Competition Board’s Decision as a Warning to Employers

The Competition Board concluded its investigation regarding 37 undertakings in the labor market. The investigation was initiated to examine whether the parties had entered into employee non-solicitation agreements that aimed to prevent transfer of employees and restrict employee mobility.

According to the statement made on the website of the Competition Authority, 16 of the parties subject to the investigation were found to have violated Article 4 of the Law No. 4054 on the Protection of Competition and were therefore subjected to administrative fines. The other 21 undertakings were not subjected to administrative fines. The total administrative fine imposed within the scope of the investigation amounted to TRY 151,147,902.

This investigation is of great importance as it is the most comprehensive investigation of the Competition Authority in the labor market, covering undertakings operating in different sectors. In previous years, the Competition Board had decided that investigations involving allegations regarding the labor market were out of scope and refrained from intervening. However, competition authorities around the world started to intervene in violations in the labor market through competition law instruments on the grounds that the market power of employers leads to a reduction or suppression of employee wages and sub-competitive working conditions. Following this trend, the Turkish Competition Authority also started to examine labor markets and accelerated its efforts in this direction. There are other ongoing investigations in this area, so we will continue to hear about the Competition Authority's interventions in labor markets and this issue will continue to be on our agenda.

So why were not all the undertakings under investigation fined?

When the oral hearings held on July 18-19 and the undertakings that were not fined are analyzed together, it is seen that the common point of the undertakings that were not fined is that only a small number of documents from other undertakings were found against the undertakings in question, and that these documents were internal correspondence/documents such as 'blacklists' created by other undertakings, rather than documents that would reveal a violation such as direct correspondence, and that there were no documents that would reveal a violation in the relevant undertakings. We will have more information on this issue when the reasoned decision is published. 

Within the scope of the investigation, anti-competitive agreements between undertakings operating in different sectors regarding the labor market were accepted as cartel agreements. In other words, even though the undertakings operate in different sectors, all undertakings were deemed to be competitors in the labor market. In this context, no matter which two undertakings enter into an agreement to restrict competition in the labor market, these agreements can be considered as cartels and could be punished by the Competition Board.

Employers are concerned about the administrative fines imposed because of the aforementioned investigation and the new investigations initiated. This is because the Competition Authority's changing approach conflicts with employers' concerns regarding the protection of intellectual and industrial property rights and trade secrets and raises questions about how employers will behave. Although the reasoned decision of this investigation will be instructive for all employers, employers still expect the Competition Authority to provide clarification and guidance on labor markets, as repeated several times during the oral hearings. However, waiting for the guidance does not protect employers. Until the guidelines are issued, it is of utmost importance for all employers to review their employment contracts and labor market practices from a competition law perspective.