Turkish Competition Authority Shines Light on Labour Markets
Introduction
On 03.12.2024, the Turkish Competition Authority (“TCA“) announced that the Competition Board (“Board“) had adopted the Guidelines on Competition Infringements in Labour Markets (“Guidelines“) with its decision dated 21.11.2024 and numbered 24-49/1087-RM(4), following the publication of the Draft Guidelines on Competition Infringements in Labor Markets (“Draft Guidelines“) and the receipt of public feedback.
The Guidelines were highly expected, given that the TCA had conducted four investigations over the past four years, involving more than fifty undertakings and resulting in administrative fines. There are also ongoing investigations into labour markets. By publishing the Guidelines, the TCA aims to provide clarity and guidance to undertakings moving forward.
The Guidelines are closely aligned with the Federal Trade Commission’s (“FTC“) and US Department of Justice’s (“DOJ“) Antitrust Guidance for Human Resources Professionals, as well as the European Commission’s (“EC“) Competition Policy Brief dated May 2024. The Guidelines are different from the other agencies because they provide a more detailed analysis of the labour market. The Guidelines go beyond the scope of existing frameworks by offering in-depth analysis and addressing specific issues, such as the assessment of labour markets in mergers and acquisitions.
This article examines the key points of the Guidelines, which aim to provide clarity on potential infringements in the labor markets, as well as highlight how they are different from the Draft Guidelines. It also explains what types of infringements are expected to fall under the Turkish Competition Law, and how the Board proposes to address those issues. The Guidelines explain that labour is an important input in the production and sale of goods and services. It is therefore a crucial factor in the competition between undertakings. The Guidelines state that any agreements or concerted practice between employers or practices or decisions by associations of enterprises that have the effect or object of fixing employees’ salaries and other working conditions will be considered a breach of the Competition Law. The Guidelines also clarify that employers operating in different industries can still be considered competitors on the labour market. Additionally, the Guidelines address circumstances under which such agreements may be considered ancillary restraints, allowing for certain exceptions when the restrictions are necessary and directly related to the objectives of the agreement.
Wage-Fixing Agreements
Wage fixing agreements are defined as agreements where undertakings jointly determine the working conditions of their employees, including wages, wage increases, working hours, side benefits, compensation, leave rights, and non-compete obligations. In the Draft Guidelines, physical working conditions were also considered as part of the working conditions, but this has been removed in the final version of the Guidelines.
In line with the Board’s previous decisions
on labour markets, the Guidelines state that agreements to fix wages and other working conditions constitute a violation of competition by object and would be considered as cartels.
Lastly, it is stated that wage fixing agreements can be made either directly or through a third party. In the event that a third party mediates or facilitates the agreement, the third party may be considered as a party to the infringement depending on the characteristics of the case at hand.
No-Poach Agreements
The Guidelines define no-poach agreements as agreements, directly or indirectly, in which one undertaking agrees not to offer employment to or recruit active or former employees of another undertaking. No-poach agreements can exist even when the parties do not prohibit or completely prohibit the recruitment or offer of employment to each other’s employees, but instead condition such employment on mutual consent or consent from the employee’s employer. The Guidelines also clarify that these agreements may involve active employees as well as former employees. The key issue, in any case, is whether there is an agreement between competitors to restrict employee mobility.Similar to wage-fixing agreements, the Guidelines treat no-poach agreements within the same framework as provider/customer sharing agreements. No-poach contracts are therefore classified as cartels and are deemed to be an infringement of the law by object. As a matter of fact, in the Board’s Private Hospital Decision
, it is concluded that “agreements to fix employees’ salaries/agreements not to poach employees, which constitute the main part of competition law enforcement in labour markets, are not different from cartels established on the buyer side of a market.”
Moreover, according to the Guidelines, no-poaching agreements can be made either directly between undertakings or through a third party. If a third party mediates or facilitates the agreement, that third party may also be considered a party to the infringement, depending on the specific circumstances of the case at hand.
Exchange of Information
In the Guidelines, it is stated that the exchange of information can be either unilateral, involving disclosure of individual data between undertakings, or multilateral, involving the mutual exchange of data. It can be done directly between the undertakings or via third-party channels such as intermediary organizations, platforms, associations, independent market research organisations or private employment agencies. It can also take place via websites, media, and algorithms.The Guidelines state that exchanging competitively sensitive information may be considered as an agreement or concerted practice that restricts competition since they reduce uncertainty in the market, facilitate anticompetitive cooperation and provide a mechanism for detecting deviations from a possible agreement between competitors.
The Guidelines refer to the Guidelines on Horizontal Cooperation Agreements for the framework regarding how the Board addresses exchanges of information under Competition Law and also mention that an anticompetitive object or effect will also arise when information exchange is related to input market.
The Guidelines explain what type of information in labour markets may produce such results. Information about wages or working conditions which affect an employee’s choice of employment, or labour mobility in general, are considered competitively sensitive. The Guidelines list wage increases, working time, fringe benefits and compensations, as well as leave entitlements. In this context, the Guidelines conclude that any information exchange made with the intention of restricting competition in the market will be considered as a restriction of competition, regardless of its effect. The Guidelines have narrowed their scope from “all types of working conditions” to “working conditions that have an obvious impact on labour mobility generally”. Additionally, the example of physical working conditions has been removed from the list, in line with the change made regarding wage-fixing agreements.
