Turkey: Forms Of Unfair Competition Under The New Commercial Code

The new Turkish Commercial Code ["TCC"], which will become effective on July 1, 2012, aims to ensure a fair and undistorted competition in favour of both traders and consumers, by re-describing unfair competition acts in accordance with the changing commercial activities.

The former law no. 6762 was based on the Swiss Federal Law on Unfair Competition dated 1943, that was later on replaced by the "Federal Law against Unfair Competition" in 1986. However, the Turkish system on unfair competition did not develop in line with the Swiss system, since Turkish courts and the doctrine designed a different model in practice. Nevertheless, although the Directive 2005/29/EC concerning unfair commercial practices ("Unfair Commercial Practices Directive") of the EU was considered by the legislator, the latter was mostly inspired by the Swiss Law dated 1986 while drafting the "unfair competition" provisions.

TCC defines the business practices that are considered as unfair competition and specifically lists the forms of transactions which are not allowed in commerce. As a general definition, commercial practices that affect the relation between competitors or between suppliers and customers, by means of misleading acts or any act against good faith, are considered as unfair competition.

In addition to the general definition, the Law also lists in six different categories the commercial practices and behaviours that are considered as a breach of "good faith":

1. Advertising and sales methods that cause a breach of good faith and other illegal acts:

• Defamation of others or others' goods, products, prices, activities and commercial businesses by means of false, misleading or unnecessarily libellous statements,
• Making false or misleading representations about its business, commercial signs, goods, products, activities, prices, stocks, method of sales campaigns and commercial relations or drawing someone ahead in the competition by using the same method,
• Giving false impression to third parties by making misleading representations about degrees, diplomas or awards or by pointing out itself as having special skills, or using false business titles or symbols,
• Taking actions that cause confusion with others' goods, products, activities or businesses,
• Comparing itself, its goods, products, activities, prices with competitors or their goods, products or prices by using a false or misleading method, by making unnecessarily libellous statements about competitors or by benefiting from its competitors 'reputation, and edging third parties ahead of competition by using similar methods,
• Offering certain goods, products or activities for sale more than once by indicating prices lower than the supply cost. Especially emphasizing such offer in adverts and thus misleading customers about its skills or its competitors' skills. – If the seller proves that the supply cost reflects the real price, the latter is taken into consideration in the assessment of unfair competition.
• Misleading customers about the real value of the offer with additional obligations,
• Limiting customer's freedom to decide by using aggressive sales methods,
• Misleading customers by hiding the particularities, amounts, purpose of use, benefits or dangers of goods, products or activities,
• Not clearly indicating its commercial title in the public announcements concerning instalment sale contracts or other similar transactions, or not indicating the cash or wholesale price or any additional cost generating from the instalment sale, in Turkish Lira and over the annual rates,
• Not clearly indicating its commercial title in the public announcements concerning consumer credits, or not making clear statements with regards to the net amount of credit, the total credit costs or the effective annual interests,
• Using contract forms concerning instalment sale or consumer credits that include inadequate or false information on the subject of the contract, price, payment terms, duration, renunciation or termination right or the right to pay the outstanding debt before the due date.

2. Leading someone to terminate or breach a contract:

• Leading its customers to terminate or breach their contracts with a third party in order to conclude a contract for itself with these customers,
• Attempting to create unfair benefit in its own favour or in favour of a third person, by providing or offering undeserved benefits to the employees, representatives or other subsidiaries of third parties or by providing or offering benefits that would lead them to breach their obligations while performing their work,
• Leading third party's employees, representatives or other subsidiaries to disclose or to obtain their employers' or clients' confidential production or business information,
• Leading a purchaser, who has already made an instalment sale, cash sale or consumer credit contract with a third party, to terminate or renounce this contract for the purpose of concluding the same with the purchaser in question,

3. Unauthorized use of others' business products:

• Using a business proposal, account or plan that is entrusted to it without authorization of the owner,
• Using a business proposal, account or plan of a third person though it was clear that these had been left and provided without authorization for use,
• Taking over the business products of others that are ready for marketing and have been created without its appropriate contribution, by means of technical copying methods,

4. Disclosure of trade secrets and production methods through illegal means:

• In particular, breach of good faith by using any manufacturer's information or trade secrets that were obtained in secret and without permission or learned through illegal ways, or disclosing such information to others.

5. Non-compliance with working conditions:

• In particular, not complying with the working conditions that are also applicable to competitors or are considered as ordinary in a specific business line or environment.

6. Application of transaction conditions that are against the good faith:

• In particular the following acts that are against the counter part of such transaction, by using misleading methods:
• • considerably failing to comply with the law that is directly applicable or would be applicable by means of interpretation or
  • determining rights and obligations, which are materially against the nature of the contract, against the counter part by using misleading methods

In the event that any of the above mentioned forms of unfair competition occurs, the person whose professional reputation, commercial activities or other economic interests have been damaged or risk to come to harm due to unfair competition may claim:

• the determination of whether or not the act in question constitutes unfair competition,
• the prevention of such unfair competition act,
• the indemnification of the related damages and losses, if the unfair competition is caused by default (such indemnity may be determined over the benefit gained through unfair competition),
• the suppression of the tangible results of unfair competition act, the correction of misrepresentations (if the unfair competition has been caused by false or misleading representations) and the destruction of the equipment and goods which have been effective in the occurrence of unfair competition.
• the payment of moral indemnity (if the conditions stipulated by Article 58 of the Code of Obligations have occurred).

In addition to those persons who are directly affected by any of the forms of unfair competition in terms of their business activities, the Law also allows consumers to benefit from the above mentioned legal protection, provided that they have been also damaged or risk to be damaged by the effects of unfair competition. Likewise, third parties such as chambers of commerce and industry, professional and economic unions, stock exchange or consumer NGOs may also claim the determination and prevention of unfair competition, correction of misrepresentations or destruction of the equipment and goods which were used for the purpose of unfair competition (if the last mentioned is necessary to prevent unfair competition).

Legal actions related with unfair competition acts are subject to a time limit of one year, from the date when the claimant learned of the unfair competition act. These rights lapse if they are not in any case used within three years starting from the date when such rights have arisen.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.