The Risk of Hidden Cartels in the Labor Market: Legal Assessment of Competition Authority Penalties and Law No. 4054 in No-Poach Agreements

Entrance

For many years, competition law has focused on classic cartel behaviors such as product pricing, customer sharing, territory allocation, and production quantity limitations. However, no-poaching agreements, also known as employee poaching or employee transfer agreements, which restrict the mobility of employees between undertakings, have become one of the most important areas of investigation for the Competition Authority in recent years.

The Guidance on Competition Violations in Labor Markets , adopted by the Competition Board on November 21, 2024 , details the circumstances under which no-poaching agreements constitute a competition violation. With this guidance, it is clear that no-poaching agreements are not a temporary measure, but rather a permanent competition policy for labor markets.

According to the Board's approach, employees are one of the essential inputs used by enterprises in their production and service delivery processes. Employers eliminating competition for employees negatively impacts employees' wages, career opportunities, and bargaining power, and can also weaken enterprises' access to qualified labor, innovation, and competition in output markets.

What is a No-Poach Agreement?

A no-poach agreement is a direct or indirect agreement whereby one undertaking does not offer jobs to employees of another undertaking, does not hire them, or makes hiring them conditional on the approval of the existing employer.

According to the Competition Authority's guidelines, the following practices may be considered as falling under an employee poaching agreement:

• Not offering job opportunities to employees of a competing company,
• No employees from competing companies should be hired under any circumstances
• The hiring of an employee is subject to the approval of the current employer
• Notifying the current employer of the employee who applied for the job,
• Approval between the companies is required before employee transfers
• Granting certain employees or groups of employees "immunity,"
• Not rehiring former employees for a certain period of time,
• Imposing commercial sanctions against the enterprise that carries out employee transfers.

An agreement doesn't necessarily have to be in writing. Phone calls, emails, WhatsApp messages, verbal agreements between human resources managers, so-called "gentlemen's agreements," or companies systematically avoiding hiring each other's employees can also form the basis for detecting a breach.

The guidelines explicitly acknowledge the existence of an employee poaching agreement even in cases where hiring is not entirely prohibited but subject to the current employer's approval. The agreement may cover both current and former employees.

It is not necessary for the enterprises to operate in the same sector

One of the most important aspects of no-poach agreements is that the undertakings are not required to be competitors in the product or service market.

For example, a bank and a technology company are not competitors in the product market. However, if both enterprises compete to employ software engineers, data analysts, or cybersecurity specialists, they can be considered competitors in the relevant labor market.

According to the guidelines, undertakings are considered competitors in the labor market if they compete in employing workers with the same or similar qualifications, regardless of their activities in the output markets. Therefore, the defense of "We do not operate in the same sector" alone does not absolve them of responsibility.

Legal Nature within the Scope of Article 4 of Law No. 4054

Article 4 of Law No. 4054 on the Protection of Competition prohibits agreements between undertakings, concerted actions, and decisions of associations of undertakings that aim to prevent, distort, or restrict competition directly or indirectly in a particular market for goods or services, or that have or may have such an effect.

No-poach agreements are considered specifically under Article 4, paragraph 1, subparagraph (b) , which prohibits the division of markets and the sharing or control of any market resources or elements.

In employee enticing agreements, employers artificially divide the labor supply among themselves. When an employee of one company is made effectively inaccessible to other companies, the workforce is effectively distributed among employers.

Therefore, the Competition Board considers no-poach agreements as follows:

• Sharing the labor market,
• An application similar to provider or client sharing,
• The cartel formed in the purchasing market,
• Infringement of competition in terms of purpose

It is described as such.

Consequences of Violation of Purpose

The fact that the no-poach agreement is deemed a breach of purpose means that the Board does not have to prove in each specific case that employee wages were actually reduced or that a particular employee was effectively prevented from changing jobs.