Furthermore, the Guidelines also provide guidance for undertakings involved in the exchange of information as third parties such as independent market survey organizations and private employment agencies. The Guidelines state that the exchange of unaggregated data, especially when it involves current or future information that would allow the identification of data sources, or the exchange of individual non-public data can have anti-competitive effects. According to the Guidelines, the exchange of unaggregated data, especially when it involves current or future information that would allow the identification of the data source, or the exchange of individual, non-public data, can create anti-competitive effects.
Unlike the Draft Guidelines, the Guidelines specify that the exchange of information generally will not be considered anti-competitive if it meets all the following conditions:
The exchange should be managed by a third party,
The data should be anonymized, ensuring that the source or individual data points cannot be identified,
The information exchanged must be at least three months old,
The data should include information from at least ten participants, and
No single participant’s data should account for more than 25% of the total dataset.
It is noteworthy that while, according to the Board’s decisions
- , existence of at least five participant data is required for the data to be considered aggregated in output markets, the Guidelines specify that the Board will require the presence of at least 10 undertakings for data related to the labor markets to be considered aggregated.
- Ancillary Restraints
- The Guidelines define ancillary restraints as restrictions in an agreement that, while not aimed at preventing, distorting, or limiting competition, are essential for achieving that agreement’s objectives. These restraints are necessary and directly related to the goals of the agreement but are not part of the core of the agreement.
- The Guidelines state that the restrictions that are found to be ancillary restraints will not fall within the scope of Article 4 of the Competition Law while provisions on no-poaching and wage-fixing that do not qualify as ancillary restraints will be treated as infringements by object as usual. The Draft Guidelines stated that restrictions that did not qualify as ancillary measures would fall under the Competition Law. However, there was no explanation of how they would be handled. It is seen that this ambiguity in the Draft Guidelines has been eliminated with a stricter approach brought by the Guidelines.
For assessing whether restrictions in an agreement are ancillary restraints, the Guidelines state that the key factors to consider are whether the restraints in question are directly related, necessary and proportional.The Guidelines define being directly related as a restraint being an indispensable part of the main agreement and necessary for its implementation. To be considered directly related, it is necessary to demonstrate that the restraint is directly linked to the main agreement and that the ancillary restriction is directly related to its primary goals. If the ancillary restriction meets other requirements, however, it can still be considered directly linked even if not implemented at the exact same time. According to the Guidelines a restraint is deemed necessary when it’s impossible to achieve or maintain the original agreement without the restraint. Considering the nature of the original agreement and the characteristics of the market, if undertakings in a similar situation would not be party to the original agreement without the restraint in question, then the restraint can be regarded as necessary.
According to the Guidelines, for a restraint to be considered proportionate, it must not be possible to achieve the same objective using a less restrictive alternative that has a lesser impact on competition. The scope of a restraint should also be limited to its purpose, geographical scope and duration, as well as the parties involved in the agreement. In particular, the Board may deem the restraint not fulfilling the proportionality requirement in the following cases:
The duration of the restraint is not clearly defined, or the duration of the restraint is longer than necessary to attain the objectives with the restraint.
Restraints are imposed on employees other than those who are key for implementing the main agreement or it is not clear which employees the restriction covers.
The restraint exceeds the geographic region where the main agreement is implemented.
The restraint covers all of the parties to the agreement or more parties than necessary, in cases where it is sufficient to impose the restriction on only certain parties.
In the Draft Guidelines, an ancillary restraint exceeding the duration of the agreement is listed as one of the situations where the restraint will not be treated as an ancillary restraint. The Guidelines do not include this part. The Guidelines do not provide any specifics on how to assess the abuse of dominance. Instead, they make general remarks. The Draft Guidelines took a more detailed approach and stated that exclusionary and market-closure abusive actions in terms of labour markets could take place along two axes. (i) acts of an undertaking in a dominating position in the relevant labor market that limit the mobility of employees against their will and (ii). the negative effects of these exclusionary acts by the undertaking in dominant position on However, it is seen that this section is completely removed from the Guidelines.
The Guidelines state that merger and acquisition analyses should consider factors such as the transaction parties’ market shares, market concentration, employee qualification similarities, barriers to entry, labour supplier organization, workplace switching costs, competitors’ capacity utilization or investment opportunities, potential competitive pressures, the possibility of increased cooperation between competitors, and the risk of a killer acquisition.
Conclusion
- The adoption of the Guidelines is a significant step towards enhancing clarity regarding the TCA’s enforcement priorities in labour markets. The Guidelines are a valuable tool for the Board to make future assessments. They also partially clarify conditions under which ancillary restrictions, often encountered in practice, can be excluded from Article 4 of the Competition Law. The Guidelines also resolve the uncertainty about how to handle cases in which the criteria for an “ancillary restraint” are not fully met by stating that such agreements would be considered infringements of the Competition Law. The Guidelines provide a standard for evaluating labour market practices, and they help businesses navigate compliance challenges.
