The Turkish Competition Authority’s Guidelines on Competition Infringements in Labor Markets Has Published
The long-awaited Guidelines on Competition Infringements in Labor Markets ("Guidelines") of the Competition Authority ("Authority") were published on the Authority's website on December 3, 2024.
Overview of the Scope of the Guidelines
Wage-Fixing and No-Poaching Agreements
What constitutes the main focus of the Guidelines is the evaluations on the application of Article 4 of Law No. 4054 on the Protection of Competition (“Law No. 4054”), titled "Agreements, Concerted Practices and Decisions Limiting Competition".
The Guidelines underline that the two predominant types of violations observed in labor markets are: (i) wage-fixing agreements and (ii) no-poaching agreements.
- Wage-fixing agreements are defined as agreements where undertakings jointly determine any working conditions that have a clear effect on employees’ choice of jobs or general labor mobility (e.g., wages, pay raises, working hours, fringe benefits, compensation, leave entitlements, and non-compete obligations), either directly or indirectly. The Guidelines indicate that wage-fixing agreements are considered a form of price-fixing and are evaluated as "cartels" and infringements by object.
- No-poaching agreements are defined as agreements where an undertaking directly or indirectly agrees not to offer jobs to or hire another undertaking’s current or former employees without prior approval from the other undertaking. The Guidelines state that no-poaching agreements are assessed within the same framework as supplier/customer allocation agreements and are also evaluated as "cartels" and infringements by object.
Additionally, the Guidelines highlight that, for both types of anticompetitive agreements, a third party facilitating or mediating such agreements could also be considered a party to the infringement, depending on the specific circumstances.
Under the approach adopted in the Guidelines, if an infringement of the above nature is identified, the base administrative fine to be applied to the undertaking will be calculated at a rate of 2% to 4% of the undertaking's annual gross revenue. Furthermore, undertakings subject to such investigations are unlikely to be able to benefit from the commitment mechanism.
Exchange of Information
Exchanges of competitively sensitive information between undertakings are evaluated under Article 4 of Law No. 4054. The Guidelines provide that information about working conditions with an obvious effect on labor mobility in general such as wage increases, working hours, fringe benefits, compensations and leave entitlements, may be regarded as competitively sensitive information.
Additionally, it is noted in the announcement of the publication of the Guidelines that the views submitted by universities, non-governmental organizations, undertakings, associations of undertakings, law firms, lawyers, and self-employed individuals on the Draft Guidelines have been carefully reviewed by the Authority. The most significant change compared to the draft version appears to be in the "Exchange of Information" section. Here, the Guidelines underscore that information exchange facilitated through third parties, such as independent market survey organizations, must meet the following five cumulative criteria to benefit from the “safe-harbor”:
- should be managed by an independent third party,
- does not permit the identification of the data source or individual data content,
- the information which is the subject of the exchange should be at least three months old,
- information should include at least the data of ten participants,
- no single participant’s data should have a share more than 25% of the total data.
Ancillary Restraints
The Guidelines adopt a three-step assessment to evaluate whether restrictions related to labor in agreements not inherently anticompetitive are considered ancillary restraints: (i) Direct Relation, (ii) Necessity, and (iii) Proportionality.
- The Direct Relation condition means that the restraint must be an indispensable part of the main agreement and subject to the implementation thereof.
- The Necessity condition refers to the requirement that the existence of a restriction must be necessary for the implementation or continuation of the main agreement between the parties. In determining the element of 'necessity,' objective conditions are considered, rather than the subjective assessments of the parties. These include: (i) whether the implementation or continuation of the main agreement would be impossible without the restriction, or (ii) whether undertakings in similar situations, considering the nature of the main agreement and the characteristics of the market, would not agree to the main agreement without the said restriction.
- The Proportionality condition takes into account (i) whether the intended objective of the restriction cannot be achieved with another means that restricts competition less and (ii) whether the scope of the restriction is limited to the objective of the main agreement, its geographical scope, duration, and the parties involved. The Guidelines note that the proportionality condition may not be satisfied under the following circumstances:
- 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 have key importance for implementing the main agreement or it is not clear which employees the restriction is imposed to
- The restraint exceeds the geographic region where the main agreement is implemented
- The restraint cover all of the parties to the agreement or more parties than necessary, in cases where it is sufficient to impose the restriction to only one party or a few parties to the main agreement
In result of the above-mentioned three-step assessment, if deemed as ancillary restraints, such restrictions are exempted from the application of Article 4 of Law No. 4054.
Final Remarks
The Authority’s intensified focus on labor markets, aligning with the international trends and diverging from its historical approach, has raised questions among undertakings. The core principles and explanations presented in the Guidelines are expected to help address these uncertainties.
The full text of the Guidelines can be accessed here.
18.12.2024
