selling price is below the procurement price applied in the purchase of the same kind of goods, business products or activities in similar volumes, the existence of deception is presumed; if the defendant proves the actual procurement price, this price becomes the basis for evaluation,
7. Mislead the customer about the true value of the presentation with additional actions,
8. Limiting the customer's freedom of decision with particularly aggressive sales methods,
9. Hiding the characteristics, quantity, purpose of use, benefits or dangers of goods, business products or activities and thus mislead the customer,
10. Not clearly declaring the title in public announcements regarding installment sales contracts or similar legal transactions, not to indicate the cash or total sales price or the additional cost arising from the installment sales in Turkish Lira and annual rates,
11. Not clearly declaring the title in public announcements regarding consumer loans or not making explicit statements regarding the net amounts of loans, total expenses and effective annual interest rates.
12. To use contract formulas that offer or enter into installment sales or consumer loan contracts within the framework of its operations and in this context contain incomplete or incorrect information regarding the subject of the contract, price, payment terms, contract term, right of withdrawal or termination of the customer or the right to pay the remaining debt before maturity.

(2) Directing the contract to tender and termination; especially;

1. To encourage customers to act in violation of the contracts they have made with others so that they can conclude a contract with them personally,
2. Trying to provide benefits to themselves or others by providing or proposing benefits to third parties' workers, attorneys and other assistants that they do not deserve and that may lead them to act contrary to their obligations in the performance of their work,
3. Directing workers, attorneys or other assistants to reveal or seize the production and business secrets of their employers or clients,
4. To force the buyer or the borrower who has made an installment sales, cash sales or consumer loan agreements to withdraw from this contract or the buyer who has made a cash sale agreement to terminate this contract in order for her/ his to conclude a such type of contract with them personally

(3) Unauthorized use of others' business products; especially;

1. Unauthorized use of a business product such as an offer, account or plan entrusted,
2. To benefit from a business product such as a third-party offer, account or plan, although it is known that these have been deposited or provided without authorization,
3. To take over and benefit from someone else's ready-to-market work products by means of technical reproduction, without her / his own appropriate contribution.

(4) Unlawfully disclosing production and business secrets; especially, evaluate or inform others about the information obtained secretly and without permission or otherwise unlawfully learned and the business secrets of the producer acting against honesty.

(5) Not complying with business conditions; especially, those who are imposed on competitors by law or contract, or those who do not comply with the business conditions usual in a profession or environment, acting against honesty.

(6) Using terms and conditions contrary to the rule of honesty; especially, misleadingly against the other party

1. Significantly departing from the legal regulation to be applied directly or through interpretation, or
2. Those who use the pre-written general terms and conditions, which envisage the distribution of rights and obligations that are significantly contrary to the nature of the contract, acting against honesty.

3. Lawsuits Filed in Case of Unfair Competition

In the presence of unfair competition, lawsuits that can be filed by persons whose customers, credit, professional reputation, commercial activities or other economic interests are damaged or who may face such a danger due to unfair competition are regulated in Article 56 of the TCC.

(1) Declaratory Lawsuit: It is aimed to determine whether the act is unfair or not. It can be filed to determine whether the act is unjust or not, as a basis for the injunction, revocation or damage actions that are planned to be initiated in the future.

(2) Case of Injunction of Unfair Competition: In the event that unfair competition act exists and continues, it is aimed to eliminate this act or to prevent unfair infringement that is highly likely to occur in the future. It can be filed for the objection or the prevention of an act by a person who has suffered damage due to unfair competition or is exposed to the risk of harm.

(3) Case of Revocation of Unfair Competition: It is aimed to provide the situation before the act that reveals unfair competition. It can be filed for the elimination of the material situation that is the result of unfair competition, correction of these statements (if unfair competition is made with false or misleading statements) and (if it is inevitable to prevent the violation) the destruction of the vehicles and goods that are effective in the processing of unfair competition.

(4) Damage Action: It can be filed in two forms as a pecuniary and non-pecuniary damages case. Since unfair competition is a special form of tort, in accordance with the terms of the TCO in order to claim compensation; the existence of an illegal act, the offender being at fault, the existence of harm or risk and a causal link must exist. However, due to the fact that proving the damage is not always easy, with the provision of TCC Article 56/1-e; in favor of the plaintiff, it was stated that the judge may decide the value of the benefit deemed possible to be obtained by the defendant as a result of unfair competition.

It is acknowledged in Article 56/2 of the TCC that customers whose economic interests are harmed or who may face such a danger may also file the lawsuits described above, but these persons cannot request the destruction of vehicles and goods.

Chambers of commerce and industry, chambers of tradesmen, exchanges and other professional and economic associations authorized to protect the economic interests of their members according to their statutes and non-governmental organizations and public institutions that protect the economic interests of consumers according to their statutes can also open the above-mentioned lawsuits, except for damage actions.

4. Statute of Limitations

Lawsuits that can be filed in the event of unfair competition in accordance with Article 60 of the TCC, one year from the day the party with the right to litigation learns that these rights have occurred, and in any case, three years after their occurrence. However, if the act of unfair competition is also an act requiring a penalty, which is subject to a longer legal limitation period in accordance with the Turkish Criminal Code, this period is also valid for civil cases.