Our article addresses the unfair competition regime under Turkish law, explaining the good faith standard, the six categories of prohibited conduct, the available actions, the liability of employers and media and information service providers, interim injunctions, limitation periods and criminal liability.
Competition law is generally associated with cartels and abuse of dominance. Yet the competition disputes undertakings encounter most frequently in commercial life arise not there but under the unfair competition regime. A competitor making misleading statements about a product, the use of distinctive signs in a way causing confusion, inducing a competitor's employee to breach its contract, a bidder exploiting a rival's calculations and plans, or securing a price advantage by failing to comply with costs imposed by regulation; these are the typical manifestations of this field. The Turkish Commercial Code prohibits such conduct through a framework built around the standard of good faith, without any separate authorisation regime. The scope of the regime protects not only competitors but also the relationships between suppliers and customers and, ultimately, the functioning of the market. This article examines the definition and purpose of unfair competition, the six categories enumerated in the Code, the available actions, the liability of employers and of media and information service providers, interim injunctions, limitation periods and criminal liability.
1. The Definition and the Interest Protected
Under the relevant article of the Turkish Commercial Code, deceptive conduct and commercial practices, and conduct otherwise contrary to the rule of good faith, affecting relations between competitors or between suppliers and customers, are unfair and unlawful. Three aspects of this definition are notable. First, the scope of protection is not confined to relations between competitors; relations between suppliers and customers also fall within it. It follows that a direct competitive relationship between the parties is not a precondition of unfair competition. Second, the standard is good faith; the unlawfulness of conduct derives not from whether it corresponds exactly to a prohibited act enumerated in the Code, but from whether it is compatible with the rule of good faith. Third, the purpose of the Code is not merely to protect individual interests; the stated aim is to secure fair and undistorted competition in the interest of all participants. This threefold structure shows that the unfair competition regime carries both a private law and a market order dimension.
2. The Enumeration Is Illustrative
The Code enumerates the cases constituting breach of good faith in six categories. This provision was drafted in conformity with the corresponding articles of the Swiss Unfair Competition Act. The essential point to emphasise is that the enumeration is illustrative and is not regarded as exhaustive. The wording of the Code makes this plain; the cases listed are the principal cases of unfair competition. The practical consequence is significant. That conduct does not correspond exactly to any of the six categories does not mean it is not unfair competition; if it meets the good faith standard in the general provision, it may be characterised as unfair competition. This flexibility carries particular value in relation to forms of conduct arising in the digital environment and unforeseeable when the Code was drafted. The use of a competitor's trademark as a keyword in search engine advertising, fake user reviews, misleading rankings on comparison platforms and manipulation conducted through search engine optimisation can all be assessed under this general standard.
3. Advertising and Sales Methods Contrary to Good Faith
The first category has the widest field of application in practice and contains numerous sub-headings. Foremost among them is disparagement; disparaging others, their goods, work products, prices or activities by false, misleading or unnecessarily injurious statements constitutes unfair competition. The standard here requires attention; even where a statement is true, it may constitute unfair competition if it is unnecessarily injurious. The second sub-heading is gaining an advantageous position by making untrue or misleading statements about oneself, one's commercial enterprise, goods and business. The third is the use of titles and designations contrary to the truth. The fourth is confusion; taking measures leading to confusion with another's goods, work products, activities or enterprise falls within this scope. Alongside these, the use of excessively low prices with the aim of forcing a competitor from the market, misleading the customer as to the real value of an offering through additional benefits, concealing the duration and quantity of sales campaigns, and every form of aggressive sales method are assessed under this category.
4. Inducing Breach or Termination of Contract
The second category targets conduct interfering with contractual relations. Inducing the breach or termination of a contract constitutes unfair competition. The most important manifestation in practice is inducing customers, in order to conclude contracts with them oneself, to act contrary to the contracts they have made with others. An undertaking interfering in a competitor's existing contracts in this way is not regarded as exercising its own freedom of contract; it has breached the rule of good faith. The second manifestation is providing or offering to third parties' employees, agents and other auxiliary persons benefits they do not deserve and which may induce them to act contrary to their obligations. The third is inducing employees, agents or other auxiliary persons to disclose or obtain the production and business secrets of their employers or principals. This third manifestation is the principal basis relied upon in information leaks occurring through employee transfers. The category also covers inducing a person to extend credit despite knowledge of its lack of capacity to pay.
