Turkish Ethics, Unfair Competition and Anti-Corruption Regulations

The provisions regarding the unfair competition have been applied in Turkish law for 90 years. For instance, the old code of obligations numbered 818 dated 1926 in Article 48 provides the right to sue for all damages or risk of damages arising from the act contrary to bona fide (good will) principles. This provision has been repeated in Article 57 of the new Code of Obligations numbered 6098 which was entered in force in 2012.

In line with this, the provisions concerning unfair competition in the old Turkish commercial code numbered 6762, in force between 1957 and 2012, was enacted by inspiration of the Swiss Federal Law on Unfair Competition dated 1943. As the original law has been changed in Switzerland in 1986, the new Turkish Commercial Code (TTC) has adopted the changed provisions and sets forth the unfair competition provisions under Articles 54-63. It is stated within these articles that the acts or commercial practices between competitors, providers and customers that are misleading or violating the rules of ethics or the bona fide (good will) principles are unfair and contrary to the law. The purpose of the unfair competition provisions is indicated as the formation of the context of fair and uncorrupted competition for the interest of all participants, including competitors and customers. Article 55 provides six examples of major unfair competition which are (i) the advertisement and sale methods that violate good faith principles. (ii) acts that influence customers to breach or terminate their agreements, with the intention to conclude agreements with them, (iii)unlawfully benefiting from products of a third party, (iv) use of general contract terms that violate the concept of good faith, (v) the disclosure of production or confidential information, (vi) the violation of business conditions
The TCC sets forth legal consequences such as (i) Declaratory action; (ii) Action to prevent the unfair competition act; (iii) Action for restitution; and (iv) Action for compensation of the damages that result from the unfair competition act.

The criminal consequences of the unfair competition is listed in TCC as imprisonment, security measures for the legal entities or fine is foreseen in case of acts of unfair competition.
In addition to this, the Act no 4054 on the Protection of Competition (act no 4054), provides the basis for the competition legislation in Turkey. Act no 4054 has been enacted following the basis of European Council’s regulation numbered 17/62.

It is stated as follows in Article 1 of the Act: “The purpose of this Act is to prevent agreements, decisions and practices preventing, distorting or restricting competition in markets for goods and services, and the abuse of dominance by the undertakings dominant in the market, and to ensure the protection of competition by performing the necessary regulations and supervisions to this end.” Accordingly, the transactions under the scope of the Act aimed at achieving this goal may be listed under three headings in articles 4, 6 and 7 of the Act: Article 4 concerns all agreements, practices and decisions between all kinds of undertakings operating in or effecting markets for goods and services within the borders of the Republic of Turkey which can prevent, distort or restrict competition, Article 6 concerns abuses of dominant power by undertakings which hold dominant position in a market, Article 7 concerns all legal transactions and behavior in the nature of mergers and acquisitions which aim to create dominant position or strengthen existing dominant position and which will significantly decrease competition as a result.

The Competition Authority which is charged with enforcing this Act is established in 1997. The main goal of the Competition Act is the prohibition of cartels and other restrictions on competition, prevention of abuse of dominant position by an entity which has dominance in a certain market and prevention of the creation of new monopolies by monitoring some merger and acquisition transactions.

Furthermore, there exists many legislation and code of practices issued by trade associations regarding doctors, lawyers, engineers, businessmen, industrials, craftsmen and other several self-employed professionals in order to ensure the discipline and reliance in the relevant sectors.

As are in every modern society, in order to develop a rightful and objective practice of public services, Turkey has developed several preventive and law enforcement measures for tackling discipline crimes and corruption in the country. Corruption, professional misconduct, neglect of duty are subject of severe sanctions. Thus, Turkey has ratified the United Nations Convention against Corruption (UNCAC). The Criminal Code criminalizes various forms of corrupt activity, including active and passive bribery, attempted corruption, extortion, bribing a foreign official, money laundering and professional misconduct.

Another institution which should be cited is the Council of Ethics which aims to improve transparency in public administration. The main function involves management and investigation of complaints about mismanagement and misconduct in public offices.

A national anti-corruption strategy (2010-2014) was also adopted in February 2010. However, weak enforcement of the regulations has been reported by several international organizations, such as the OECD, the EU and Transparency International.

Corporate Governance Principals and other related legislations within the capital markets sector has an important role for a rightful and transparent system in trade life.