Unfair Competition Actions — Conditions, Types and Damages

A comprehensive guide to the conditions for an unfair competition action, the instances of unfair competition under TTK Arts. 54-63, the types of action, the burden of proof, limitation and the available legal remedies.

Freedom of competition, one of the fundamental principles of a free market economy, is not unlimited; conduct contrary to the rule of good faith, deceptive business practices and unlawful acts directed at competitors may constitute unfair competition. Articles 54-63 of the Turkish Commercial Code No. 6102 govern unfair competition, the rights of action and the sanctions.

What Is Unfair Competition?

Under TTK Art. 54, deceptive conduct and commercial practices, or conduct otherwise contrary to the rule of good faith, that affect relations between competitors or between suppliers and customers are unfair and unlawful. The aim is to secure fair and undistorted competition in the interests of all participants. It should be observed that the competitive relationship is not confined to direct rivalry, but that the conduct must affect economic competition.

Which Conduct Constitutes Unfair Competition?

TTK Art. 55 contains an illustrative list: disparaging others or their products; misleading statements about oneself, one's business or one's products; the unjustified use of chosen titles or professional designations; measures leading to confusion; misleading through comparative advertising or unnecessarily disparaging a competitor; inducing customers to breach a contract; unauthorised exploitation of the work product of others; unlawfully obtaining or disclosing manufacturing and trade secrets; failing to comply with business conditions; and using general terms and conditions contrary to the rule of good faith. Conduct outside the list may also constitute unfair competition if it breaches the general criterion in Art. 54.

What Are the Conditions for an Unfair Competition Action?

For claims for a declaration, an injunction and the removal of the unlawful situation, it suffices that there is conduct contrary to the rule of good faith within TTK Arts. 54–55 affecting economic competition and that the claimant is suffering or is at risk of suffering harm; actual loss and fault are not general conditions of those claims. For material damages, fault, loss and an adequate causal link are required; for moral damages, the conditions in TBK Art. 58 apply in addition.

Direct rivalry is not required. The conduct must affect the economic relations of competitors, suppliers, customers or other market participants. A breach of a statutory or contractual business condition falls within TTK Art. 55 only if it involves gaining a competitive advantage by not complying with a rule also imposed on competitors; not every tax, labour or occupational safety breach is automatically unfair competition.

Who Are the Claimant and the Defendant?

A person suffering or at risk of suffering harm may seek a declaration, an injunction, the removal of the unlawful situation and, where there is fault, damages. Customers may bring the actions in Art. 56 only to the extent that their economic interests have been harmed. Professional and economic associations whose economic interests are harmed, and civil society organisations and public bodies that protect consumers' economic interests under their statutes, may bring actions for a declaration, an injunction and correction; they may not claim damages unless they have suffered loss themselves.

The action may be brought against the person who committed the act of unfair competition and, where the conditions are met, against the employer, the press or broadcasting organisation, or the electronic communications service provider. The liability of each type of defendant is subject to the special conditions in TTK Arts. 57–58.

What Types of Unfair Competition Action Are There?

Under TTK Art. 56 a claimant may seek a declaration of unfair competition; an injunction; the removal of the factual situation created by the unfair competition, the correction of false or misleading statements and, where necessary, the destruction of the means and goods; and, where there is fault, material damages together with moral damages on the conditions in TBK Art. 58. The judge may also award as material damages the value of the benefit that the perpetrator might have obtained as a result of the unfair competition.

The claims may be advanced together where there is a legal interest and the conditions are met. An action for a declaration is not a mandatory precondition of the other claims. Loss need not have occurred for an injunction or correction; for damages, loss and fault must be proved. Destruction, publication and access-related measures are formulated with regard to proportionality and third parties' rights.

Limitation

Under TTK Art. 60 the actions are time-barred one year after the day on which the rightholder learned that the right of action had arisen, and in any event three years after the right arose. If the act also constitutes an offence subject to a longer limitation period for prosecution, that period also applies to the civil actions. Where the infringement continues, new loss or risk may arise for as long as it lasts, as regards a claim for an injunction; heads of damages are assessed by reference to their own dates of knowledge and accrual.

Burden of Proof and Evidence

Each party proves the facts on which it relies under HMK Art. 190. The claimant establishes the unfair conduct and its competitive effect and, where damages are claimed, also fault, loss and the causal link. The defendant's defensive facts, such as lawfulness, consent or exhaustion, are subject to their own burden of proof. Proof of actual loss is not required for a claim for a declaration or an injunction.

Contracts and correspondence, commercial books, advertisements and product samples, internet and social media records, expert examination, witnesses and market data may be used. Notarial determination of digital content is not the only mandatory method of proof; the preservation of evidence under HMK Art. 400 et seq., secure electronic records and other lawful evidence are assessed on the facts.

Interim Measures and Provisional Legal Protection

Under TTK Art. 61 and HMK Art. 389 et seq., an interim measure may be sought where a change in the existing situation risks making it more difficult to obtain the right or causing serious harm. The claimant proves the unfair competition and the need for the measure prima facie; the court has regard to the balance of the parties' interests, proportionality, security and third parties' rights.

A temporary suspension, the withdrawal of a particular advertisement or product from the market, the protection of trade secrets and the securing of evidence may be appropriate measures. Blocking access to internet content is not a routine or automatic measure in an unfair competition action; the conditions as to jurisdiction, identification of the URL or content and proportionality under the TTK, the Code of Civil Procedure and Law No. 5651 are required together.

The Criminal Dimension

The intentional acts listed in TTK Art. 62 are punishable, upon complaint and unless the act constitutes another offence carrying a heavier penalty, by imprisonment of up to two years or a judicial fine for each act. The statute does not provide for “a minimum of one year's imprisonment”. Where offences are committed within the activity of a legal person, criminal liability may arise for the members of its organs or partners who took part in the act; security measures may be applied in respect of the legal person.

Protection Against Unfair Competition and Preventive Measures

Businesses may reduce the risk of infringement through trade mark and design registration, monitoring of trade names and domain names, an inventory of trade secrets, access controls, confidentiality clauses, training of employees and suppliers, advertising approval processes and regular market monitoring. Non-competition agreements may not be used to control employee mobility without limit; they are subject to the conditions in TBK Art. 444 et seq. as to place, duration and subject matter and to the protection of the employee's economic future.

Where infringement is suspected, screenshots, product samples, sales records and correspondence should be preserved lawfully, and the need for the preservation of evidence or an interim measure should be assessed without delay. The timing of the application, the limitation period in TTK Art. 60 and the effect of a continuing infringement on the type of claim are calculated together.

Frequently Asked Questions

Does unfair competition arise only between competitors?

No. Conduct affecting suppliers, customers and other market participants may also fall within its scope.

What is the time limit?

One year from knowledge and in any event three years from the accrual of the right; the exception of a longer criminal limitation period is reserved.

What is the penalty?

Upon complaint, imprisonment of up to two years or a judicial fine for each act; the provisions on more serious offences are reserved.