20.06.2024
Authors: Gizem Ak Yürek, Oğuzhan Onur
In today's world, where economic and commercial life is built on liberal and global principles, "competition" is one of the concepts valued for ensuring the vibrancy and efficiency of economic life. While it is essential for actors in economic and commercial life to engage in "competition", limitations have also been imposed on activities aimed at competition to prevent actors from engaging in business, transactions and actions that violate the principle of good faith. In this legal brief, the matters defined as "unfair competition" in the relevant legislation and the legal actions that can be taken in cases constituting "unfair competition" are summarized and submitted for your information.
1. What is Unfair Competition?
Unfair competition is regulated in the Turkish Code of Obligations numbered 6098 ("TCO"), the Turkish Commercial Code numbered 6102 ("TCC") and in the other legislation not addressed in this legal brief.
Unfair competition, as regulated in TCO, refers to the situation where a person faces a decrease in customers or the risk of losing customers due to the dissemination of false news, advertisements, or other behaviours contrary to the good faith.
In TCC, unfair competition is defined as “behaviours or commercial practises that are deceptive or otherwise contrary to the good faith which affect relationships between competitors or between suppliers and customers”.
While the regulation in TCO is more limited and narrow in scope; in TCC, a more detailed regulation with various provisions on unfair competition is regulated. Cases which constitute “unfair competition” are exemplified in detail, and concrete indicators for determining unfair competition are specified.
Due to the regulation of unfair competition in these 2 (two) different laws, there are various Court of Cassation decisions stating that the regulations in TCC should be taken as the basis for resolving disputes related to unfair competition among merchants, while the regulations in TCO should be taken as the basis for resolving disputes related to unfair competition among non-merchants.
However, there are also opinions arguing that the broad and comprehensive regulations in the TCC should be applied to all disputes related to "unfair competition", regardless of whether the parties are "merchants" or not.
2. Cases Constituting Unfair Competition
In TCC, while the definition of "unfair competition" is provided, various cases constituting unfair competition are also listed separately.
Some of the cases specified in TCC as constituting "unfair competition" are as follows:
· Making false, misleading, or unnecessarily disparaging statements about third parties or their goods, activities, prices, etc.
· Making false or misleading statements about himself / herself / itself, his / her / its commercial enterprise, products, activities, etc.
· Attempting to create the impression of having "superior" abilities as if achieving success in this regard, without having received any title, diploma, or award.
· Taking measures or actions that lead to the confusion of third parties' goods, activities, or businesses with his / her / its own.
The cases specified in TCC are not "limited in number"; they are merely examples of unfair competition that are commonly encountered in everyday life. Therefore, even if not explicitly mentioned in TCC, actions or behaviours that are "deceptive" and/or contrary to the good faith affecting relationships between competitors and/or individuals operating in the market and customers shall constitute "unfair competition".
There are 3 (three) main criteria considered in determining unfair competition. Accordingly, for a case to constitute unfair competition:
· There must be an action or activity that affects commercial life.
· This action or activity must be "deceptive" or “contrary to the good faith”.
· The related action or activity must affect the relationship between competitors or between suppliers and customers.
In this context, in various decisions of the Court of Cassation it is stated that the following cases constitute "unfair competition":
· Selling bread at a price lower than the one determined by the Chambers of Bakers,
“…Considering the costs, it was deemed obligatory for the standard 250-gram white bread to be sold at 0.75 TRY as of the date of the lawsuit. However, it was acknowledged that the defendant sold bread at 0.50 TRY, which was below this price. The defendant also admitted to this fact. Based on these grounds, the lawsuit was accepted, and it was determined that the defendant's actions constituted unfair competition. Accordingly, a decision was made to ascertain the unfair competition and to cease it…”[1]
· Unauthorized use of information such as "examination periods," "vaccination days," etc., belonging to a clinic or medical center,
“…It is understood that the business product related to the customer information transferred to the plaintiff company consists of qualified information such as patient names and addresses, examination periods, vaccination days, etc. As stated by the expert committee consulted, the unauthorized use of this information from the plaintiff constitutes unfair competition…”[2]
· Importing and selling the originals of the products subject to an exclusive distribution agreement by purchasing them from the third countries.
“…When offering goods brought into the country entirely legally through importation for sale, the defendant must avoid presentations that would create the impression that these goods are from the manufacturer's authorized seller, distributor, or sales center. From this perspective, it can be seen that in the specific case, the defendant used the plaintiff's brand and the word "guide" in its title in a manner that would create the impression that they were in a contractual relationship such as dealership or authorized dealership with the plaintiff.