5. Unauthorised Exploitation of Another's Work Product
The third category concerns the protection of labour and investment. Taking unauthorised advantage of the work products of others constitutes unfair competition. The first manifestation is taking unauthorised advantage of a work product entrusted to one, such as an offer, calculation or plan. The second is taking advantage of a work product belonging to third parties, such as an offer, calculation or plan, where it ought to be known that it was entrusted or supplied without authorisation. What is required here is not actual knowledge but the obligation to know; a duty of care therefore comes into play according to the circumstances. The third manifestation is taking over, by technical means of reproduction and without any appropriate contribution of one's own, another's work products ready for marketing and exploiting them. This provision protects work results that fall outside the scope of intellectual property legislation but represent serious labour and investment, and in this respect fills the gap left by registration-based protection.
6. Disclosure of Production and Business Secrets
The fourth category governs the unlawful disclosure of production and business secrets. Under the provision, a person who evaluates or communicates to others information obtained secretly and without permission, or learned in some other unlawful manner, and the business secrets of the producer, has acted contrary to good faith. The scope of this category is not confined to the person who obtains the secret; it also covers the person who evaluates and disseminates it. Since there is no dedicated statute governing trade secrets under Turkish law, this category constitutes the principal basis of trade secret protection. Read together with the inducement provision in the second category, a chain of liability emerges covering both the person who encourages the transfer of a secret and the person who transfers and uses it. The elements of trade secret protection, confidentiality agreements and the problems of proof form the subject of a separate study; in this article the category is addressed only as a component of the unfair competition system.
7. Failure to Comply with Business Conditions
The fifth category is a provision that receives less attention in practice than it deserves while performing a serious function. Those who fail to comply with business conditions imposed on competitors as well by statute or contract, or usual in a branch of business or locality, have acted contrary to good faith. The logic of this provision is that competition must proceed under equal rules. An undertaking that secures a cost advantage by failing to comply with obligations imposed by legislation creates an unfair advantage for itself in the market. In practice this category may be invoked against undertakings failing to comply with employment legislation, occupational health and safety rules, environmental obligations, product safety and standards regulations, or sectoral authorisation and licence conditions. The value of the provision is that it goes beyond meeting such breaches with administrative sanctions alone and confers a direct right of action on the competitor that does comply. In this respect the category makes regulatory compliance an element of competition.
8. Use of General Terms Contrary to Good Faith
The sixth category establishes the unfair competition dimension of standard contract texts. Using terms of business contrary to the rule of good faith constitutes unfair competition. The provision targets in particular those who use pre-drafted general terms which, in a misleading manner and to the detriment of the other party, depart significantly from the statutory regime applicable directly or by way of interpretation, or which provide for a distribution of rights and obligations significantly contrary to the nature of the contract. The existence of this category shows that the review of general terms operates along two separate axes. On the first axis, incorporation, interpretation and content review are conducted within the framework of the Turkish Code of Obligations and the sanction is that the provisions are deemed unwritten; this review is directed at the relationship between the parties to the contract. On the second axis, the same conduct constitutes unfair competition on the ground that it distorts the market order, and gives rise to a right of action for competitors and customers. This second axis is frequently overlooked by undertakings using standard texts.
9. The Available Actions
A person whose customers, credit, professional reputation, commercial activities or other economic interests are harmed, or who faces such a danger, by reason of unfair competition may bring the actions enumerated in the Code. An action for a declaration seeks a determination of whether the act is unfair. An action for prevention seeks the cessation of a continuing breach or one likely to be repeated. An action for removal seeks the elimination of the material situation resulting from the unfair competition, the correction of false or misleading statements where the unfair competition was committed by such statements, and, where unavoidable in order to prevent the infringement, the destruction of the instruments and goods effective in committing it. An action for damages seeks compensation where there is fault; moral damages may also be claimed where the conditions are met. The successful party may also request publication of the judgment after it becomes final, at the expense of the unsuccessful party. The right of action is conferred not only on competitors but also on customers whose economic interests are harmed.
10. Liability of Employers and of Media and Information Service Providers
The Code contains two special provisions as to the persons against whom liability may be directed. The first concerns the liability of employers; where the act of unfair competition has been committed by employees or workers in the course of performing their services or work, the actions for declaration, prevention and removal may also be brought against the employer. As regards actions for damages, the employer's liability arises under the general provisions. This provision demonstrates the risk undertakings bear through the acts of their employees and underlines the importance of internal training and compliance programmes. The second concerns the liability of press, broadcasting, communication and information service providers. Where unfair competition has been committed through the publications or services of such providers, an action may in certain conditions be brought against them as well, although liability is kept narrow through a graduated structure. This provision carries practical value in relation to disparagement campaigns and misleading content disseminated through digital platforms.
