Guidelines on competition violations in labour markets have been published

The guidelines sets out the basic principles regarding competition violations in labour markets and addresses the application details for these violations within the framework of the Law on the Protection of Competition No. 4054 ("Competition Law").

Competition violations in labour markets

Under Article 4 of the Competition Law, agreements and concerted practices between undertakings, and decisions and practices of associations of undertakings which have as their object or effect or likely effect the prevention, distortion or restriction of competition directly or indirectly in a particular market for goods or services are illegal and prohibited. The guidelines consider agreements or concerted practices between employers aimed at determining employees' wages and other working conditions, or that have such an effect, as violations of Article 4 of the Competition Law. Additionally, agreements aimed at preventing employers from hiring each other's current or former employees, or that have such an effect, are also considered violations of Article 4 of the Competition Law.

The restrictive practices in labour markets envisaged under the guidelines and within the scope of Article 4 of the Competition Law can be summarized as follows:

Exchange of information

According to the guidelines, information exchange is defined as the exchange of any data directly or indirectly related to the labour between undertakings. This exchange can be unilateral or multilateral and can occur directly between undertakings or through third parties such as intermediary institutions or platforms. The Turkish Competition Board's approach to information exchange is outlined in the guideline on Horizontal Cooperation Agreements. In this context, competition-sensitive information in the labour market is classified as information related to wages or other working conditions that have a clear impact on employees' employment choices or general labour mobility. The guidelines also state that the activities of third parties, such as independent market research organizations and private employment agencies, will be taken into account in competition violations related to information exchange. According to the guidelines, information exchanges that simultaneously meet the following conditions will not have a clearly restrictive effect on competition:

• Information exchanges conducted by an independent third party,
• Sharing of data anonymously,
• Information relating to at least three months prior,
• Information containing data from at least 10 participants,
• No participant's data having more than 25% ratio in the total data.

Wage fixing agreements

The guidelines define wage fixing agreements as agreements where the working conditions of an undertaking's employees, such as wages, wage increase rates, working hours, fringe benefits, compensations, leave rights, and non-compete obligations, are determined collectively. Accordingly, agreements aimed at determining wages and other working conditions are considered illegal under Article 4 of the Competition Law and constitute a violation within the scope of the Competition Law.

No-poaching agreements

The guidelines define no-poaching agreements as agreements where an undertaking directly or indirectly agrees not to offer jobs to or hire the employees of another undertaking. Besides, no-poaching agreements are explained as the existence of an agreement between competitors aimed at restricting employee mobility, and it has been stated that this agreement can be done between undertakings or can be concluded through a third party.

Ancillary restraints

Another topic covered in the guidelines are ancillary restraints and the criteria for applying these restraints to agreements between undertakings. Ancillary restraints are defined as restrictions that are not the main subject of an agreement but are necessary and directly related to achieving the objectives of the agreement, and do not have the purpose or effect of preventing, distorting, or restricting competition. Restrictions on the labour in agreements between undertakings that are not anti-competitive in purpose or effect are evaluated as ancillary restraints based on whether these restrictions are directly related, necessary, and proportionate to the main agreement. However, for a restriction to be considered an ancillary restraint, such restriction must be in direct relevance to an integral part of the primary agreement, mut be essentially necessary for the implementation of the primary agreement and must be proportional.

Conclusion

With the publication of the guidelines, a general framework is provided for the detection of violations and anti-competitive behaviours in the labour markets, and the evaluation criteria for such behaviours. On the other hand, the guidelines do not contain detailed information on the evaluation and implementation of these restrictions and behaviours considered as violations by undertakings operating in different sectors and with different labour structures. It is expected that the decisions to be made by the Turkish Competition Board within the scope of the regulations foreseen in the guidelines and the evaluations that will emerge over time regarding the role of the guidelines in practice will also be guiding in the implementation of the guidelines.

Footnotes

1. The guidelines on competition infringements in labor markets