Accordingly, it is not deemed correct to dismiss the lawsuit in its current written form without considering the aspects mentioned, especially since the actions of the defendant company constitute unfair competition within the meaning of Articles 56 and 57/5 of TCC. Therefore, if the conditions for determining and preventing unfair competition exist, as well as if there are grounds for awarding compensation, the court should have ruled in favor of determining and preventing unfair competition and, if necessary, awarding compensation. Therefore, it is deemed necessary to accept the appeal of the plaintiff's attorney in this regard and to overturn the decision in favour of the plaintiff…”[3]
Within the scope of unfair competition, it should also be noted that for an action or activity to constitute "unfair competition", it is not obligatory that;
· There is a “competitive relationship” between the parties;
· The person taking an action or engaging in an activity constituting unfair competition have gained a benefit;
· The person taking an action or engaging in an activity constituting unfair competition is faulty and/or;
· The person subjected to unfair competition have been “damaged".
If the previously mentioned 3 (three) criteria are present, the related action or activity shall constitute "unfair competition".
3. Legal Actions That Can Be Taken In Case Of Unfair Competition
The legal actions that can be taken by the related persons in case of unfair competition and the issues that can be requested from the relevant court in this regard are as follows:
· Determination of unfair competition,
· Prevention of unfair competition,
· Reinstatement of the situation resulting from unfair competition,
· Material compensation,
· Moral compensation.
3.1. Determination Of Unfair Competition
In TCC, the first right granted to the related persons within the scope of "unfair competition" is the right to request the determination of unfair competition from the court.
In TCC, with a special lawsuit regulated for “unfair competition” which is a spesific type of lawsuit known as “declaratory lawsuit”, the relevant persons are granted the right to request from the court the determination of whether an existing situation constitutes "unfair competition".
In this regard, it should be noted that with the relevant lawsuit, it is possible to request from the court not only the determination that a situation constitutes "unfair competition" but also the determination that it does not constitute "unfair competition".
3.2. Prevention Of Unfair Competition
In TCC, the related persons are also granted the right to request from the court the prevention of unfair competition.
Under the scope of "prevention of unfair competition," the court can be requested to cease an action or activity that currently exists and constitutes unfair competition; or to prevent an action or activity that has the potential to cause unfair competition or is likely to recur.
3.3. Reinstatement Of The Situation Resulting From Unfair Competition
The elimination of the situation resulting from an action or activity constituting unfair competition can be referred to as "reinstatement".
In this regard, if a situation constituting unfair competition already exists the relevant court can be requested to eliminate the situation and/or means constituting unfair competition for the purpose of removing the unfair competition.
3.4. Material Compensation
It is also possible for persons who has suffered damage from an action or activity constituting "unfair competition" to file a lawsuit claiming "material compensation".
For material compensation to be claimed due to unfair competition:
· An action or activity constituting unfair competition must exist,
· "Damage" must have occurred as a result of this action or activity.
· The person taking action or engaging in activity which constitutes unfair competition must be "faulty".
In this context, the person who has suffered damage due to unfair competition can claim material compensation proportional to the "benefit" obtained by the person taking action or engaging in activity which constitutes unfair competition.
3.5. Moral Compensation
In TCC, it is also regulated that moral compensation can be claimed due to "unfair competition".
For real persons, issues such as "honour and dignity," "physical integrity," "privacy of private life," etc., are evaluated within the scope of "personality rights," while for legal persons, issues such as "commercial reputation," etc., are evaluated within the scope of "personality rights".
In this regard, real or legal persons who suffer damage to their "personality rights" as a result of actions or activities constituting "unfair competition" can claim moral compensation from the court.
4. Conclusion
In economic and commercial life, there are cases that occasionally constitute "unfair competition". These cases are extensively regulated in our legislation and the relevant persons are granted various rights in this context.
The utilization of these rights is important for preventing unfair competition between actors and mitigating potential material and/or moral damages.
If you have any questions regarding “unfair competition” and the legal actions that can be taken in this regard, feel free to contact us anytime.
[1] The Decision of the 11th Civil Chamber of the Court of Cassation Numbered 2017/1916 F. and 2018/7379 D., Dated 26.11.2018
[2] The Decision of the 11th Civil Chamber of the Court of Cassation Numbered 2015/4798 F. and 2015/12224 D., Dated 18.11.2015
[3] The Decision of the 11th Civil Chamber of the Court of Cassation Numbered 2007/10509 F. and 2008/13713 D., Dated 01.12.2008