11. Interim Injunctions
The most effective instrument in unfair competition disputes is often the interim injunction. The Code contains a specific provision on this matter, providing that upon the application of a person entitled to bring an action the court may order an interim injunction within the framework of the relevant procedural provisions. The value of the injunction lies in preventing the loss from growing while the breach continues. Where a misleading advertising campaign, packaging causing confusion or an imitation product already on the market is in issue, waiting for the substantive action to conclude gives rise to losses difficult to make good. By way of an injunction it may be sought that the advertisement be stopped, that sales of the products be prevented, that imitation products be seized or that the relevant content be blocked. The applicant must satisfy the burden of prima facie proof; gathering evidence before the application, having screenshots and promotional materials recorded through a notary and obtaining sample products where available therefore directly affect the prospects of the application succeeding.
12. Limitation Periods
Unfair competition actions are subject to short limitation periods, and missing those periods is a frequent cause of lost rights in practice. Under the Code these actions become time-barred upon the expiry of one year from the day on which the party entitled to bring the action learned of the accrual of those rights, and in any event three years from their accrual. As to the commencement of the one-year period the moment of learning is decisive; it is accepted that learning requires not merely awareness of the act but also knowledge of the identity of the perpetrator. The three-year period is objective in character and expires even where learning has not occurred. An important exception applies to these periods; where the act of unfair competition is at the same time an act requiring a penalty subject to a longer prosecution limitation period under the Turkish Criminal Code, that longer period also applies to the civil actions. Since in continuing breaches limitation is accepted to begin anew each day, the calculation of the period in continuing conduct requires separate assessment.
13. Criminal Liability
Unfair competition gives rise to criminal as well as civil liability. The Code makes certain acts of unfair competition offences and provides for a penalty of imprisonment of up to two years or a judicial fine. Among the acts falling within the offence are intentionally committing one of the cases of unfair competition enumerated in the Code, intentionally giving false or misleading information about one's own position, goods and work products so that one's own offers are preferred to those of competitors, deceiving employees or auxiliary persons in order to obtain secrets, and employers failing to prevent such acts. Prosecution of the offence depends on a complaint; the right to complain is conferred on the persons entitled to bring the civil actions. The complaint period runs from the time the act and the perpetrator become known and must not be missed. The Code further contains a specific provision on the liability of legal persons, applying where the act of unfair competition is committed in the course of conducting the business of a legal person.
14. Mistakes Frequently Made in Practice
Certain mistakes are frequently repeated in unfair competition disputes. The first is missing the one-year limitation period; since the period is short, action must be taken the moment the breach is detected. The second is bringing the substantive action without seeking an interim injunction; the breach then continues throughout the proceedings and the loss grows. The third is bringing an action without preserving evidence; since content in the digital environment can readily be removed, screenshots and publications must be recorded in advance. The fourth is abandoning a claim on the ground that the conduct does not correspond exactly to one of the six categories; the enumeration is illustrative and the general standard is good faith. The fifth is assuming that only a competitor may bring an action; customers whose economic interests are harmed may also sue. The sixth is insufficient preparation for proving loss in a damages claim. The seventh is neglecting the criminal route; a complaint may be effective both for deterrence and for obtaining evidence.
15. Conclusion and Practical Recommendations
The unfair competition provisions constitute one of the most frequently invoked protective instruments in commercial life. The basic considerations may be summarised as follows. The standard is good faith; since the cases enumerated in the Code are illustrative, conduct not corresponding exactly to a category may also constitute unfair competition. Protection is not confined to competitors; relations between suppliers and customers fall within the scope and the right of action is conferred on customers as well. The six categories cover a broad field, from advertising and sales methods to inducing breach of contract, from unauthorised exploitation of work products to the disclosure of secrets, and from failure to comply with business conditions to general terms contrary to good faith. Actions for declaration, prevention, removal and damages are available, and publication of the judgment may also be sought. An employer may be held liable for the acts of its employees. The interim injunction is the most effective instrument for preventing the loss from growing, and evidence must be preserved before the application. Limitation is kept short at one year and three years, and where the act constitutes an offence the longer criminal limitation period applies. The criminal route may be pursued separately upon complaint.
The unfair competition provisions are closely connected with the other fields of commercial and contract law. Our article on protecting trade secrets and know-how under Turkish law, which examines the category on the disclosure of production and business secrets in detail, and our analysis of the review of general terms and conditions, which forms the other axis of the category on terms contrary to good faith, address the matters connected with unfair competition.
For advisory services on the conduct of unfair competition actions, applications for interim injunctions, the preservation of evidence and the assessment of commercial practices from an unfair competition perspective, you may contact us at info@guzeloglu.legal.