Consequences of Restricting Competition in the Field of Private Law

1. Introduction

The healthy functioning of a free market economy the existence of fair competition . Competition ensures that consumers have access to higher quality goods and services at more affordable prices, and it also compels businesses to innovate. Therefore, competition law is a branch of law that not only protects the economic order but also enhances consumer welfare .

The Law No. 4054 on the Protection of Competition (RKHK) , the primary source of competition law in Turkey , contains regulations largely parallel to those of European Union competition law. Article 4 prohibits agreements that restrict competition , Article 6 prohibits abuse of dominant position , and Article 7 prohibits the restriction of competition through mergers and acquisitions

Although administrative sanctions imposed by the Competition Board are frequently discussed, the consequences of restricting competition in the field of private law are at least as important. This is because private law sanctions directly concern the relationships between the parties and the possibilities for compensation for those who have suffered damage.

This article will comprehensively examine the private law consequences of Law No. 4054 in light of the law's provisions, Supreme Court decisions, and European Union practices

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2. Invalidity of Agreements Restricting Competition (Article 56)

2.1. General Principle

Article 56 of Law No. 4054 explicitly states that agreements and decisions of undertakings that restrict competition are absolutely null and void . This is in line with the sanction of "absolute nullity due to illegality" stipulated in Article 27 of the Turkish Code of Obligations (TBK) .

2.2. Nature of Invalidity

• Absolute nullity is the case. The court will consider the invalidity of the contract ex officio, even if the parties do not raise the issue.

• The nullity applies from the outset (ex tunc). That is, the contract is considered as if it had never come into existence.

• The parties cannot claim any rights based on an invalid contract.

2.3. Supreme Court Practice

The 11th Civil Chamber of the Supreme Court of Appeals, in its decision numbered 2009/4955 E., 2010/1526 K. , explicitly emphasized that agreements restricting competition are absolutely null and void, and that the parties cannot claim any rights based on these agreements.

2.4. Comparison with European Union Law

A similar provision exists in EU law. Article 101/2 of the Treaty on the Functioning of the European Union (TFE)stipulates that agreements restricting competition shall be null and void. Therefore, Turkish law is in full compliance with EU law in this respect.

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3. Liability for Damages (Articles 57-58)

3.1. General Regulations

Article 57 of the law grants those harmed by the restriction of competition the right to claim compensation . Accordingly:

• An individual or undertaking harmed by a competition violation full compensation .

• The damage can be both direct (e.g., overpaying due to high prices) and indirect (e.g., loss of market share).

3.2. The Principle of Fault and Proof

Liability for damages based on fault. However, since competition violations are often committed deliberately, the existence of fault is usually readily accepted.

• The burden of proofrests with the injured party.

• The Competition Board's decisions finding violations strong evidence .

In its decision numbered 2017/4358 E., 2019/2211 K. , the 11th Civil Chamber of the Supreme Court of Appeals stated that while the decisions of the Competition Board are not binding on the court, they constitute strong evidence

3.3. Triple Compensation (Article 58)

Article 58 of Law No. 4054 introduced a unique provision in Turkish law, compensation of up to three times the amount may be awarded.

• The aim is not only to remedy the damage but also a deterrent effect .

• The court may award triple compensation, taking into account the severity of the violation, the degree of fault, and the economic circumstances of the parties.

This arrangement punitive damages .

3.4. Calculation of Damages

The following methods are prominent in calculating damages:

1. Comparative approach: How would the market function if there were no violations?

2. Overpricing method: Calculating overpayments.

3. Profit loss method: Determining the market share and profit lost by a competitor.

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4. The Impact of Competition Board Decisions on Private Law Cases

The Competition Board plays an important role not only in imposing administrative fines but also in private law cases.

• A compensation lawsuit can be filed even without a board decision.

• However, the Board's decision strong evidence and reduces the burden of proof on the plaintiff.

The Court of Cassation has also adopted this approach. For example, numbered 2014/4797 E., 2015/8626 K. , the 11th Civil Chamber of the Court of Cassation accepted that while the Board's decision is not binding in a private law case, it constitutes important evidence.

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5. Relationship with Unfair Competition

Competition violations under Law No. 4054 often overlap with the unfair competition provisions in the Turkish Commercial Code (Articles 54 et seq.)

• A competition violation can also be considered unfair competition.

• In this case, the injured party can file a lawsuit based on both the Competition Law and the Turkish Commercial Code.

• The Supreme Court also has rulings in its jurisprudence that the violation of competition constitutes unfair competition.

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6. The European Union and a Comparative Law Perspective

Turkish competition law has been largely influenced by European Union law.

• Articles 101 and 102 of the ECHRregulate, respectively, the restriction of competition through agreements and the abuse of dominant position.

• Article 101/2 of the ECHRstates that agreements restricting competition shall be null and void (same as Article 56 in Turkish law).

• In the EU, it is also possible for those harmed to claim compensation. Indeed, the Courage v. Crehan (C-453/99) decision, the European Court of Justice accepted that individuals harmed by competition violations have the right to bring compensation claims.

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7. Conclusion and Evaluation

Under Law No. 4054, restricting competition does not only result in administrative fines. also has serious consequences in the field of private law :

1. Contracts that restrict competition are absolutely null and void.

2. Those who have suffered damages can claim compensation for the losses they have incurred.

3. A compensation mechanism of up to three times the amount is available.

4. Decisions of the Competition Board constitute strong evidence in private law cases.

5. There is a complementary relationship between the unfair competition provisions of the Turkish Commercial Code and the Competition Law.

Consequently, competition violations impose a significant financial burden on businesses not only through administrative fines imposed by the Competition Board but also through private law sanctions. This creates a powerful mechanism that encourages businesses to act lawfully and protects fair competition in the market.