The fact that the agreement, by its very nature, is capable of restricting worker mobility may be sufficient grounds for finding a violation. Therefore;

• "The agreement was not implemented."
• “No employee was harmed,”
• "Employees could still change jobs,"
• "The companies had low market share,"
• "The agreement lasted only a short time."

Defenses of this kind do not automatically negate the existence of the violation. These arguments are more likely to affect the determination of the penalty or the evaluation of evidence in the specific case.

Sharing salary and benefits information is also risky

Competition law risks are not limited to explicit agreements such as "we will not hire each other's employees." The sharing of the following information between employers can also be examined under Article 4 of Law No. 4054:

• Future salary increase rates,
• Position-based salary scales,
• Bonus and incentive rates,
• Benefits packages,
• Private health insurance terms and conditions,
• Compensation policies,
• Permission rights,
• Working hours,
• Recruitment budgets,
• Maximum salaries that will be offered for specific positions.

The guidelines state that competitively sensitive information regarding the workforce can be shared directly or through third-party platforms, private employment agencies, research companies, or associations of businesses. Sharing forward-looking and disaggregated wage information at the business level could constitute an anti-competitive practice, as it makes it easier for competitors to coordinate their recruitment and wage policies.

Is Every Employee Enticement Clause Unlawful?

Not every no-poaching provision is automatically unlawful. A no-poaching provision may fall outside the scope of Article 4 of Law No. 4054 if it is an ancillary restriction necessary for the performance of a legitimate business transaction

This issue may arise particularly in the following processes:

• Company mergers and acquisitions,
• Joint ventures,
• Fixed-term consulting projects,
• Outsourcing agreements,
• Technology and know-how transfers,
• Partnerships in which sensitive commercial information is transferred,
• Contracts in which specific employees are assigned to a joint project.

However, for a limitation to be considered a secondary limitation, three conditions must be met simultaneously:

1. Direct Relevance

The provision against enticing employees should not be considered separately from the legitimate underlying contract. It must be clearly indicated to which commercial transaction it is linked.

It is not sufficient for the parties to have a general business relationship. The limitation must be concretely linked to a specific project, investment, acquisition, or cooperation agreement.

2. Requirement

It should not be objectively possible to enforce or maintain the original contract without a no-poach clause.

The restriction does not merely require that it be more profitable, easier, or safer for the parties. If the same objective can be achieved through a less restrictive method, the provision against employee poaching is not considered necessary.

3. Proportionality

Limitation;

• With certain employees,
• With specific tasks or positions,
• With a specific geographical area,
• With a fixed contract period,
• With the parties to the original contract

It should be kept to a minimum.

Provisions that cover all company employees, have indefinite duration, continue for many years after the contract ends, or include employees unrelated to the main project may be considered disproportionate.

The guidance considers the inclusion of personnel other than key employees, the lack of a clearly defined duration, the geographical scope exceeding the area to which the main agreement applies, and the inclusion of an excessive number of parties in the limitation to be problematic from a proportionality standpoint. The burden of proof for the conditions of ancillary limitation rests with the undertaking relying on this defense.

Exemption pursuant to Article 5 of Law No. 4054

Article 5 of Law No. 4054 allows for an agreement restricting competition to be exempted from the prohibition of Article 4 if certain conditions are met simultaneously.

For this, the agreement is:

1. Providing economic or technological development,
2. It benefits the consumer,
3. It does not eliminate competition in a significant portion of the relevant market,
4. Not restricting competition more than is necessary

is necessary.

However, the Competition Authority's Guidance states that wage-fixing and employee poaching agreements, by their nature, disproportionately restrict competition and are unlikely to generate economic benefits that would offset their harm to competition. Therefore, naked no-poaching agreements are not expected to benefit from individual exemptions as a rule.

Administrative Fines in No-Poach Agreements

According to Article 16 of Law No. 4054, undertakings that violate Article 4 of the Law may be subject to an administrative fine of up to 10% of their annual gross revenue generated at the end of the fiscal year preceding the final decision

Managers or employees found to have had a decisive influence on the violation may also be subject to personal administrative fines of up to 5% of the administrative fine imposed on the undertaking . Therefore, not only companies but also human resources managers and senior executives who establish, maintain, or play a decisive role in the implementation of the agreement face the risk of personal sanctions.

The Impact of the New Penal Code

With the new Penal Code that came into effect on December 27, 2024, the fixed penalty ranges based on the distinction between "cartel" and "other violations" found in the old regulation have been abolished. In the new system, the initial penalty rate is specifically:

• The nature of the violation,
• Whether the violation is blatant or serious,
• The severity of the damage that has occurred or is likely to occur

It is determined by taking these factors into consideration.

The initial penalty rate depends on the duration of the violation;

• For violations lasting longer than one year but less than two years, one in five,
• Two-fifths for violations lasting longer than two years but less than three years,
• For violations lasting longer than three years but less than four years, three out of five,
• Four out of five for violations lasting longer than four years but less than five years,
• A tier for violations lasting more than five years

is being increased.

Recidivism, continuation of the violation after notification of the investigation decision, and having a decisive influence on the violation may be considered an aggravating factor. Limited participation in the violation, coercion by other undertakings, a low share of the infringing activity in total revenue, or providing extraordinary assistance to the on-site inspection may be considered mitigating factors.

Key Decisions of the Competition Board

Decision Regarding Private Hospitals

The Competition Board's decision dated February 24, 2022, numbered 22-10/152-62, examined allegations regarding the prevention of employee transfers between private healthcare institutions, the discussion of salary scales, and coordination related to the labor market.

The Board has determined that 18 private healthcare institutions and one consortium of enterprises violated Article 4 of Law No. 4054. This decision is one of the first significant rulings imposing comprehensive administrative fines for violations in the labor market. It is stated that a total of approximately 57.9 million TL in administrative fines were imposed under this decision.

2023 Labor Force Decision

The decision dated July 26, 2023, and numbered 23-34/649-218, examined gentleman's agreements between numerous undertakings operating in different sectors, stipulating that they would not employ each other's employees.

The Board concluded that 16 undertakings were parties to anti-competitive employee enticing agreements and imposed administrative fines totaling approximately 151.1 million TL on these undertakings. The process was concluded through settlement for some undertakings, and no violation was found for others where sufficient evidence was not available.

Labor Force Decision II, dated 2024

The Labor Force II decision, dated February 27, 2024, and numbered 24-10/170-66, examined enterprises operating in various sectors, primarily information technology.

It was concluded that eight undertakings were parties to anti-competitive employee enticement agreements and that these agreements could not benefit from individual exemption under Article 5 of Law No. 4054. A total administrative fine of approximately 91.7 million TL was imposed on the undertakings.

Pharmaceutical Industry Decision Dated 2025

The Competition Board's decision dated September 11, 2025, examined employee poaching agreements and the sharing of future salary and benefits information concerning companies, the majority of which operate in the pharmaceutical sector.

Ten undertakings were found to be parties to employee poaching agreements or concerted actions, and seven undertakings were found to be parties to forward-looking competitively sensitive information exchange regarding employee salaries and benefits. A total administrative fine of 244,801,302.91 TL was imposed on the undertakings found to be in violation

Tire Industry Decision Dated 2026

The investigation into the automotive tire manufacturing and distribution sector examined price coordination, resale price setting, regional and customer restrictions, as well as information exchange regarding the labor market and employee poaching practices.

As a result of settlement and investigation decisions, a total of approximately 3.63 billion TL in administrative fines were imposed on the undertakings. However, it should be emphasized that this entire amount does not relate solely to the act of not poaching employees; it represents the total penalty for multiple violations, including price coordination and vertical restrictions. Nevertheless, the decision demonstrates that behaviors towards the labor market have become part of much broader sector-wide investigations.

What evidence can be used in competition investigations?

Since no-poach agreements are often not formalized in the form of contracts, the Board assesses the evidence as a whole. The following documents are particularly risky:

• Emails with the message "Don't hire employees from us,"
• WhatsApp conversations between human resources managers,
• Records showing that approval was sought from the previous employer for the employee's hiring,
• Lists kept about employees who defected to a rival company,
• Sharing job applications between companies,
• Internal instructions regarding not submitting bids to competitor employees,
• Threats to terminate the business relationship due to employee transfers,
• Common wage scales,
• Tables showing future salary increases,
• Meeting notes and calendar records,
• Information exchange conducted through human resources consultants.

The absence of a written agreement does not mean there has been no breach. A single explicit written communication demonstrating the parties' agreement, along with other conduct and documents, can constitute significant evidence.

Opportunity for Compromise and Active Cooperation

The undertaking under investigation may request a settlement until the investigation report is served. If the settlement is accepted, a reduction of up to 25% may be applied to the administrative fine. In return, the undertaking acknowledges the violation and cannot challenge the matters included in the settlement agreement or the administrative fine in court.

Given that no-poach agreements are classified as cartels, the Regulation on Active Cooperation for the Purpose of Detecting Cartels may also come into play, if the conditions are met. In particular, full immunity may be possible for undertakings that first uncover a cartel of which the Board is unaware and provide the necessary information and documents; and a reduction in penalties may be possible for subsequent applications.

Therefore, if a no-poach practice is detected within a company, instead of destroying documents or deleting correspondence, an immediate competition law review should be conducted and the option of active cooperation should be evaluated.

Private Law Consequences

The consequences of no-poaching agreements are not limited to administrative fines imposed by the Competition Board.

According to Article 56 of Law No. 4054, agreements that violate Article 4 of the same law are invalid. Therefore, it may not be possible to make a contractual claim or demand a penalty based on an unlawful provision prohibiting employee poaching.

Individuals harmed by competition violations under Articles 57 and 58 of the Law may claim compensation for their losses. If the fault is serious, or if there is collusion or agreement, the court may award compensation up to three times the amount of the damages suffered.

In this context, employees also theoretically;

• They were prevented from switching to higher-paying jobs
• Their wages are below competitive levels,
• Career and promotion opportunities are limited,
• They suffered tangible economic damage as a result of the agreement

If they can prove their innocence, they may be able to claim compensation.

Compliance Recommendations for Companies

Companies must recognize that the risk of no-poaching is the responsibility not only of the legal department, but also of human resources, procurement, sales, and senior management.

Human resources personnel should be trained not to share information on recruitment, salary, bonuses, raise rates, and benefits with competitors. Anti-poaching clauses in commercial contracts should be reviewed in terms of duration, person, role, geographic area, and their connection to the main contract.

General and indefinite clauses stating that "Neither party may hire any of the other's employees" should be avoided. If a restriction is truly necessary, it should be limited only to employees who are key to the main project and for the shortest possible time.

In independent wage surveys, it is crucial to ensure that the data does not reveal up-to-date information on individual companies, that data from a sufficient number of undertakings is combined, and that no single participant's data carries a decisive weight in the overall results.

Conclusion

In the current approach of the Competition Authority, no-poaching agreements are not seen as a simple human resources practice or a rule of commercial courtesy. The sharing of employees between undertakings is considered a purchasing cartel .

Therefore, preventing employee transfers between competing employers, requiring permission for hiring, withholding offers from employees, or coordinating wage policies may violate Article 4 of Law No. 4054.

In case of violation, the undertaking may face administrative fines of up to 10% of its annual gross revenue, personal fines for managers and employees, invalidation of the contract, and claims for private law compensation.

If a non-enticement clause is required within the scope of a legitimate commercial transaction, the clause must be directly related to the main contract, objectively necessary, and proportionate in terms of duration, persons, geographical area, and scope. Otherwise, general defenses such as "we wanted to protect our employees" or "it was a requirement of our commercial relationship" will not be sufficient before the Competition Board.