The labor market is considered as an economic field where workers supply their labor in line with employers’ demands. In this market, employers compete to employ while employees offer their labor to employers in line with the wages and working conditions provided. The mentioned market, where wages and working conditions are determined based on the balance of supply and demand; new concepts that confront competition law and labor markets are considered as hot topics for last couple of years. In particular, employee non-distortion and wage fixing agreements restrict competition in the labor market and harm the functioning of the market.
Such agreements are made explicitly or implicitly between employers and have significant negative effects in a labor market where a small number of employers compete for a large number of employees. Salary fixing and employee non-distortion agreements create an imbalance in favor of employers by restricting workers’ access to fair wages and career progression, and as a result, the prevention of competition limits workers’ access to better wages and working conditions, while undermining employers’ ability to attract a skilled workforce.
Within the framework of the Law No. 4054 on the Protection of Competition, which is designed to ensure effective competition in the markets and to prevent behaviors distorting or restricting competition, the Chairman of the Competition Authority, Birol Küle, issued a warning in August 2023 towards companies which have entered into employee non-solicitation agreements causing the labor force to grope for opportunities outside of Türkiye. In the meanwhile, he stated that they aimed to intervene in violations that reduce the welfare of employees. In May 2024, French high schools were fined 22 million Turkish Lira regarding fixing school registration fees and teachers’ salaries together.
In addition to the “Law No. 4054 on the Protection of Competition” on the labor market, which has been on the radar of competition authorities in recent years, the “Draft Guidelines on Competition Violations in Labor Markets” was opened for public consultation by the Competition Authority as a secondary legislation on September 16, 2024. The draft could be considered as a step to clarify the application principles of competition law in the labor markets and to set some of the principles in the market. Due to the increasing importance of competition violations in labor markets in recent years, the need to provide certainty in this area arose. In order to provide this certainty, the “Draft Guidelines on Competition Violations in Labor Markets” was prepared within the framework of the “Law on the Protection of Competition” numbered 4054.
The basic principles set forth in the “Draft Guidelines on Competition Violations in Labor Markets” are as follows:
- The labor market is considered as one of the areas where undertakings compete. Therefore, within the framework of Article 4 of Law No. 4054, agreements restricting competition in labor markets are considered to be unlawful and in violation of competition law.
- The Competition Board considers agreements to fix the wages or limit the working conditions of employees as price fixing agreements in goods or services markets and considers such violations as cartels.
- In Turkish competition law, employee non-poaching agreements are considered as cartels under Article 4, subparagraph (b) of Law No. 4054 as they aim artificial division of labor and are considered as competition infringements; these agreements may be made directly or through a third party.
- Anti-competitive information exchanges may be part of agreements between undertakings. In particular, undertakings may exchange competition-sensitive information in order to maintain employee non-distortion or wage fixing agreements. However, whether such information exchange is anticompetitive in the labor market is a case-by-case assessment.
- Restraints that do not constitute the primary purpose of the main agreement but are directly related, necessary and proportionate for the realization and maintenance of the agreement are ancillary restraints, and restrictions that are determined to be ancillary restraints are not evaluated within the scope of Article 4 of Law No. 4054. However, restrictions that are found not to be an ancillary restriction are considered within the scope of the law. The criteria of direct relevance, necessity and proportionality for a restriction to be considered as an ancillary restriction are explained in the draft guidelines.
- Agreements between undertakings, concerted practices and decisions of associations of undertakings are exempted under Article 5 of Law No. 4054 when they restrict competition, but disproportionate restrictions such as wage fixing and employee inducement agreements in labor markets are not exempted.
- Article 6 of Law No. 4054 prohibits an undertaking from restricting competition by abusing its dominant position, and exclusionary conduct that restricts employee mobility in labor markets is considered within this scope.
- Within the framework of Article 7 of Law No. 4054, which prohibits mergers and acquisitions that would significantly reduce effective competition, the effects of such transactions on the labor market are analyzed through various factors.
You can access the Draft Guidelines on Competition Violations in Labor Markets from this link:
